Goldman CEO David Solomon Sees Robust Underwriting Calendar in 2019

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Goldman Sachs Group Inc. Chief Executive Officer David Solomon said he sees good prospects for underwriting this year, while downplaying concern that growth in the leveraged-loan market is a risk for big banks.

“If the market environment continues to be what we see today, I think we’ll have a relatively robust underwriting calendar for 2019,” Solomon said in an interview Thursday on Bloomberg Television from Davos, Switzerland. While the government shutdown has delayed some initial public offerings, the backlog is still healthy, he said.

Volatility weighed on capital markets during the fourth quarter, when revenue from Goldman’s underwriting business plunged 38 percent to $843 million. The firm blamed lower leveraged-finance activity and a drop in secondary equity offerings.

Banks were left with billions of risky corporate loans they struggled to sell last month. Policy makers including former Federal Reserve Chair Janet Yellen and ex-Fed governor Daniel Tarullo have raised concerns about the buildup in leveraged debt creating risks that could harm the economy.

“I’m not really looking at the big bank balance sheets and thinking about leveraged loans as a risk issue,” Solomon said.

On the economic outlook, Solomon said:

  • “There’s a possibility that as we get into the latter part of 2020 and we see continuing tightening, as the Fed continues to manage monetary policy, that we could see an economic slowdown.”
  • “Our economists are talking about 3.5 percent global growth. We’re talking about 2.25 percent to 2.4 percent growth in the U.S. If you look at just the economy itself, I think we’re doing just fine.”

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