Jefferies

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Continental European Equity Issuance Volumes at Record Levels

The economic and political environment within Continental Europe continues to strengthen, presenting an extremely favorable window for Continental European issuers. The receding geopolitical risks and improving economic data is in sharp contrast to the uncertainty in the UK driven by Brexit and political change. Aggregating the 19 economies of the Euro zone, shows that GDP grew at an annualized rate of 2.3% in Q1 ’17, almost double the rate of the U.S. In addition, long term measures of business confidence are also firming, with the OECD business confidence indicators for France, Germany, Italy and Spain all rising over the past quarter. Finally, the need for institutional investors to deploy capital within Continental Europe is at recent highs, with equity fund flows extending to 27 consecutive weeks of inflows and $49 billion of net inflows year-to-date. This has set a favorable backdrop for Continental European equities with issuance (excluding the UK) totaling $102 billion, the highest year-to-date volume on record. Rights issues have driven 40% of the overall volume, the highest share of overall volume since 2009.