Credit Suisse Group AG’s Asia head, Eric Varvel, said companies in the region are boosting reliance on capital markets for growth rather than syndicated loans.
“The amount of equity in the capital markets sold year-to-date has pretty much outstripped anything we have seen in the past,” Varvel, who is also co-chief executive officer of the investment bank, said in an interview with Bloomberg Television’s Susan Li today. High-yield bond sales have also climbed to a record as the non-investment grade bond market “has really developed in a very nice way,” he said.
An increase in investor confidence as the global economy recovers has pushed up stock benchmarks from the U.S. to Japan, luring companies to capital markets. Equity offerings in the Asia-Pacific region have reached $62.2 billion this year, surpassing North America’s $56.2 billion and Europe’s $39.8 billion, according to data compiled by Bloomberg.
Growth in Asia has resulted in a pick up in mergers and acquisitions, as well as fund flows into wealth management boosting banks, according to Varvel.
“The amount of net new assets coming into the investment bank in Asia outstrips anything else we are seeing around the world,” Varvel said.
While investor confidence has helped lift sentiment, Varvel said there’s some concern over credit bubbles and an end to the credit market rally.