LONDON -- Showing that a pullback in 1990 was only a pause, foreign corporations have resumed their rush to the United States to sell tens of billions of dollars worth of stock and bonds to American investors.
The issuers include British biotechnology companies; Spanish and Portuguese banks; Argentine, Mexican and British phone companies; Venezuelan paper, petrochemical and metal concerns; French oil companies; Indian textile, metals and petrochemical companies, and Japanese and South Korean electronics corporations.
The renewed interest in the United States is part of a larger trend: companies, governments and supranational organizations like the World Bank are increasingly peddling big blocks of securities around the world. They are aiming in the equity markets for the highest possible prices, and in the bond markets for the lowest-possible interest rate on the longest-possible maturity.
"You want to turn over as many rocks as you can to make sure you achieve the maximum possible demand," said Robert K. Steel, a managing director at Goldman Sachs International Ltd., the American investment bank's London-based arm.
This is happening as competition for capital intensifies while banks remain stubbornly hesitant to lend. Demand for capital is growing among everyone from Eastern Europeans, who need to rebuild their economies, to Western European, Latin American and Asian governments selling state-owned companies.
In scrambling to expand their sources of supply, all naturally look to the United States, the world's largest and most sophisticated market.
Analysts blame the 1990 decline in foreign securities sales in the United States on the uncertainty generated by the Persian Gulf war and a pause in sales of state-owned companies. But in 1991, the sale of foreign shares in public and private deals doubled, to a record $9.78 billion, according to the London-based IFR Securities Data Co. Bond deals rose 48 percent, to $55.33 billion.
Based on results so far this year, investment bankers think the 1992 totals will at least match and probably exceed last year's.
What makes the United States markets so attractive? Largely, an easing of disclosure rules, low interest rates and increasingly adventuresome American investors.
"U.S. institutional and retail investors have over the past 18 months become very avid buyers of foreign equities and bonds," said Julian Summer, a managing director at London-based Merrill Lynch International Ltd. "This is a major sea change."
Merrill Lynch expects the value of foreign securities held by Americans to increase to $875 billion in the year 2000; that would be up from $275 billion in 1991 and just $120 billion in 1985.
One reason is the increase in mutual funds in the United States that invest in foreign securities. As of May, the assets of stock funds that invest largely outside the United States stood at $41.8 billion, more than twice the level at the end of 1988, and assets of global bond funds have soared to $28.5 billion from just $3 billion in 1988.
The regulatory atmosphere in the United States has become more friendly with the easing of disclosure requirements under Rule 144A, which the Securities and Exchange Commission introduced in 1990. Foreigners can now sell securities to big institutional investors, disclosing only the data required in their home markets.
For American investors, who have long been more receptive to a wider range of stocks and bonds than their foreign counterparts, the rush of foreign offerings has meant new opportunities to increase their returns -- something many have been seeking as falling interest rates have reduced their bond returns.
Investment bankers point to some interesting plays among recent foreign issues, particularly European and Latin American telephone companies, French oil companies like Total and Elf-Aquitaine and a German software company named SAP.
There has been an especially noticeable rise in the number of European companies and banks issuing debt and preferred shares, including Sweden's SKF and Electrolux, France's Banque Paribas and Britain's British Petroleum, Grand Metropolitan and British Aerospace. Many now have big U.S. operations and prefer to borrow for them in dollars.
Even foreign companies without American operations are being drawn to the United States. These borrowers, especially those without top credit ratings, have found that the cost of selling dollar-denominated debt in the United States -- that is, the interest-rate level -- is lower than in the European market, which remains unreceptive to corporate issues rated below single-A.
Borrowers can also obtain maturities of up to 30 years in the United States compared with an effective maximum of 10 years in the European market. This has become increasingly important to companies like Grand Metropolitan that are worried about the long-term availability of capital.