Posted by: Ben Steverman on May 15, 2009
Billions of new shares have flooded the market this month. Data from Thomson Reuters today shows almost as much equity has been issued in the last two weeks as in the first four months of the year.
In May, companies have raised $35.3 billion by issuing new shares, compared to $36.7 billion from January to April.
Some of the equity raises were required by the results of the federal government stress tests of top banks. Wells Fargo’s (WFC) $8.6 billion raise fits in this category. It’s the largest deal of the past two weeks, Thomson Reuters says.
But, as I noted a few days ago, not all the equity-raising is government-prompted or even related to the financial sector. Many corporations seem to be seizing the opportunity provided by the recent stock market rally, even if such equity raises dilute the stakes of current shareholders.
This flurry of activity may be short-lived. But, for now, it’s keeping Wall Street’s investment bankers busy and providing needed revenue to their troubled employers. So far this month, Thomson Reuters estimates banks have collected $1 billion in fees from U.S. equity capital markets activity.