SOURCE: Thomson Reuters Corporation

January 06, 2010 09:00 ET

Thomson Reuters Releases Fourth Quarter 2009 Global Investment Banking Reviews

Q4 Equity Issues and Appetite for Global Debt Take Spotlight as M&A Fees Dwindle

LONDON and NEW YORK, NY--(Marketwire - January 6, 2010) - Thomson Reuters has released the final fourth quarter 2009 global reviews for mergers & acquisitions and capital markets activity.

Announced global M&A finished the year at $1.97tr, down 32% from the 2008 total ($2.89tr) and down 53% from the record high reached in 2007 ($4.17tr). US targets accounted for 36% of global M&A activity, with $705bn in deals, while M&A was most active in the financial sector with $390bn in deals (although this figure also represents a five-year low for M&A in that sector). Global buyside financial sponsor activity stands at a seven year low of $130bn. Morgan Stanley is the leading advisor for global M&A with $620.6bn in deals.

The global equity markets took center stage in 2009 with record offerings from US financial issuers and a surge in IPO offerings in the third and fourth quarters. Equity issuance reached $858.4bn this year, up 36% over 2008, with $294bn in follow-on issuance from global financial issuers. 44 IPOs priced in Asia in the fourth quarter, bringing the total annual proceeds to $73bn, a figure over 133% higher than the 2008 total and accounting for 63% of global IPO activity. JP Morgan is the lead bookrunner for global equity offerings with $103.7bn in underwriting.

Global debt markets saw record appetite from investors, marking the highest year on record for corporate debt offerings at $1.2tr in global issuance of non-financial investment-grade corporate bonds. Issuance of high-yield bonds in the fourth quarter reached $65bn, bringing the annual global total to a three-year high of $176.1bn. Government guarantee schemes in 16 countries raised $845bn in debt for qualifying issuers since various initiatives began in October 2008, with over 50% of such issuance coming from the US, France, and the UK. JP Morgan is the lead bookrunner for global debt offerings with $429.8bn in underwriting.

Syndicated loans issuance reached $1.5tr in 2009, a 41.5% decline from the 2008 total and the lowest level of activity for the decade. Americas proceeds comprised 43.6% of global volume with $668.8bn in proceeds while European lending accounted for 27% of global volume, its lowest share since 2001. By contrast, Japanese and Asian lending stood at its highest ever proportion of global volume with market share of 17.4% and 10.5%, respectively.

"The last quarter of 2009 saw a flurry of activity leading to a dynamic, if unusual, picture across the industry", said Neil Masterson, Global Managing Director of Investment Banking at Thomson Reuters. "Record issuance of equity follow-on offerings and corporate bonds resulted in bookrunning fees outstripping M&A advisory for the first time in a decade. However, the future looks encouraging for M&A with strong indicators in the last quarter, including a 32% increase in fourth quarter M&A activity, the biggest quarter for private equity-backed M&A in eighteen months, and the biggest quarter for global IPOs in two years, with two-thirds of activity driven by China, US and Brazil. While we anticipate deal activity to increase in 2010, driven in large part by the recovery in capital markets, the constraining factors of business confidence and access to funding in the syndicated loans market linger."

With an estimated $69.5bn earned in 2009, global investment banking fees are down 7% compared to 2008 and represent the lowest total since 2004. Fees from equity capital markets underwriting were the lead source of fees for investment banks, comprising 36% of the total. Traditionally M&A advising is the largest fee generator for investment banks, as has been the case for the past six years.

The full reviews are available at the Thomson Reuters Deals Intelligence website.

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