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Debt issuance was strong in the third quarter. See which markets led the way.

By Marine Cole

Final numbers are in for the third quarter, which is looking strong on the debt side but more mixed in equity capital markets.

Overall global debt markets activity totaled $1.3 trillion in the third quarter of 2010, a 22 percent increase from the second quarter. However, year-to-date activity fell 14 percent from the same time last year, according to data provided by Thomson Reuters.

High-yield debt issuance continues to be on a roll, with global corporate high-yield debt reaching $79.3 billion in the third quarter, the highest quarterly issuance since records began in 1980. Issuance was up 49 percent from the second quarter and year-to-date issuance has reached the highest levels for any full year on record, with total issuance of $209 billion so far in 2010, up from $111.3 billion for the same period last year.

Bank of America Merrill Lynch and JP Morgan are cashing in on the trend, controlling a combined 25 percent of the overall high-yield underwriting market, which generated $3.7 billion in fees, a 70 percent increase from the first nine months of 2009.

There's also good news in the securitization world. New issuance of asset-backed and mortgage-backed securitizations totaled $132 billion and $400.7 billion, respectively, during the first nine months of 2010. This combined issuance is up 39 percent from the same period last year.

For September, the volume of US investment-grade corporate debt totaled $100.1 billion, the highest monthly level for issuance since May 2008, according to Thomson Reuters. Total monthly volume for US investment-grade debt is up 41 percent from August's total, the fourth consecutive month of increased offerings.

The financial services industry saw the largest year-to-date increase in offerings, while telecommunications saw the sharpest decline.

Additionally, two of the largest offerings from 2010 were issued in September: a $5 billion offering from NBC Universal and a $4.7 billion offering from Microsoft.

In equity, activity is down 9 percent year-over-year, with $506.7 billion during the first nine months of 2010. But the first nine months of the year have been the strongest for initial public offerings since 2007. China's AgBank broke the record for the largest IPO ever with its $22.1 billion deal.

Altogether, issuers from the US raised $124.2 billion in overall equity capital markets, down 30 percent from the first nine months of 2009. Chinese and Japanese issuers accounted for 20 percent and 9 percent respectively.

Four sectors accounted for 70 percent of equity capital market activity. Issuance was led by financial issuers at 33 percent, followed by energy and power at 17 percent, industrials at 10 percent and materials at 10 percent.

As for equity underwriters, despite a decrease of 6.6 market share points, JP Morgan led all equity capital market underwriters for the first nine months of 2010 with $40.6 billion in proceeds from 235 issues. Goldman Sachs remained in second place with $40.1 billion in proceeds from 158 issues.

According to an estimate from Freeman Consulting, fees from equity capital markets transactions totaled $13 billion for the first three quarters of 2010, a 14.7 percent decrease from the same period last year.

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