Stock sales show renewed confidence in economy

ByABC News
May 12, 2009, 11:21 PM

— -- Companies usually worry about generating money for investors. Now they're looking to generate it from them.

"We have willing sellers and willing buyers (of stock and debt). That's what we need," says Linda Killian of Renaissance Capital, adding that it's the first step for companies to prepare for a stronger economy.

And it's not just the lucky few enjoying the increased willingness from investors. Signs that investors are willing to pony up more cash include:

Rise in stock issuance. U.S. companies that were already public raised a monthly record $26.5 billion by selling additional stock in May so far, Dealogic says. And this year so far, financial and insurance companies have raised a record $26.7 billion from such follow-on offerings.

Opening stock market for emerging companies. DigitalGlobe, SolarWinds and OpenTable are expected to issue initial public offerings this week and next, Renaissance says.

There's no question companies have different motives for raising money. Ten banks, for instance, must raise $74.6 billion in capital following the government's stress tests of their ability to withstand a weak economy. But the timing isn't all that bad, as the banks are able to sell stock at a time when the stocks as a group have more than doubled in price since March, says Charles Crane of Scotsman Capital. "If companies can bolster their war chests after being frozen out of capital markets for months, that's a good thing," he says.