FORTUNE — Twitter is expected to publicly file its IPO registration within the next couple of weeks, meaning that it would list shares at the end of October or the beginning of November. The company’s timing couldn’t be worse.
The U.S. government is scheduled to shut down on October 1, unless enough House Republicans drop their insistence that Obamacare funding be stripped. And that’s perhaps the least significant of our nation’s legislator-made problems. Come October 17, we’ll hit our borrowing limit unless Congress agrees to raise the debt ceiling. Either or both scenarios would cause major capital market hiccups, including for companies trying to go public.
Let’s just look at the 2011 debt ceiling fight. The government was scheduled to default on its debts on August 3. Beginning two weeks earlier, the stock markets began to tumble – with the DJIA losing nearly 600 points between July 21 and August 1. Then came the so-called Budget Control Act of 2011, which would later set the stage for sequestration. S&P reacted with a sovereign credit downgrade, sending the markets into a deeper spiral – by August 10, the DJIA down more than 2,000 points from that July 21mark (21% loss).
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Not surprisingly, the IPO market went very soft. There had been 16 offerings in July 2011, but then there were just 13 offerings over the next three months combined. And in none of those months did issuance top $1 billion. By the end of September, Bloomberg reported that companies had canceled or postponed $8.9 billion of initial public offerings.
So here we are today, in the 2013 version of July 2011. Expect the whole thing is exacerbated, because our fearless leaders have double the opportunity to harm America’s economy. Yet, companies continue to hurtle toward IPO as if there are no foreseeable speed-bumps.
Here are quotes from some folks I emailed with yesterday:
- Exchange industry source: “I’ve been on the road visiting companies for 20 days straight and while I’m worried about it personally, not a single company – and I’ve seen over 30 – has even mentioned it.”
- Source close to Twitter: “Twitter is not worried at all. If the Senate passes the bill and it gets to the House, it’s over. Republicans will have to pass.”
- Silicon Valley advisor: “Those on the road last week and this were focused on getting on making their moves as soon as possible post-Labor Day, but no one seems to chatting about the debt ceiling. It feels a little like we are in our own happy bubble out here. I am stunned they’re not spooked.”
To be sure, Twitter is probably the exception. The type of company that could successfully in any condition short of a terrorist attack or natural disaster. But after waiting so long, why voluntarily time plan to price into a maelstrom? And what about the cavalier attitude from all of the non-Twitters? You know, the types of companies that were forced to delay or cancel last time around? Have we finally found the one thing that could cool off the red-hot IPO market?
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All I can think is that they view the GOP nihilism as posturing, rather than sincere policy. Or figure that cooler heads will eventually prevail, and the brink won’t look so scary the second time around. Perhaps this is emboldened by the fact that credit rating agencies have mostly held their tongues so far.
That’s all well and good. Well, until it isn’t good anymore. Courage and contingency needn’t be mutually exclusive.
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