Mischler Q2 2022 Primary Debt Market Underwriting Roles Touch Every Sector
Mischler Co-Manages Debt Issued by Banks, Consumer & Commercial Credit, Auto, Industrial, and Consumer Products
Q2 2022 has proven to be one of the rare periods in recent history during which economic outlooks have been completely mired due to the confluence of multiple factors; ongoing supply chain issues attributed to a global health crisis, the follow-on inflationary pressures impacting manufacturing and shipment, geopolitical crisis causing energy prices to skyrocket and food resources available to nations across globe to decline precipitously.
Suffice to suggest that the best and brightest of Fortune corporation CFOs across every industry have been challenged since the beginning of 2022. For many, this period has added insult to injuries already suffered throughout the prolonged and still ongoing Covid-19 pandemic.
As spirited debates escalate between global macroeconomists, investment bankers, and financial industry market strategists as to whether the current environment has the US economy (and that of other countries) sitting on the precipice of recession, or facing a period of stagflation, or whether this is a “cyclical” period “not unlike many other cycles throughout the past decades”, Issuers of investment-grade corporate debt have demonstrated great resiliency in the course of keeping their balance sheets fortified.
Issuers and underwriters of investment grade corporate debt will affirm that is the lack of reliable economic visibility combined with a generational shift in Federal Reserve interest regime policy [from “lower for longer” to “higher for the foreseeable future”] that has led to a noticeable decline of issuance of investment-grade corporate debt during the first half of 2022.
While the reduction in the total volume of new corporate debt issuance speaks to the economic uncertainties, the good news for proponents of DEI best practices and those who advocate the importance and benefits of Fortune company utilization of diversity-certified banks within underwriting consortiums are enjoying mostly sunny skies, despite the cloudy weather.
2022 remains on pace to mark another YoY increase in the allocation of underwriting mandates to qualified diversity-certified investment banks.
It should be noted, that during the first 10 years into the 21st century, many lead IBs and Fortune Issuer IR teams viewed the utilization of minority broker-dealers to be “good optics [if not necessarily additive to transactions]”. During the past 8-10 years, there has been a commendable shift in the practice of engaging the best-in-category firms that bring proven capabilities i.e. strong underwriting capacity, reliable connectivity to long-term focused institutional investors, and a discrete list of business-centric ‘added-value services’ has proven to be an important strategy. The minority BDs who actually bring each of these elements to the table have demonstrated time and again that they fill a crucial and complementary role to that of lead underwriters, and meet the needs of not only investor relations executives, but the needs of all company’s stakeholders.
Further, when comprehensive vetting of minority BDs is performed by Issuer treasury teams (or by DEI / ESG counterparts within their organizations), it becomes much easier to compare the performance of those co-managers using the same metrics used to evaluate the lead underwriters.
To the above, during Q2 2022, Mischler Financial Group, the financial industry’s oldest diversity-certified firm owned and operated by military veterans (SDVOBE and MBE certified) received mandates from issuers across multiple sectors, including Consumer Credit, Commercial Credit, Industrials, Auto, Consumer Products, Private Equity, and Banking. Notable issuers during this period included VISA, Ford Credit, Citibank, KKR, Caterpillar Inc., Lowe’s, and Morgan Stanley.
For further information, see Debt Capital Markets section