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By Marine Cole
Overall activity in the debt and equity capital markets fell in the first half of 2010, but there were some bright spots amid the gloom in initial public offerings, high-yield corporate debt, leverage loans and securitization. But debt issuance overall was down, reflecting the general de-levering occurring on balance sheets of all but the most troubled companies.
Global equity markets activity totaled $314.5 billion in the first half of 2010, down 7 percent from the first half of 2009, according to data provided by Thomson Reuters. Follow-on offerings were especially slow at $185.1 billion in the first half of 2010, compared with $288.5 billion in the same period last year.
But IPOs opened strongly, with global volume for the first half of 2010 at $93.9 billion, up from $13 billion in last year's period. Activity was boosted by emerging market issues, which accounted for 52 percent of global IPO volume so far this year. New listings from Chinese companies accounted for 36 percent of global IPO volume this year.
Overall volume for equity capital markets remained highly concentrated among four main sectors: financials (31 percent), energy and power (14 percent), industrials (12 percent), and materials (11 percent).
In the US, equity and equity-related proceeds totaled $78.4 billion from 380 deals in the first half of 2010, down 33.6 percent in total proceeds from the first half of 2009.
But the IPO market in the US was vibrant, with 58 IPOS raising $8.5 billion. That represented a 242.5 percent increase in proceeds and a 346.2 percent increase in deal count over the first half of 2009.
Venture-backed IPOs turned in the best performance since the fourth quarter of 2007, as CFOZone reported earlier this week.
Overall, the decline in debt markets was even more pronounced than in equities, with global issuance falling 23 percent in the first half of 2010 to $2.6 trillion, according to data from Thomson Reuters. Activity in the second quarter decreased even more dramatically by 40 percent from the first quarter, registering the first sub-trillion dollar quarter since the fourth quarter of 2008.
But the volume of global corporate high-yield debt reached $130.7 billion in the first half of 2010, more than twice the levels seen in the first half of 2009 and breaking all records for semi-annual corporate high-yield issuance. The first quarter was stronger than the second, when European sovereign debt woes pressured debt markets globally. Second-quarter high-yield activity dropped 28.8 percent from the first quarter.
Despite government guarantee programs winding down, new issuance of asset-backed and mortgage-backed securitizations totaled $255.7 billion and $93.1 billion, respectively, in the first half of 2010. They experienced double-digit percentage increases compared to the first-half of 2009.
JPMorgan topped the underwriting league tables on the equity side, despite a decrease of 8.2 market share points, with $25.9 billion in proceeds from 160 issues. Barclays ended the first half of the year in the first position of debt capital markets underwriting league tables, with 8.2 percent of the market.
The US leveraged loan market continued to rebound with issuance at $476.48 billion in the first half of 2010, up 73 percent over the first quarter of 2009. To put it in perspective, this figure rivals with 2009 full-year results of $547.12 billion, but is still far below the peak of $954.61 billion during the height of the leveraged buyout boom in the first half of 2007.
As early as last week, there were some large leveraged loans issued by Google ($3 billion) and Dean Foods ($2.7 billion).
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