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European LevFin Wrap — Conferences galore, Paymentsense prospers
Ryan Daniel
+Alessandro Albano
•3 min read
We’re deep in the summer lull for European levfin, but don't despair as it won't be too long before the action picks up. Expect more details on a burgeoning pipeline from 9fin in the coming weeks.
In the meantime, all eyes are on Fed chair Jerome Powell whose Jackson Hole speech on Friday afternoon is expected to focus on the seemingly never-ending fight against inflation (at this point, it’s definitely felt like a 12-round slog).
The takeaway will most likely be “higher for longer”, as opposed to “mission accomplished”.
A peak for rates?
The key point remains how long the Fed will hold rates at the 5.25-5.5% level; traders are now pricing the first cut in May — providing some support to sentiment.
“Inflation is coming off which gives investors a lot more comfort. People are just looking for a pretty stable window for when they participate in deals, not necessarily huge upside straight away,” said a banker.
On that note, this week we asked whether September could spark a high yield resurgence following the preference for loans versus bonds in 2023. Investors and issuers are gaining confidence that global central banks are nearly done with hikes.
European PMIs for July painted a picture of economic frailty — PMI for the Euro Area is at its lowest since November 2020, even if inflation is more than double the ECB’s target. The composite index dropped to 47 from 48.6 in July and services tumbling to a 30-month low (48.3).
Investors have become more sceptical that the ECB will keep hiking rates, with just a 32.5% chance of a September hike priced in at the time of writing. Expect Christine Lagarde’s remarks at Jackson Hole to be closely followed too.
As mentioned in this week’s edition of Macro Prophet, BRICs 2023 also kicked off. The developing nations, whose economies account for nearly 31.5% of global GDP, accelerated moves towards the de-dollarisation of international trade.
Shifting from petroleum to payments, Paymentsense gets top billing in this week’s edition of the Earnings Digest as it reported stellar numbers (revenues jumped to £74m — a 44% rise from Q1 23 with transaction revenues dominating the revenue mix at 79%). Positive news from the sector was particularly comforting for investors after the recent fallout from Adyen — especially those reading across to the upcoming Worldpay LBO.
