Capital Markets Deep Dive March 20, 2018
REUTERS / Firstname Lastname
REUTERS / David Mdzinarishvili
Capital Markets Deep Dive | #DealTrends
Capital Markets Deep Dive | #DealTrends
Matthew Toole is the Director of Deals Intelligence within Thomson Reuters Investing and Advisory Division and is responsible for communicating broad M&A, capital markets, private equity and venture capital industry trends through regular research reports and the financial media. Matthew’s research has been featured in various global financial publications including The New York Times and the Financial Times and he has appeared on CNBC’s Worldwide Exchange and Squawk Box and The Nightly Business Report.
Anthony Hughes is Assistant Editor for International Financing Review with primary responsibility for overseeing equity capital markets coverage, including publication of the IFR US ECM Briefing. In this capacity, Mr. Hughes specializes in coverage of TMT, Industrials and Financials. He has had a long career in business journalism, starting in Australia as Investment Editor of the Sydney Morning Herald as well author of a daily stock market column for the Australian Financial Review. Prior to joining IFR in 2011, Mr. Hughes worked as AFR’s New York correspondent. He has also co-authored two books on stock market investing in Australia. Anthony is a CFA charterholder.
Davide Scigliuzzo is an Assistant Editor at IFR covering debt markets with a focus on leveraged finance. He has written about financings for large M&A deals and leveraged buyouts as well as broader trends impacting the new issue market. Prior to his current role, Davide worked as a reporter for IFR in New York and London covering debt capital markets in developed and emerging markets. Davide earned his Bachelor’s degree in Economics and Social Sciences from Bocconi University in Milan and has Master of Arts in International Relations and International Economics from the Johns Hopkins University School of Advanced International Studies (SAIS).
Capital Markets Deep Dive | #DealTrends
Capital Markets Deep Dive
Led by a resurgence of M&A activity, High Yield and IPO issuance, global investment banking fees surpassed $100 billion for the second time since our records began in 2000 and set an all-time record. Capital Markets fees account for nearly three-quarters of all IB fees over the past five years.
28%
28%
22%
22%
Investment BankingRevenue by Productsince 2013
Mergers & Acquisitions Debt Capital Markets
Equity Capital Markets Syndicated Loans
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
2013 2014 2015 2016 2017
Regional IB Revenues
Americas Europe Asia Pacific
$0
$5
$10
$15
$20
$25
$30
2013 2014 2015 2016 2017
M&A DCM ECM LOANS
Capital Markets Deep Dive | #DealTrends
Capital Markets Running at Record Highs in 2017
The number of global capital markets offerings hit an all-time record during full year 2017, topping 25,000 transactions for the second consecutive year. ECM activity has been more sensitive to macro headlines during the 10 years since the financial crisis, while the low global interest-rate environment has pushed global DCM issuance to over $7 trillion for two consecutive years.
$0
$200
$400
$600
$800
$1,000
$1,200
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
199
819
99
200
020
01
200
220
03
200
420
05
200
620
07
200
820
09
201
020
11
201
220
13
201
420
15
201
620
17
DCM ($bil) (Left Axis) ECM ($bil) (Right Axis)
0
5,000
10,000
15,000
20,000
25,000
30,000
198
0
198
1
198
2
198
3
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
Number of Global ECM Offerings Number of Global DCM Offerings
Capital Markets Deep Dive | #DealTrends
Global Equity Capital Markets activity falls 6% compared to 2017 levels
$0
$50
$100
$150
$200
$250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global IPO ($bil) Global Follow-Ons ($bil) Global Convertibles ($bil)
*year-to-date for all time periods
Global Initial Public Offerings hit three-year high, raising $30.7 billion, up 11% from a year ago
0
50
100
150
200
250
300
350
400
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global IPO Proceeds ($bil) Number of Offerings
Capital Markets Deep Dive | #DealTrends
Capital Markets Deep Dive | #DealTrends
Healthcare listings lead 2018 offerings with 24% of total proceeds; Industrials lead by number of offerings so far this year
5
10
15
20
25
30
35
40
45
$0
$1
$2
$3
$4
$5
$6
$7
$8
Healthcare Real Estate Industrials HighTechnology
ConsumerProducts
Financials Energy andPower
Retail ConsumerStaples
Materials Media Telecom
IPO Proceeds ($bil) Number of Offerings
Top Global Initial Public Offerings: First Quarter 2018
Capital Markets Deep Dive | #DealTrends
$3
$3
$3
$4
$5
$5
$6
$7
$20
$32
$0 $10 $20 $30 $40
National Stock Exchange
Bolsa Mexicana de Valores
Shenzhen ChiNext
London
ShenzhenSME
Shanghai
Hong Kong
Nasdaq
Frankfurt
New York
2018YTD IPO Proceeds ($bil)
Global Block Trades account for 40% of follow-on activity over the past three years this year, down from 52% during year-to-date 2015
0%
10%
20%
30%
40%
50%
60%
70%
$0
$50
$100
$150
$200
$250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global Block Trades ($bil) Non-Block Trade Follow Ons ($bil) Block Trades a % of Total
Capital Markets Deep Dive | #DealTrends
*year-to-date for all time periods
Capital Markets Deep Dive | #DealTrends
Private equity fee pool across capital markets shifts to exits and portfolio company financing activity a decade after the buyout boom
$0
$2
$4
$6
$8
$10
$12
$14
$16
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Acquisition Financings Buyouts / Investments Capital Raisings / Acq of Sponsor Exits Portfolio Company
Global High Yield offerings decline 30% by proceeds and 27% by number of new offerings
0
50
100
150
200
250
$0
$20
$40
$60
$80
$100
$120
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global High Yield Corporate Debt ($bil) Number of Offerings
Capital Markets Deep Dive | #DealTrends
*year-to-date for all time periods
High Yield bonds accounted for 16% of overall US leveraged finance in 2017 as lending boomed, lowest percentage since the financial crisis
0%
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40%
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$1,000
$1,200
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$1,600
$1,800
$2,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
US High Yield Bonds ($bil) US Leveraged Loans ($bil) Bonds as % of Leveraged Finance
Capital Markets Deep Dive | #DealTrends
Top Global High Yield Bonds: First Quarter 2018
Capital Markets Deep Dive | #DealTrends
$1
$3
$8
$9
$9
$11
$13
$14
$0 $5 $10 $15
CCC
CCC+
B-
BB+
BB
BB-
B
B+
S&P Ratings ($bil)
Global Investment Grade bond offerings fall 9% compared to year-to-date 2017; US marketplace offerings decline 26% compared to a year ago
0
500
1,000
1,500
2,000
2,500
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global Investment Grade Corporate Debt ($bil) Number of Offerings
Capital Markets Deep Dive | #DealTrends
*year-to-date for all time periods
Top Global Investment Grade Bonds: First Quarter 2018
Capital Markets Deep Dive | #DealTrends
121
128129
136
147
126
106
117
109106104
89
96
0
20
40
60
80
100
120
140
160
2015 2016 2017 2018
Avg. US Investment Grade Spreads (BPS)
Corporate bond issuers have been taking advantage of the low interest rate environment to boost cash, fund M&A and buybacks
Capital Markets Deep Dive | #DealTrends
1,000
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3,000
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6,000
7,000
8,000
$0
$500
$1,000
$1,500
$2,000
$2,500
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Non-Financial Corporate Bonds ($bil) Number of Offerings
*proceeds in billions
Capital Markets Deep Dive | #DealTrends
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