How Companies Are Meeting Their Financing Needs

Episode Summary

Executive Summary: Goldman Sachs’ Susie Schur said capital markets recovered far faster than expected after March 2020 because of unprecedented fiscal and Fed support, enabling companies to raise both crisis liquidity and now growth capital. She highlighted a rebound in investment-grade, high-yield, and IPO activity, uneven sector access, and lasting shifts toward virtual execution and more inclusive, flexible work.

Main Topics: Capital markets rebound and shift from crisis to offense capital (Priority: 5/5): Schur argued that after an extraordinary spring of crisis financing, companies are now increasingly raising capital to pursue growth, M&A, and balance-sheet flexibility rather than just survival. Effectiveness of Fed and fiscal support (Priority: 5/5): She credited U.S. Federal Reserve programs and broader government backing for restoring market access, widening the investor base, and preventing a deeper funding freeze. Sector-by-sector access to capital (Priority: 4/5): Access varied sharply by industry: tech, telecom, healthcare, and other growth or insulated sectors accessed markets more easily, while energy, airlines, cruise lines, gaming, and other levered cyclical sectors faced tougher conditions. IPO market revival and SPAC surge (Priority: 4/5): The conversation emphasized a strong comeback in IPO issuance starting in July, with a notable concentration in tech and healthcare and a large share of SPAC listings. Lasting capital markets changes from virtual execution (Priority: 4/5): Schur said the pandemic accelerated digital workflows, virtual roadshows, hybrid meetings, and work-from-home practices that will likely make markets more efficient long term. Attracting and developing diverse talent (Priority: 4/5): She stressed that Goldman’s performance benefits from diversity and that firms should broaden assumptions about who can succeed, creating an inclusive environment for women, Black, Latinx, LGBT, disabled, and veteran talent. Remote learning, networking, and personal connection (Priority: 3/5): Schur described how interns and new hires can build relationships and learn effectively through Zoom, FaceTime, and other tools, despite reduced in-person contact.

Key Arguments: Policy support was the critical enabler: Fed announcements quickly reopened capital markets and expanded access from top-tier borrowers to a much broader set of issuers. The market moved from emergency financing to proactive financing, with companies raising capital to prepare for growth, acquisitions, and future opportunities. Sector fundamentals and COVID exposure drive financing access more than market sentiment alone; strong-balance-sheet, high-growth businesses can raise capital more easily than cyclical or highly levered companies. The pandemic will permanently change capital markets operations by normalizing virtual roadshows, electronic document distribution, hybrid meetings, and more efficient workflows. IPO activity rebounded because risk appetite returned and private companies sought public currency before the election or as market windows reopened. Diversity is not just a moral goal but a performance advantage: broader perspectives improve firm outcomes and help attract top talent. Remote interaction can create real intimacy and accelerate learning, making relationship-building possible even outside the office.

Data Points: Investment-grade financing market activity: Heavy three-month period from mid-March to mid-June was the largest in history by almost a factor of two - Describing the surge in corporate financing after the pandemic shock and policy intervention Fed corporate credit facilities announcement date: March 23, 2020 - Point at which policy support broadened market access Goldman secular growth and stay-at-home custom equity baskets: Up 50% year-to-date - Illustrating which sectors were insulated and could access equity markets more easily GS Global Health Risk cyclicals custom equity baskets: Down 27% year-to-date and flat year-to-date respectively - Showing weaker performance among more challenged cyclicals and pandemic-sensitive sectors U.S. listed IPO volumes vs. 2019: Up 18% at $52 billion - IPO market recovery in 2020 despite pandemic conditions July 2020 IPO pricing activity: $16 billion across 35 offerings - Evidence of a sharp July rebound in IPO issuance Share of 2020 YTD IPOs priced in July: 31% - Concentration of IPO activity in one month SPAC share of July IPO offerings: 14 of 35 offerings, or 40% - Shows the prominence of SPACs in the reopening IPO market SPAC total proceeds in July: $8.8 billion - Scale of SPAC issuance in the rebound Week of July 13 IPOs: Biggest week since the start of the pandemic - Illustrates the pace of the market reopening First-half 2019 vs first-half 2020 IPO issuance: Down just 8% year over year - Context for how resilient the IPO market was even before the July surge Podcast recording date: Monday, August 3, 2020 - Timestamp for the discussion and market references

Pivotal Quotes: "“Companies are starting to take what I would call play offense capital.”" — Susie Schur: Explaining the shift from emergency liquidity raising to growth-oriented financing "“Those programs have been phenomenally successful.”" — Susie Schur: Assessing the impact of Fed support on market access and funding conditions "“We can now do an IPO completely virtually, nobody's meeting in person.”" — Susie Schur: Describing how technology and remote processes are changing capital markets execution

Implications: Capital markets are likely to stay open for strong issuers, with continued volatility for vulnerable sectors. Expect more virtual execution, faster workflows, and a lasting emphasis on diversity and flexible, remote relationship-building.