What were the highs and lows of Q3 2017? Our Global Markets Reviews look at key trends across IB strategy, M&A, ECM, DCM, Leveraged Finance, and Loans, according to Dealogic figures. For more information or a full copy of our Global Markets Reviews for Q3 2017, please reach out to our teams below.
Global IB revenue in the first 9 months of 2017 ($59.9bn) outpaced 2016 by 6% despite consecutive quarterly declines in fees after a strong Q1. During Q3, all products except M&A saw a year-on-year decline, with syndicated lending down the most – 24% (to $831.4bn).
M&A – While total global cross-border M&A volume was down 7% to $817.6bn in the first 9 months of 2017, volumes targeting the professional services and transportation sectors are at record highs, and real estate volume is the second highest on record.
ECM – IPO volumes have revived across the globe from low 2016 levels – up 130% in the US, up 54% in Europe, and up 19% in Asia Pacific. Japan Post Holdings led global Q3 ECM with a $10.8bn follow-on (September 2017), run on Dealogic.
DCM – US Corporate & FIG issuance totaled $1.42tr, the highest first 9 month total on record. Asia Pacific priced a total of $597.8bn in G3 bonds, the highest volume on record for this period.
Syndicated Loans – Global syndicated lending remained steady at $3.23tr, on par year-on-year. Johnson & Johnson signed the largest loan of Q3 2017 ($10.0bn) to refinance existing debt.
Deals – United Technologies’ $30.1bn bid for Rockwell Collins was the biggest M&A deal in Q3 2017. In July 2017, AT&T ($22.5bn) issued the third-largest corporate bond on record.
This is the first time on record that no bank from Asia Pacific is in the top 15 of the global investment banking revenue rankings for the first 9 months of the year.
Americas IB revenue for the first 9 months of 2017 ($34.3bn) experienced a 12% gain from $30.7bn. After seven straight year-on-year gains, Americas technology IB revenue fell 14% in the first 9 months of 2017 to $4.5bn.
IPOs boost volume – US-listed ECM volume experienced a 7% increase to $195.5bn in the first 9 months of 2017, led by IPOs (+120%). Volume rebounded from 2016, which marked the lowest annual volume since 2011. Despite a year-on-year uptick, Q3 2017 volume fell 20% from Q3 2016.
US institutional loans break annual levels – US institutional loans volume of $704.2bn for the first 9 months of 2017 has already surpassed all previous full-year levels. However, Q3 2017 volume of $146.2bn was down 38% from Q2 2017 ($235.7bn).
Financial institutions gain momentum – US-marketed DCM issuance fell 2% to $2.49tr during the first 9 months of 2017, while FIG issuance spiked to a record high of $519.5bn via 1,170 deals.
Acquisitions get pricier – US M&A volume declined 15% to $936.9bn in the first 9 months of 2017. However, the average EV/EBITDA multiple of US M&A deals for the first 9 months of 2017 (13.6x) reached a record high, surpassing the previous record of 13.2x set in 2014.
Asia Pacific Highlights
Asia Pacific (ex-Japan) IB revenue in the first 9 months reached $9.0bn in 2017, down 10% from the same 2016 period ($10.0bn). Australasia led the decline with a 23% year-on-year decrease to $985m in 2017—its lowest first-9-months revenue since 2004 ($857m).
ECM bright spot – IPO volume stood at $52.8bn in the first 9 months of 2017, up 27% from $41.5bn raised in the same period last year, while IPO activity reached a record high of 758 deals.
India ECM soars – India ECM volume reached $18.2bn via 182 deals in the first 9 months of 2017, more than double the $7.7bn from the same period last year. The jump was led by follow-ons ($12.2bn).
Global Logistic Properties – The recent acquisition of Global Logistic Properties by a Chinese consortium for $16.1bn was the main driving force behind the growth in APAC cross-border M&A and the largest cross-border LBO deal on record in Asia Pacific.
China dominates G3 bond market – Chinese issuance continued to dominate the Asia Pacific (ex-Japan) G3 market in the first 9 months of 2017 with $154.1bn, up 74% year-on-year.
At $14.0bn in the first 9 months of 2017, EMEA IB revenue was up 4% compared to the same period in 2016. US banks increased their share of the EMEA IB wallet to 38.4%, their highest Q3 share since 2000 (40.5%).
$1bn+ deals boost volume – $1bn+ M&A deals stood at $490.0bn, accounting for 65% of overall EMEA M&A. This is the highest share for this period since 2007 (68%).
LevFin volume fell after two strong quarters – European LevFin volume was up 86% year-on-year to $172.8bn in the first 9 months of 2017. However, after two strong quarters ($68.2bn in Q1 and $58.2bn Q2), Q3 total volume was down to $46.3bn.
European FIG fell to a 19-year low – European FIG (ex-secured) activity fell to 1,289 deals ($366.5bn) from 1,599 in first 9 months of last year ($382.8bn) – the lowest levels of activity since 1998.
ABBs reach record levels – EMEA ECM activity reached 1,220 deals in the first 9 months of 2017, the second highest on record behind 2007 (1,399 deals), which was driven by ABBs. Average discount on EMEA ABBs (6.8%) is the largest for a Q3 period on record.
For more information or a full copy of our Global Markets Reviews for Q3 2017, please reach out to our teams below: