Are investors’ decisions over risk and return becoming more rational? To what extent do the market’s fears over headline risk, as opposed to credit, determine what advice you give to clients?
Miles Millard, European head of debt capital markets, Deutsche Bank
Investors have built up significant pools of liquidity over the last six months that they are now putting to work as the headline risks are easing and spreads have stabilized at levels that offer value.
Jean-François Mazaud, deputy head of capital raising and financing at SG
Investors’ decisions may have become more rational, although we are of the opinion that they are not at all the only parties responsible for the irrationality of the market in H1 2007. Headline risk is clearly important, as well as the credit or equity story for them today. Access to liquidity is also more and more scrutinized.
Roberto Isolani, joint head of global capital markets at UBS
Yes, I think they are. If the level of oversubscription that we have seen recently is anything to go by, the power is slowly shifting back to the issuers. Investors are doing a lot more of their own sector and credit work. The European market has become much more sector-focused and in some sectors (eg home building) there is still no price attractive enough to allow certain deals (eg 10-year and longer in size).