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LBO REVERSALS, OTHER FACTORS INCREASING NEED FOR EQUITIES ISSUANCE, SIA SAYS; CORPORATE DEBT REFINANCING ALSO RISE

LBO REVERSALS, OTHER FACTORS INCREASING NEED FOR EQUITIES ISSUANCE,
 SIA SAYS; CORPORATE DEBT REFINANCING ALSO RISE
 /ADVANCE/NEW YORK, May 20 /PRNewswire/ -- Reversal of corporate leveraged buyouts (LBOs) of the 1980s and other financings stressing debt is increasing the need for equity issuance, according to a Securities Industry Association report issued Wednesday.
 Moreover, since an estimated $550 billion of equity was retired in the 1984-1990 period as a result of LBOs and other activities, there is a "huge potential" for some of those funds to return to the marketplace through purchase of equity offerings, Jeffrey M. Schaefer, senior vice president, research, said in the current Investor Activity Report (IAR).
 A different factor working to increase debt issuances is detectable in the corporate bond area, where, excluding asset-backed securities, companies are seeking to raise new funds, or replace existing debt, at what they see as reasonable or lower costs, Schaefer said.
 Initial Public Equities Offerings Set Record in Quarter
 Initial public offerings (IPO) of equities in the first quarter, excluding closed-end funds, reached a record $8 billion, surpassing the previous peak $7.1 billion in the final 1991 quarter, according to data collected by Grace Toto, research associate.
 Further, the amount of funds raised by IPOs in the first 1992 quarter already is about half the near-record $16.5 billion raised in all 1991, Schaefer and Toto said. The record was $18.1 billion in 1986.
 Many companies in the first 1992 quarter continued the 1991 pattern of changing their balance sheet components to more equity and less debt, Schaefer noted.
 Overall, corporations issued $29.1 billion of common and preferred stock in the first quarter, slightly less than the record $29.5 billion issued in the final 1991 quarter, they said.
 If the first quarter's pace continues for all 1992, equity offerings will "easily outpace last year's record $76 billion" or an average $19 billion quarterly, Schaefer and Toto said.
 First Quarter Debt Issuance Follows 1991 Pattern
 Examining corporate debt developments, Schaefer said information from Securities Data Co. suggests in the first quarter about one-quarter of the corporate debt issuance resulted from refinancing at lower interest rates.
 That pattern is in line with SIA estimates showing slightly more than 20 percent of corporate debt issuance in 1991 resulted from companies seeking funds at rates below their existing debt, Schaefer and Toto said.
 In the first 1992 quarter, corporate debt issuance, including asset- backed securities, averaged $190 billion, compared with $135.5 billion in the fourth 1991 quarter and a $127 billion quarterly average in 1991, they said.
 -0- 5/19/92/1830
 /CONTACT: Art Samansky or Karen San Antonio of the Securities Industry Association, 212-608-1500/ CO: Securities Industry Association ST: New York IN: FIN SU: ECO


PS-SB -- NY082 -- 1937 05/19/92 14:55 EDT
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Date:May 19, 1992
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