RBC Dominion Securities took the top spot, helping its clients raise $5.2-billion through 28 debt issues.CHRIS WATTIE/Reuters
Corporations are heading back into the Canadian bond markets thanks to reduced volatility and a more dovish tone from central bankers.
Investment bankers helped companies raise $14-billion in the Canadian debt markets in the first quarter of the year, according to the latest data from Refinitiv. That’s nearly double the $7.9-billion of debt issued by corporations in the fourth quarter of last year, when trade uncertainty roiled markets and left many corporations sitting on the sidelines.
RBC Dominion Securities took the top spot, helping its clients raise $5.2-billion through 28 debt issues. CIBC World Markets came in second, with 17 issues raking in a combined $2.7-billion.
After a slow second half of 2018, bond issuance has picked up, particularly over the course of the past month as the Bank of Canada has hit pause on its planned interest-rate hikes and the trade tension that led to market tumult begins to settle.
“The environment in the capital markets has just become a lot more favourable, particularly the fixed-income market," said Marc St-Onge, global head of debt capital markets at CIBC World Markets Inc.
“The extreme volatility we faced in the last half of the year last year is no longer present."
Another important factor is that the cost of issuing corporate debt in Canada is “extremely attractive” right now thanks to lower Government of Canada yields and tighter credit spreads said Rob Brown, co-head of debt capital markets at RBC. Currently, funding costs for bond issuers are down 60 to 70 basis points since the start of the year, Mr. Brown said. (100 basis points equal one percentage point.)
“The underlying rate environment is helping in terms of encouraging issuers to access the markets," he said.
Investors, meanwhile, are “very hungry” for new corporate bonds to devour, owing to the low levels of supply in the second half of last year, said Patrick MacDonald, co-head of debt capital markets at RBC.
“Investors have been on the sideline for some time and now they’re looking to deploy the cash and invest in this asset class,” Mr. MacDonald said.
If conditions remain favourable, this year’s volume of bond issuance could match or even surpass last year’s total, Mr. St-Onge said.
“We’re making up that lost ground at a fairly rapid pace currently,” Mr. St-Onge said. “I would expect volumes to continue to be very strong."
Equity issuance, on the other hand, remained low during the quarter, with only 56 issues raising a total of $4.5-billion. That’s below the $5.8-billion raised in the Canadian equity markets in the fourth quarter of last year, when there were 74 issues, and down significantly from a year ago when 111 issues brought in $7.9-billion of proceeds, according to Refinitiv.
CIBC nabbed the top spot for equity issuance, leading eight deals totalling $1.2-billion, followed by RBC, which led 10 deals that raised a combined $1-billion.
Top Banks for Equities
(excluding self-led deals)
Rank
Company
Amount raised (billions)
Issues
CIBC World Markets
$1.2
8
1.0
10
RBC Dominion Securities
BMO Nesbitt Burns
.52
9
TD Securities
.31
5
National Bank Financial
.21
7
Top Banks for Corporate Debt
(excluding self-led deals)
Rank
Company
Amount raised (billions)
Issues
RBC Dominion Securities
$5.2
28
2.7
CIBC World Markets
17
2.4
TD Securities
15
2.1
12
BMO Nesbitt Burns
Scotia Capital
1.2
11
Top Banks for M&A
(any Canadian involvement announced)
Value of deals (billions)
Rank
Adviser
Deals
6
TD Securities
$US16.9
BMO Nesbitt Burns
16.6
9
Goldman Sachs
16.2
7
Citi
15.5
6
Bank of Am. Merrill Lynch
13.8
2
JOHN SOPINSKI/THE GLOBE AND MAIL
SOURCE: refinitiv
Top Banks for Equities (excluding self-led deals)
Rank
Company
Amount raised (billions)
Issues
CIBC World Markets
$1.2
8
1.0
10
RBC Dominion Securities
BMO Nesbitt Burns
.52
9
TD Securities
.31
5
National Bank Financial
.21
7
Top Banks for Corporate Debt (excluding self-led deals)
Rank
Company
Amount raised (billions)
Issues
RBC Dominion Securities
$5.2
28
2.7
CIBC World Markets
17
2.4
TD Securities
15
2.1
12
BMO Nesbitt Burns
Scotia Capital
1.2
11
Top Banks for M&A (any Canadian involvement announced)
Value of deals (billions, USD)
Rank
Adviser
Deals
6
TD Securities
$16.9
BMO Nesbitt Burns
16.6
9
Goldman Sachs
16.2
7
Citi
15.5
6
Bank of Am. Merrill Lynch
13.8
2
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: refinitiv
Top Banks for Equities (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
CIBC World Markets
$1.2
8
RBC Dominion Securities
1.0
10
BMO Nesbitt Burns
.52
9
5
.31
TD Securities
National Bank Financial
.21
7
Top Banks for Corporate Debt (excluding self-led deals)
Rank
Company
Amount raised (billions)
No. of issues
RBC Dominion Securities
$5.2
28
2.7
CIBC World Markets
17
2.4
TD Securities
15
12
BMO Nesbitt Burns
2.1
1.2
Scotia Capital
11
Top Banks for M&A (any Canadian involvement announced)
Value of deals (billions, USD)
Rank
Adviser
No. of deals
TD Securities
$16.9
6
BMO Nesbitt Burns
16.6
9
Goldman Sachs
16.2
7
Citi
15.5
6
Bank of Am. Merrill Lynch
13.8
2
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: refinitiv
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Alexandra Posadzki