Global debt, M&A activity slides to start 2022

Global debt issuance slumped in the first quarter of 2022, according to new data from Refinitiv.

Total issuance activity declined by 7% from last year’s first quarter to US$2.5 trillion, and the volume of deals was down by 6%.

The decline in overall issuance came as high-yield debt offerings plunged to a six-year low. Global issuance of high-yield debt was down by 72% in the first quarter to US$59.0 billion — its slowest start to year since 2016.

Refinitiv also reported that green bond issuance was down by 11% in the first quarter, sovereign debt activity declined by 3%, and international bond offerings were down by 24%. Offerings of emerging market debt dropped by 38% too.

Amid these widespread declines, investment grade corporate debt was the outlier, as issuance in this segment rose by 3% in the first quarter to US$1.3 trillion — representing the strongest start to the year on record.

Despite these conflicting trends, the top five firms in the underwriter league tables remained unchanged, with JP Morgan holding onto first place, followed by Citi, BofA Securities, Goldman Sachs and Morgan Stanley.

Two Canadian firms — RBC Capital Markets and TD Securities Inc. — were ranked in the top 25, although RBC slipped to 17th place from 12th place last year, and TD came in at 20th, down from 17th in 2021.

M&A activity cooled in Q1

Global merger and acquisition activity dropped in the first quarter as markets were roiled by rising inflation and the flaring of geopolitical conflict.

Market data firm Refinitiv reported that the value of global M&A declined by 21% in the first quarter, compared with the same quarter last year, and the volume of deals was down by 17%.

Compared with the fourth quarter of 2021, the drop was even more precipitous, with deal value declining by 34% quarter over quarter.

Nonetheless, the market still recorded US$1.0 trillion worth of transactions in Q1, marking the seventh consecutive quarter above that figure.

The tech sector continued to lead M&A activity, with US$258.9 billion worth of deals in the first quarter — which is down by 5% from a year ago, but accounted for 25% of overall M&A value in Q1, up from 17% in 2021.

The financial sector ranked second, with a 13% share of the action, and real estate was third at 12%.

Refinitiv also reported that the market saw an increase in private equity-backed buyouts in the first quarter, with these deals making up 29% of the overall transaction value.

Conversely, deals involving SPACs dropped sharply from 17% of the overall M&A activity in the first quarter last year to just 3% this year.

The M&A league tables were largely unchanged from last year, with Goldman Sachs continuing to dominate. JP Morgan remained ranked second in global M&A, and Morgan Stanley stayed in third place.

RBC Capital Markets was the top ranked Canadian firm, in 14th place overall, up from 24th a year ago. TD Securities placed 25th, down from 16th place in 2021.