As American Patriot and Philosopher Thomas Paine wrote in 1776, “These are the times that try men’s souls..” COVID-19 has touched too many of those we know and has stoked fear and anxiety about the health and economic safety of loved ones and friends. And, as all of us know, this unheralded health crisis has upended global financial markets in a way that has compelled our government and governments across the world to introduce monetary and fiscal initiatives in an effort to stave off an economic implosion that only a few could imagine being possible.
Uncertainty is the biggest enemy of Issuers, Investors and Consumers (as it is within the context of personal relationships also). To those who feel compelled to predict with certainty as to where financial assets will be priced in the near and interim terms–we can only suggest that crystal balls are in shorter supply than hand sanitizer, an observation conveyed within a recent edition of “Quigley’s Corner”, Mischler Financial Group’s daily commentary penned by MFG Managing Director and Head of Fixed Income Syndicate in which Ron provides an assessment of activity across the primary debt capital market and insight to the overall investment-grade corporate bond market.
Based on 100+ years of history, coupled with the legacy experience of the most senior members of the Mischler team, including folks who have navigated capital markets and invested for themselves and others going back to the 1970s, we can only suggest that “this (crisis) too shall pass”.
However much credit and equity markets are exhibiting unheralded volatility and however cloudy the near term economic cycle(s) may seem, as pointed out by Ron in his recent email commentaries,* based on the past week’s record-setting issuance of investment-grade corporate debt by companies across nearly every sector and the respective “over-subscription” metrics of those offerings, the state of our biggest corporations and our economy is secure.
Institutional investors have voted with their wallets and have concluded that America remains a great country, the impact of COVID-19 on corporate balance sheets and the operations of those companies will be managed carefully and responsibly, that our capital markets are secure and the most formidable companies in America will continue to be the most formidable companies in the world. It is with this sense of confidence that will bring us ‘to the other side’, irrespective of any medium-term economic impact COVID-19 will likely bare on employment rates, productivity, and other key economic metrics. (Team Mischler extends thanks to the corporate treasury teams that included our diversity-certified firm within their underwriting groups and applauds the many other issuers and their lead IBs for successfully placing these new bonds with forward-looking investors during these volatile times.)
For financial market savants, COVID-19 will be remembered as the Black Swan that dumped on a 10-year long bull market, yet it should also serve as a reminder that irrational exuberance and the belief that stock prices can only go up year over year is a mythical notion. That said, this ‘crisis’ has hopefully reminded each of us, whether in the role as a corporate executive, an elected official, or as a parent, as to what our priorities should always be: to serve as role models to colleagues, family, and friends and community members; to remind others as to health safety steps that need to be complied with AND to demonstrate confidence and optimism during not only the best of times but also the most challenging of times. It should also remind us that attaining short-term financial goals should never be an excuse to discount the steps and measures needed to preserve the long-term economic health of our country, our businesses and most importantly, the health and well-being of the tens of millions of our citizenry.
Out of The Mouths of Babes [Pslams 8:2; Matthew 21:16) One need not be a person of deep faith or a bible scholar to appreciate the phrase “out of the mouths of babes..” It is in this spirit that we share the views of former Team Mischler intern Rachel Chamberlain; a former scholar-athlete and a member of the UCLA Class of 2020 and UCLA Army ROTC Class of 2020. Though Rachel’s long-anticipated graduation ceremonies will now be limited to live-stream video programming, whilst she has remained ‘self-confined to quarters’ in compliance with directives issued by health care experts from both federal and state levels, Rachel has used this moment in time to convey thoughts that should inspire any of us. Click on image left or text below to read (and share!)
*(“QC” subscription access for clients and issuers only; if you’re not on the DL reach out to firstname.lastname@example.org)