Finance Leaders Forum: A Conversation with Mizuho’s Moshe Tomkiewicz, Jeb Slowik and Josh Weismer

Capital Markets
Capital Markets
November 15, 2023

Commentary was provided at the Mizuho Americas Finance Leaders Forum held in NYC in September 2023.

Victor Forte, Head of Investment Grade Capital Markets & Syndicate for Mizuho Americas moderated a panel discussion with Mizuho bankers Moshe Tomkiewicz, Jeb Slowik, and Josh Weismer, who each talked about the current state of the Investment Grade Capital, Leveraged Finance, and Equity Capital Markets, respectively. Victor asked the panelists about access to capital, the impact of market volatility on investor appetite and whether they see their markets as “risk on or off” in coming months. 

Moshe Tomkiewicz on Investment Grade Capital Markets

Josh Weismer on Equity and Equity-Linked Markets

Jeb Slowik on Leveraged Finance

Raising capital in volatile markets

Market conditions over the last several months resulting from the regional banking crisis, UBS’s acquisition of Credit Suisse and ESG restrictions on investments have contributed to a challenging backdrop for capital raising but it’s still ‘risk on’ in debt and equity markets, a panel of Mizuho capital markets specialists told attendees at Mizuho’s inaugural Finance Leaders Forum in mid-September.

Each product banker provided a year-end view and laid out their expectations for the last quarter of 2023 and into 2024 citing robust demand from hedge funds, insurance companies and pension funds among the drivers of increased appetite for deal supply as rates remain elevated. Whether the Fed lowers rates or stays the course with higher rates will underpin the level of deal flow. 

“We've had a rise of about 20% in non-financial issuance (in IG bonds) this year,” said Victor Forte, Head of Investment Grade Capital Markets & Syndicate for Mizuho Americas, who led the panel discussion “Capital Raising in Volatile Markets”. “High yield is ahead by, I'm going to say it's about 40% or so plus or minus from where it was last year.”

The Fed kept interest rates steady in its most recent September meeting, at a more than 20-year high. This has left investors wondering whether it will keep rates “higher-for-longer” – a key phrase that has kept markets on tenterhooks since the central bank embarked on its rate raising spree more than a year ago to quell rising inflation. 

This new rate environment, while challenging for some corporates who were used to issuing debt at much lower rates in years prior, is a boon for investors like pension funds and insurance companies hungry for high-yielding securities.

Hedge funds are also looking to investment grade bonds as a follow on to this momentum, said Moshe Tomkiewicz, Head of Investment Grade Debt Capital Markets, who said the market has seen $90 billion of supply since Labor Day.

“I would say hedge fund demand in IG primaries is the strongest I've seen in my career,” he said. 

While the leveraged finance market has seen an uptick in deals, it’s been more of an opportunistic play, said Jeb Slowik, Head of Leveraged Finance. What’s more, private credit has stepped in incrementally to fill the void left by banks over the last year, taking about 10 to 15% of banking market share.

“You know, five years ago (private credit) was close to zero in my market,” he said. “And they've gone a little bit more mainstream.” 

Private credit will face increased competition as the syndicated loan market bounces back, though investors will engage on a deal-specific basis, Slowik added. 

Equity markets saw healthy inflows of around $20 billion “over the last month,” Josh Weismer, Head of Equity Capital Markets, told the forum attendees.  

On the day of the Finance Leaders Forum, the “VIX” - CBOE Volatility Index – a measure of implied volatility on S&P 500 options over a 30-day period – was around 13, Weismer pointed out. 

Generally, the market considers a reading below 12 to be low volatility and above 20 to be high. By early October, the VIX had risen closer to 20. 

“We’re definitely risk on,” Weismer said.

The conversation then turned to the growing converts market and the ESG outlook.

Convertibles are a viable option for those “thinking about short-term financing needs in a higher-for-longer rate environment,” Weismer said.

“Year to date, we've seen about $40 billion of converts, whereas last year we had $25 billion the entire year,” he added. 

Green bond issues have been down in the last year but ESG considerations have largely been baked into conventional investment grade bond spreads. In terms of the high-yield market, there’s some benefit to real green bonds, but the investor base for them is not large enough to make a big impact. 

Explore our insights

Center Stage
Digital Horizons
Markets Mindset
Intellectual Curiosity
Back to top