Thomson Reuters Releases Third Quarter 2009 Global Investment Banking Reviews

M&A down 38% YTD but record corporate debt and equity offerings brighten outlook

London/New York – Thomson Reuters has released the final third quarter 2009 global reviews for mergers & acquisitions and capital markets activity.

Announced global M&A volume stands at $1.46 trillion for the year to date, with $461.1 billion in deals announced for the quarter. Dealmaking is still down a substantial 38% versus third quarter 2008 and is the lowest third quarter figure since 2004. Financial sponsor activity meanwhile has reached a 4-quarter high of $37.9 billion for this quarter, a marked increase over second quarter but down 67% on a full year basis. Financial sponsor activity has comprised just 4.9% of overall M&A activity so far in 2009, the lowest share since 2000.

In the global equity markets follow-on offerings have remained strong, with year-to-date offerings totaling $439 billion, up 34% versus the same period in 2008. Global quarterly IPO volume reached $34.4 billion, its highest level in five quarters, with Asian IPO activity accounting for 84% of the quarterly total from 116 offerings generating proceeds of $29.1 billion. The global equity pipeline is filled with $191.5 billion of planned IPO and follow-on offerings.

In the global debt markets, continued investor appetite for corporate debt has driven year-to-date volume of investment-grade bonds (excluding financial issuers) to $994.2 billion, marking the busiest first nine months of the year ever and already exceeding any previous full year volumes. High yield bond issuance is still very active, with $47.7 billion in global issues this quarter. The year-to-date total now stands at $109.7 billion, nearly triple the 2008 figure. Meanwhile, government-guarantee schemes for qualifying firms’ debt have helped raise $807.1 billion in 15 countries since programs were introduced in October 2008.

Issuance of syndicated loans remains anemic, with $261.9 billion of loans issued this quarter, 61% lower than third quarter 2008. Year-to-date global volume is $1.24 trillion, the slowest first nine months of the year since 2000.

“For those seeking green shoots the evidence is somewhat patchy,” said Neil Masterson, Global Managing Director of Investment Banking at Thomson Reuters. “Despite low M&A and syndicated loan volumes, bond markets remain very strong with record issuance in some asset classes. Follow on offerings continue to drive equity capital markets and there are signs of resurgence in the IPO market. M&A deal values and fees have contracted significantly when compared to the same period last year, although the decline in the number of deals announced is more modest at 11%, implying that bankers are active yet unable to close large mandates due to a lack of market confidence and difficulty financing large transactions.”

Global investment banking fees are down over the previous year with an estimated $44.5 billion earned across all asset classes, compared to $56.1 billion in fees for the first nine months of 2009 (a 21% decline). Fees from debt and equity capital markets activity accounted for 63% of the total pool during the first nine months of 2009 compared to 39% last year.

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