NEW YORK — Stocks are shaky; credit is tight; the economy may be tipping into a recession. Not the best of times to be going to the markets for what could be the largest initial public offering in U.S. history.
That’s the gamble Visa is taking as it gave details Monday about an IPO that could raise nearly $19 billion: If it works, it could be an encouraging sign to the stock markets and may help loosen the credit knot.
Visa’s IPO will have little direct effect on cardholders, but the banks that issue Visa cards are expected to see a windfall of more than $10 billion, which might keep them from pulling back credit lines further and pushing rates higher.
“That’s a good thing for the banks and a good thing for consumers. It might help ease the credit crisis a bit,” said Ben Woolsey, marketing director at the card-information website .
Banks have suffered huge losses tied to defaults on subprime housing loans and are gearing up for more as consumer credit deteriorates.
JPMorgan Chase & Co. — with a 23 percent stake in Visa — stands to gain the most. The more cash-strapped Citigroup Inc. and Bank of America Corp. also are Visa stockholders.
Visa said Monday in a Securities and Exchange Commission filing it will offer 406 million shares at $37 to $42 each, following its rival MasterCard in shifting from being a privately held interest to a publicly traded company.
Demand for IPOs has been incredibly weak recently, reflecting nervousness among investors about placing bets in untested waters. Last year at this time, IPO returns were outperforming the broader stock market, but now they’re underperforming.
