Day after day, there are more voices warning of a recession in 2023, an idea Société Générale has ruled out. Although there are many doubts about the war in Ukraine and the impact of raising interest rates, the French entity is optimistic and rules out a recession in both the US and the Eurozone. Instead, what they expect is a prolonged period of stagflation. That is, low growth with a high price level. In this context, Jaime Sanz, global head of sovereign ratings advisory, has left the door open for central banks to soften their message now that inflation is starting to show signs of moderating. Similarly, it considers that in an environment where inflation is driven by supply issues, monetary policy tools are not best suited to restore price stability.
With his focus on the upcoming monetary policy meetings, Sanz expects at least two consecutive increases of 50 basis points in the eurozone and postpones the quarter-point increase to the second half of the year. According to their predictions, interest rates in the eurozone will end up at 3.75-4%. In other words, given the investor discount, prices are expected to hit a ceiling this year.
In an environment where monetary normalization continues to run its course, Fernando García, Director of Capital Markets at Société Générale, hopes that the euphoria experienced at the beginning of the year will subside and, as happened in 2022, corporate issuers will continue to benefit from the huge levels of liquidity that have accumulated in the most difficult moments of the pandemic. . In 2022, non-financial companies issued 7,775 million, which is 63% less than the previous year. He stresses that “unless there is a merger or acquisition, it is not expected that investments will be deployed by companies. In this scenario, it is expected that issue volumes higher than those of 2022 will be exercised, but not exceptionally high.”
Where there is more activity between the two financial exporters. “It’s a very positive year from an issuance standpoint and from an investor standpoint,” highlights Carlos Cortizo, Head of Capital Markets for Financial Institutions at the bank. Although the early part of the year has proven promising with spreads narrowing to a range of 40-45 bps for Tier 2 issues and 150 bps in the case of Potential Convertible Bonds (Coconut), the expert believes it continues to have a lot of inconvenience. certainty. In 2022, financial issuers placed 26,800 million, which is 37% less than the previous year.
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