Capital Markets

Best of 2006: Capital Markets

Venerable institutions were called into question this year, while new ideas permeated the LBO, M&A, and debt-raising markets. Here is our selection...
CFO StaffDecember 19, 2006

Hoping to take a fresh look at the capital markets in the new year? Take a quick look back at the newsmaking stories of 2006 and then track the trend forward into 2007. Indeed, in 2006, two stalwart institutions of the capital markets—credit ratings agencies and stock buyback programs were both put to the test.

Meanwhile, also warned finance executives about reversible warrants, told a tale of revolt among LBO investors, speculated about just how much a backdated option is worth, and reported on why the Fed thought hedge funds got too much credit. Here’s how those headline grabbing stories turned out.

(To see all of our capital markets coverage, check out the capital markets section of our archive).

Bush Signs Rating Agency Reform Bill

The new law, according to one lawmaker, addresses an “industry that was beset by conflicts of interest and a lack of competition.”

How Sarbox Can Cure the Ratings Agencies

The Senate Banking Committee hears a call for a “simple, bright-line rule” to prevent credit raters from using their clout to gainconsulting business.

Are Buybacks Financial Coverups? Some stock buybacks can conceal a company’s true economic condition while boosting executive compensation.

Bondholder Backlash
LBO debtholders are getting tougher about protecting their interests.

Fed: Hedge Funds Get Too Much Credit
In a sign of growing concern, the president of the New York Federal Reserve calls on banks to tighten up their lending to hedge funds.

This Way to the Mezzanine
New instruments called “reversible warrants” enable fast-growing issuers to take back equity rights forfeited in financing, provided that the issuer hits certain performance milestones.

What’s a Backdated Stock Option Worth?
Backdated stock options aren’t as valuable as you might think.

If You Love a Company, Set It Free?
The SEC may loosen deregistration requirements for foreign companies as a way to attract more overseas issuers. But the move could backfire.

A Hard Shell
Managers of special purpose acquisition companies, or SPACs, are on the hunt for merger targets.

Private Equity Firms Chasing Small-Caps
Of $76 billion in high-yield debt issued so far this year, $22 billion financed mergers and acquisitions, a trend that is likely to continue as small company IPOs take a back seat to private equity purchases.