Investors losing interest in rights issues, research suggests
As markets prepare for another wave of rights issues, research by UBS analysts indicates that investors might be tiring of such cash calls. While stocks of companies that offered first-quarter issues have experienced stellar gains, those issued after April are not doing nearly as well. UBS analyst Daniel Stillit said reasons for the situation include lower-quality issuers and "an element of deal fatigue." Financial Times (tiered subscription model) (13 Aug.)
Daniel Stillit, analyst at UBS, said there were three reasons for this: a higher level of "non-pre-emptive" issues where shareholders are not offered the right to buy shares in proportion to their existing holdings; lower quality issuers coming to the market; and "an element of deal fatigue".
A further flood of equity raisings are expected this year as companies continue to shore up their finances by taking advantage of higher share prices.