The first three months of 2020 have been a period of extremes for global investment banks, with activity in some areas such as debt capital markets reaching all-time highs, while others, such as equity capital markets, have plummeted, according to Refinitiv Deals Intelligence.
Global debt issuance hit $2300bn during the first quarter of 2020, the highest quarterly total since records began in 1980. Activity was particularly driven by high levels of corporate issuance, as many companies looked to top up their coffers ahead of a period of significant economic turbulence.
US investment-grade corporate issuers led the charge with $435.7bn-worth of bonds printed in the first quarter of 2020, a 35% year-on-year increase and the highest quarterly total on record. March also set a monthly record for US investment-grade corporate issuance, with $204.8bn issued in the month, and there looked to be little sign of a slowdown in the early weeks of April.
Despite a near-shutdown of the primary markets for high-yield issuance in March, with issuers unable or unwilling to list in jittery market conditions, the volume of global high-yield corporate debt printed still reached $108bn during the first quarter. This was a year-on-year increase of 11%, driven by a flurry of issuance in the opening weeks of 2020.
It was a very different story for equity capital markets, however, where quarterly global activity reached a four-year low of $126.6bn. In initial public offerings (IPOs) it had been a promising start to the year, but activity slowed drastically in March 2020, against a backdrop of huge volatility in stock markets around the world. Global IPOs totalled just $6.9bn in March, a 37% decline compared with the previous month. There were some signs of a market thaw in early April, with several IPOs coming to market. Over the quarter as a whole, IPO volumes reached $25.8bn, a 75% increase compared with 2019, which was a slow year for IPOs globally.
Global merger and acquisition (M&A) activity also saw a dramatic contraction, with a 25% year-on-year decrease to $730.5bn during the first quarter of 2020, a four-year low. Cross-border deals appeared to be hit particularly hard, as economic disruption spread further around the globe. Cross-border activity totalled $208.6bn, a 16% year-on-year decrease and the slowest first quarter for cross-border M&A since 2013.
