Wall Street digests record fundraising haul as AI race intensifies

{"text":[[{"start":11.5,"text":"US investors are showing a voracious appetite to fund the AI race and put cash to work, agreeing to dole out more than $100bn in the span of a few days, even as anxieties about global growth and the Iran war loom in the background."}],[{"start":26.95,"text":"The $75bn initial public offering of SpaceX — the largest flotation of all time — and $35bn debt financing for Anthropic point to an investor willingness to absorb a torrent of supply. Bankers are in the final stages of cobbling together more than $40bn of debt for Paramount to pay for its takeover of Warner Bros Discovery, with their equity capital markets colleagues turning their attention to the looming IPOs of Anthropic and OpenAI."}],[{"start":54.45,"text":"The deluge of debt and equity issuance shows investors are moving cash off the sidelines and looking past surging inflation that could ultimately weigh on economic activity and prompt central bank policymakers to lift interest rates. "}],[{"start":69.15,"text":"Kristina Hooper, chief market strategist at Man Group, said: “There is an incredible combination in markets of Fomo [fear of missing out] and fear. Fomo most weeks, including this week, is winning out.”"}],[{"start":82.85000000000001,"text":"“Geopolitics doesn’t matter to markets until it’s all that matters to markets. We’re still in the first phase. Investors are thinking about big gains and the short term. The long term is not on investors’ minds today,” she added."}],[{"start":96.7,"text":"For now, much of the fundraising has been concentrated in technology companies, including mammoth stock offerings by the likes of Google’s owner Alphabet. Other groups, such as Meta, are also weighing equity sales to fund their AI spending plans."}],[{"start":111.35000000000001,"text":"That, for many investors, has drawn comparisons to the dotcom boom and bust. It also recalls the immediate aftermath of the pandemic when retail investors were gripped with euphoria and big money managers pumped stocks to untenable valuations."}],[{"start":127.45000000000002,"text":"But others see capital markets finally hitting full throttle after a year in which bursts of activity were quelled by market volatility induced by the Trump administration. They are waiting to see if the debt and equity binge broadens beyond investments tied to AI."}],[{"start":144.9,"text":"“Investors are looking to dive in, but it’s been pretty concentrated,” Kevin Foley, JPMorgan Chase’s co-head of global investment banking, said. “Activity levels are very strong. We continue to advocate for our clients to get out there and get deals done. The world can change quickly and there are still risks hanging in the balance.”"}],[{"start":164.55,"text":"Companies have raised roughly $4.7tn across global equity, debt and bank loan markets this year, a record pace, according to data provider LSEG. That figure, up 7 per cent on last year, does not include the spurt of activity in investment-grade private credit markets, which are increasingly being tapped to finance data centres, chips and power plants feeding the AI boom. That included a $35bn debt package cobbled together by Apollo and Blackstone this week for Anthropic."}],[{"start":197.75,"text":"Blackstone president Jon Gray said the flotations of SpaceX, Anthropic and OpenAI signalled that the IPO market had “really found its footing”. He added that Blackstone, the world’s largest private investment group, had listed three companies this year and hoped plans to float a further seven would go ahead."}],[{"start":215.95,"text":"Dealmakers are waiting to see if the activity around AI and the zeal to finance its growth spreads to other corners of markets. They hope it can help break a logjam in the private equity industry, given leveraged buyout shops are struggling to exit nearly $4tn of ageing investments."}],[{"start":232.64999999999998,"text":"Jim Bianco, president of Bianco Research, said: “There is unlimited investor appetite and unlimited financing for companies in the AI space, but outside of that, companies are kind of treading water.”"}],[{"start":null,"text":"

"}],[{"start":245.2,"text":"Debt markets have rallied over the past two months as the US economy has shown resilience in the face of rising inflation and the Iran war. Big investors have been willing to finance mammoth leveraged buyouts, including the record-setting $55bn take-private of Electronic Arts by a Saudi Arabia-backed consortium assembled by Jared Kushner and Silver Lake."}],[{"start":268.95,"text":"That appetite will be tested again in the coming weeks as bankers look to launch the marquee debt package to fund Paramount’s $111bn acquisition of WBD, which includes at least $30bn in investment-grade debt and more than $10bn of high-yield bonds, according to people familiar with the deal."}],[{"start":287,"text":"Investors said they were uncertain when the torrent of equity and debt issuance would begin to satiate appetite, given the near-record $7.9tn stocked away in money market funds."}],[{"start":298.05,"text":"Charles Lemonides, founder of hedge fund ValueWorks, said the activity reminded him of the late 1920s and 1990s, when a wave of innovation led to speculative stocks and large-scale financings. "}],[{"start":311.90000000000003,"text":"“On the way up, companies clamoured for capital and investors threw capital at them, because it was a gold rush and everyone wanted in,” he added. But each instance resulted in “major bull markets that ended up very badly”. "}],[{"start":326.65000000000003,"text":"Analysts have been pointing to a shift in one metric that has often signalled overeagerness in the market. Over the past two decades, US companies have largely retired more shares of publicly traded companies through buybacks and mergers than they have added through IPOs and equity sales. This summer’s three blockbuster IPOs could push the market in the other direction."}],[{"start":349.85,"text":"Research from Goldman Sachs suggests net equity supply in 2026 could be flat after having been in negative territory since 2003. "}],[{"start":360.3,"text":"“This is late-cycle behaviour,” said George Pearkes, macro strategist at Bespoke Investment Group. “What happens next for the stock market? From that perspective it is a pretty negative indicator.”"}],[{"start":380.3,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781417189_6269.mp3"}