Sunday, May 14, 2017
Spotify was one of the most eagerly awaited IPOs of this year, but it appears that the company may bypass the IPO market entirely. Recently, sources said that Spotify would be the first major company to carry out a direct listing on the NYSE. In a traditional IPO, the company sells stock to investors through investment banks. The company receives the funds raised, less the underwriter's commission. In a direct listing, the exchange lists the stock, allowing employees to buy and sell shares on the market. No new shares are created and no funds are raised by the company.
Wednesday, May 3, 2017
In 1977, 30-year Treasury bonds first started being regularly issued. The issuance of these bonds was discontinued in 2001, then reintroduced in 2006. Although longer maturity Treasury bonds have been issued, for example, the 50-year bonds used to finance the Panama Canal, for about 40 years, 30-year bonds have been the longest term bonds issued by the U.S. government. With historically low interest rates, several countries have chosen to go the really long-term route. For example, Ireland, Belgium and Mexico have issued 100-year bonds, and Austria has issued 70-year debt. Recently, Steve Mnuchin, the United States Secretary of the Treasury, indicated that the Treasury was considering the issuance of 50-year Treasury bonds to lock in long-term interest rates. Opponents argue that the liquidity in the 50-year maturity market is not sufficient to support regular auctions for these bonds. Finding the necessary demand needed because of low liquidity could prove costly. Only time will tell if the U.S. Treasury decides to issue 50-year maturity bonds.