A Flurry of New Equity in May

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.

Reader Comments

StableCitizen

May 19, 2009 11:07 AM

It's a bear market with bullish optimism. Traders are running on empty and fear. It will level out and sanity will return someday.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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