Capital Markets
US Capital Markets Face Uncertainty Entering 2019, With Volatility Likely to Continue
Performance in the U.S. capital markets was mixed in 2018, with the equity new issuance market showing strength through most of the year and debt issuance markets softening. In 2019, the U.S. economy is forecasted to continue to grow, albeit at a slower pace, but ongoing concerns over interest rates, domestic and geopolitical events, trade and the decelerated pace of global economic growth could cause further market volatility.
SEC Continues Steady Progress With Regulatory, Enforcement Goals
The SEC's regulatory and enforcement goals remain largely unchanged: a continued focus on protecting Main Street investors, streamlining regulations and encouraging capital formation.
New UK IPO Rules Encourage Independent Research, Address Perceived Conflicts of Interest
New IPO rules in the United Kingdom are aimed at ensuring the availability of information to the market earlier in the IPO process and remedying perceived conflicts of interest by giving unconnected analysts an opportunity to provide independent research.
New HKEx Rules Spur Bumper Year in Hong Kong Capital Markets, but Lasting Impact Remains Unclear
The Hong Kong Stock Exchange’s updated rules now permit the listing of companies with dual-class share structures and pre-revenue biotech companies, and facilitate the secondary listing in Hong Kong of Chinese companies with an existing listing on another stock exchange. But whether the new rules will lead to a long-term increase in the competitiveness of Hong Kong as a capital-raising venue remains to be seen.
Recent Trends in Renewable Energy
The sustainable features of well-structured renewable generation assets with contracted output, low operating costs, and predictable revenue and cost streams remain attractive in the market.
Corporate Restructuring
Second Circuit Adopts Secured Creditor Cramdown Standard Based on Market Efficiency
In In re MPM, the Second Circuit settled the question concerning the applicable cramdown interest rate methodology but left unresolved a critical element: What constitutes an “efficient market”? A close reading of the decision and the precedent upon which it relied reveals that a practical, transaction-based approach should be used in assessing market efficiency.
M&A/Governance
2019 US and Global M&A Outlook: Despite Mounting Headwinds, Potential Remains for New Year
Deal activity remained resilient in 2018, facilitated by relatively stable equity markets and readily available financing that prevailed for a significant portion of the year. A number of factors suggest significant activity will continue this year, so long as there is no meaningful deterioration in fundamental economic conditions or substantial disruption of access to financing.
Latin America Trend to Watch: Representations and Warranties Insurance
As with other novel legal and financial risk allocation structures and solutions that have been introduced in the region, representations and warranties insurance made its way into Latin America after first taking root elsewhere. The use of such policies is expected to continue to rise in the coming year, especially in Latin America's most complex, cutting-edge transactions.
US and EU Antitrust Enforcers Remain Active and Aggressive, With Some New Wrinkles
Antitrust enforcement agencies in the U.S. and Europe were busy in 2018. In the U.S., both the DOJ and FTC continued to scrutinize horizontal transactions in concentrated industries in which the merging parties appear to be close competitors. And despite coming changes to the leadership, the European Commission should remain active in merger and antitrust reviews, and will continue to explore new theories of potential harm.
US Corporate Governance: Turning Up the Heat
Companies and boards should expect investors in the new year to ask questions about companies' business strategies and governance with greater frequency and urgency. Lackluster responses are likely to be met with increased demands for change — in strategy, management or even board composition.
Trending Topics in Executive Compensation
In 2018, various executive compensation issues made headlines, including director compensation litigation, the impact of the Tax Cuts and Jobs Act on performance-based compensation, how the #MeToo movement is shaping policies and compensation arrangements, persisting gender pay disparity issues and SEC enforcement actions on executive perquisite disclosure.