« Exchanges at Goldman Sachs

How Companies Are Meeting Their Financing Needs

2020-08-04

Susie Scher, co-head of the Global Financing Group in Goldman Sachs' Investment Banking Division, talks about how companies are meeting their financing needs in this environment and the broader sentiment for banking activity in the second half of 2020. Additionally, Scher shares her thoughts on how to recruit and develop diverse talent, as well as advice for how junior employees can continue to grow and develop their networks while working remotely.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This is extreme the Goldman Sachs? We discuss developments currently shaping markets industries in the global economy and Jake Seaward Global, have corporate communication to the third today, I'm delighted to be doing Susie sure headed the global financing group investment, banking vision of doctors. Is about our companies are meeting their financing needs in the environment and the broader. sentiment for banking activity in the latter, half of the year was talk about recruiting diverse, How is it also serves as a co chair of the firm wide summer adversity champions, council welcomed. The problems is thanks. Jack happy to be here with you. so you help companies across all industries with their financing needs. It's been a busy busy year sitting here, midsummer. What's this debate among Clyde's in terms of the back half of the year, and how is the outward changed since March, while Jake? It has been incredible
have you told me when I left the office on or about March this t it's there. Sitting here in the first week of August, we would have had the biggest issuance years in a quarter in it aspirin grade, inequities equities reopening of the high yield market? I would have told you that, you're insane, and what happened in. What's changed. Is that We rapidly moved into a global pandemic, so global health crisis, a global economic crisis. companies realised that they needed to raise capital quickly. They need to raise a lotta cap at all, and this is really the beautiful part. governments around the world. Both the fiscal government central banks rely. They needed to provide support in underpinning to the markets so that it
bastards would be comfortable. in the securities that companies were selling because they were born stopped by both fiscal underpinning and monetary underpinning, and so that sort of the story of what happened, and so in the period of March, through Paul it may June, companies took firstly to crisis capital both from debt markets in the equity markets, in the form of loans in the form of bonds and the form, a common equity converts pipes from alternative investors in private format into public companies and that it was kind of underpinning into the market
what has changed the crushing you asked me. What's the our work really was change is that companies have taken all the liquidity needed because the virus is still out there. The economy is still quite fragile, but companies for now have taken all the capital, the creed I need it, and so what's going on in the markets today is that companies are starting to take what I'll call play off at the capitol and so in the debt markets there are some companies that are financing, for example, it isn T last week who had already fallen asked in the debt markets in a huge why they are financing to take capital for what comes next in the agri. markets and where we can talk about this in a little bit more details, we ve started to see them ideal market rebound has come just Jeanne. Maybe this is the time to create public currency for myself to set myself up
to grow abroad through emanate, and so I think that care the year, I'm cautiously optimistic that we will continue to see. Companies who want to play off ants have access to play off it. Happily the deaf equity markets and then, as the pandemic and the health crisis, the economic crisis drags on which we know it I believe it will, until we have about seen companies what access to if they need it more crisis capital and they pause therein and see what what I haven't said, the church in talking about rights. you mentioned. The extraordinary policy support both monetary and fiscal policy. The feds programmes were designed to inject liquidity into the marketplace from your valid points as its that's all, of those problems helping companies state funded through this period of crisis those programmes,
said, Norman away, successful and if that probably most critical part of the policies that impact it capital markets have been the programmes by the? U S, bad! You have you remember a prior to the March twenty third grade facilities announcement. Only highest quality and thus be great corporate virus and access to the market. Soon. Those first couple of weeks we saw the disease in the Walmart through the World BAR out, and we saw spreads gap, bow in a sharply negative feedback work, but just by announcing the corporate credit facilities business even before they were after they were literally just announced by policy makers. We saw a rapid expansion of market access to the full range of investment, great companies and then shortly followed by broad access in high yields and, in fact, even though they didn't tat be facilities available, the fallen angels, who was
although raised was eight or nine billion of security, is simply because the very sad oh and angels, need access. Bacon action, the facilities and so either. What we just talk about, that the period for MID March and June represented the heaviest three month period and invest a great financing market in history by almost a factor of two, don't think it's an understatement to say that bad policy truly enabled a very broad range of companies to build a bridge to reopen the economy and substantially divide their balance sheets soon. different industries are being treated differently by the pandemic. What industries easing have a relatively easier or more difficult time accessing capitalist environments? And what are you tribute? Those differences, too short starting with access to the equity markets in terms of easier, I think- pie, growth, company,
he's with strong balance sheets, so sectors like tat, telecom and some sectors within healthcare and consumer have been insulated from the direct impact of pandemic, so for contacts both the bullet, sex, secular growth and stay at home, custom equity, This gets her up fifty percent here today, so those women companies that can access easily accessed the equity markets them challenge credit, sir, I mean is fairly obvious, but Superbowl, lower growth, hiding word assets, so sectors like energy, particularly given under performance of oil, leopard industrialists and any company impacted directly by the pandemic, to provide a clear path given the ongoing on certain me. So the g S, global health risk sickles, hast inequity baskets her down twenty seven percent here today and then flat here, date respectively, and that's the equity markets in the bond markets.
a company within best been great. Ratings has strong access. So when you see haves and have nots, that's really The leverage finance markets, so a sub sectors with open, tell whence I'm way streaming. Services, package, buddhist walls, more insolent it and a cyclical players like insurance programmes, Me too automation, security, software out performed and then seen for the leverage market. Anybody especially companies, either Big natives export covered. This is obvious, like airlines from his lines gaining measure their attitude on it all depending on what's going on and would provide arrests and then very specific. We are not specifically did this crisis, but to any crisis companies, Viewed as over laboured or with a lot of short term majorities or less access to the markets. Even it
in sectors that may not be as impacted by the pandemic. So near autonomy. Predictions joke is especially about the future right now we're in the middle of it. You get the since it anything about capital markets is change forever, because the pandemic and what we ve learned There is a lot that will have changed forever about the capital markets and, most well revolve around the usage technology and therefore making markets more efficient. So, for example, we can now do it the owl completely virtually nobody. meeting in verse said Anne. It means we have had for virtual. Road shows me make documents we used to make available in paper virtually, I think, having better from home set ups in a more frequent usage with no stigma attached will be a big part of the capital markets, greater use of
your pc technology, including hybrid meetings, meeting made your boat to see some investors, but not all investors, and I thank them guess beneficiary will be this workflow concept so will be able to do a lot more electronically, and I think that will benefit all sectors of the market, but was still so. I think, bonds and stocks in an analog way using voices using discuss ends using what we would call it a salespeople, but I think will be able to do. A lot more efficiently and in I think people were probably spend a lot more time you don't serve their desks rather than travelling around, to talk to each other, especially during execution phase, which might be very good for the markets right. If you don't have to go around, show lunch, but you could do a zoom world show
You can do more research on the security you wanna buy. You can celebrate more security sought link. We all, I hope, will be a beneficiary from what we ve learned season. You're a couple times is that IP market is really picked up in recent weeks and in the past month, or so what kind of companies are coming to the ip market? What does it look like and how's it differ. We ve seen a huge taken, our appeals really since the start of July sore about a month into it and just for contacts comparing the first The two thousand nineteen, with the first two thousand twenty ip away when's violence. For U S listed companies was down just eight percent, you're a year, which is pretty incredible- I do think about this situation, whereas now you have listed ideal volumes are up. Eighteen percent versus two thousand nineteen at Did you buy yet, with Sixteen billion pricing in July, allow across thirty five operates so that thirty one percent of twenty twenty years,
they ideals price in July. The word in a day or two after the end of the day, is spats of the thirty five offerings fully for tee The forty percent have been spats tolling, eight point, eight billion and did costume just published a report is a thirty nine page report on spat commentary. So you can do a podcast with him. Next I wanted to that end. In addition, from a european perspective, the week of July, Thirteenth was the biggest weak for IP, as since the start of the pandemic and overall risk capital from the by side has been notable spanning. Really diverse set of institutions, including mutual funds, pension, sovereign wealth funds, longshore hedge funds and the appeal activity, as you would expect he's coming in the sectors that we talked about that have been less affected by a bit. So largely tech, german in sectors of health care, and I think
continues and just anecdotally it'll be appeals have as a debt girl. I've learned a lot about the equity markets of the past that we hear from the financing group at you can call your bag Tuesday night and state that you to do a great deal on Wednesday morning. Even if you wanted to do a debt ip, how you could call and say you want to do a debt up here to do it in a few weeks- equity, IP or take up much much law. work, and so right now we might be working on ideas for first quarter, two thousand twenty wine generally of the last couple of weeks, had many ceos and see our foes called to say how quickly
the seller aid for those that were slaves to be third quarter of two thousand and twenty will see some people come in August and for those who are slated to be first Porter, two thousand twenty one. We see some folks trying again to the market Creole action, which is pretty fascinating, so I don't think there's going to be any break for our equity capital markets to August appeals. That's it that's a different kind of summer, almost like an oxymoron. Yes they saw in additional financing or sissy play a big role in higher in overall, but especially The verse higher- and I mention the your culture that from one summer, diversity Champions Council and give a lotta sperience into space, reflect a little bit about what are the important thing we can do to attract a verse, So one of the things we ve been talking about a lot this summer- and I, like this phrase- is we ve been talking about? Avoiding thinking traps see what I said, about the business. We had a perception of what the person that we thought
somebody who could be successful looked like and that no offense Jake was a straight white, bad and well can still be phenomenally successful in investment banking. It your way through your straight your mail. I've been beneficial array of the fact that we now down. Not only can we be successful, if were women as I am, or openly guy as I am, or why or latin necks, but that have you in a diverse group of folks makes thus even greater, and I don't think it's a coincidence that were having some of our best performance ever arm with our most diverse cells. for for workforce ever so We can do to attract tourists. Individuals are small, is just make. People understand that this is a great place,
work because we believe in the wisdom of crowds and the success of the first books and think in a very expensive way about what it might take to be successful and all men and then once with higher black people live next. People El Gb, chief folks, into the firm. It is important also think expansively about what somebody might not just look. But see why, relative to what our expectation is that middle part the current for the way people so I think we need to create an environment where people come in understanding that all different types of people can succeed, and I one of the reasons I spend so much time on this, and somebody should count he laid the number of hours they spend on zoo calls this summer. The number one email I get after I have, as in called with our insurance, is like wow How did somebody like you, you know,
succeed in this business and make it a Goldman Sachs and it actually has nothing to do with me. It has to do with the environment we ve created here we are environment that seeks p with unique experience and unique perspectives, and now really what you know: conclusion is all about. So I don't think it's that much of a stretch or comment become the employer of choice for people from all different from black people when its people algae bt people women and people with disabilities veterans, because daddy the environment. We have nurtured folks like that for a long time, just not enough of them
so you mention the zoom cause with intern summer. Interns working interns do they're all everyone's workin remotely all our new hires where their experience tyres summer and turns our new, analyse and associate classes. What can they do to build their networks and learn, despite not being in the office? And what have you seen the experience so far? So I think it's important to connect with as many people as possible, and I asked we really love the live connection, and Zoo MRS causes? We get to my right now and so a resume or even face time, and so we for interns thing to find a new way to interact, so we tend to default just calling people but there's something seeing each other as humans, not only has not only do we. think we needed it, but it's also become, I think, It's a man in a way that it wasn't before and so
It should understand that and make that happen so you have a body sign, mentor, assign coach don't be afraid to get on the phone I like seeing somebody actually in their home environment. I like that Jake, even though this is a part caused you- and I are sitting here and zoom, I, like you a t shirt. I hope you like that. I wore my fresh white tee shirts. You had no idea that I wore my hearing ponytail, but now You do maybe my jihad, zoo bombs are cow, and so the insurance don't be afraid to creep personal connect. An intimacy with it, people that your meeting in turn the learning that'll com from creating because guess what one should establish your zoom intimacy with your endless buddy in healthcare and us banking. When you want
paying her in two weeks, because you are having a hard time building your lot. All Europe tat Stir, which is a great didn't gratification way of connecting somebody and you'll say: hey Susie, you, we harbour the phone we face time well trying to build this model and it'll be like you're sitting there side by side. find new ways to connect using the Tec. Ology you have it be as good as it is one we're all in the office together is that's like that's the Since the Goldman Sachs, that's the best They interact, but we can A second best waited interact that I would make argument is pretty darn good,
It certainly is broken down that sort of artificial distinction between our work self and are put himself because inevitably were low. But above and it's quite visible, these is so I mean the pandemic. Zawoiski been awful for a lot of people and still is in the economic and health impacts are dramatic, but is there something if you found a silver lining amidst this particular time and clothes without optimistic note, yet For me, the silver lining is two things: one work and one family. The work thing I just mentioned: I've been other friends Twenty three years on close to a lot of people, I've gotten close to more people in a really cool waited always door, but his kids dames. I certainly You know where they live, and so I really do feel- and I would know what they're going to. something earth shattering in their lives. But I might I've known just how they were feeling- and I didn't just talking about some of the stuff- that's going on in the world, whether that's the pending
MAC or systemic racism. In like an inn, that way that's been a huge benefit and then your for me I'm for kids, twenty, eighteen, eleven and AIDS and I've loved all the time I haven't a man like ashamed to say that I've hand more dinners with my four kids in the Past five months than I think I had opened like the three week like generous, I should say it was the other on the weekend and I think had in the previous twenty years, and I love wandering down to the kitchen to veto forged. refrigerator and light you know seeing them in the middle of the day and taught them about what I am be going on and that's been like. That's been like we'll what was to be a more present Para and I take coming out of this. Like that's one of my own personal assignments- is
stay as president as I can be because, despite its working more harder than ever worked in my life was since I was young might naturally, I kids, as has been amazing solely with that just the same as the father for I've spent more time. Watching them during the day I used to see them in these low snippets in the morning little snippets evening. I need to get it for since their lot. So soon thanks so much for joining us today. It is my pleasure, thank you. Jake is great to catch up. That concludes episode of exchanges of omens acts thanks for listening and if you enjoy the show, we hope you subscribe and Apple pie, gas, liberating or comment until later this week for a weekly market they were leaders passed from providing, could take on the latest in markets, this podcast version. Put it on Monday, modest third in the year, two thousand and twenty thanks for this.
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Transcript generated on 2021-07-03.