Total equity issuance in Canada fell to $6.5 billion in the third quarter — the lowest in more than six years –as common equity and income trust financing plunged, according to the Investment Industry Association of Canada.

Equity issuance was down 44% from the second quarter and 24% from the same period last year, the IIAC found in its quarterly report on equity financing and trading activity.

In the same period the S&P/TSX composite index plummeted by more than 2,700 points from the end of the second quarter, and trading volumes reached a record high of 25.7 billion shares being exchanged at the end of the quarter.

Initial public offerings were nonexistent on the TSX during the third quarter, the IIAC found. Only small caps from the Venture exchange raised a $172 million on 58 offerings — a 75% drop from Q2, as issuers have shelved any planned initial offering until market conditions improve.

Secondary offerings totaled $900 million compared to $3.7 billion recorded in Q2, but private placements compensated for part of the loss with $2.6 billion in financings — up by 15% from Q2.

Income trust issuance declined in the third quarter after a short-lived recovery in the second quarter. Six offerings in Q3 raised $214 million in financings, down 90% from Q2, and down 88% from the same period last year.

Together, the drops in income trust and common equity financings accounted for 90% of the overall declines from the second quarter.

Preferred shares fell to $1.5 billion on five offerings — a decrease of 36% from the previous quarter, but still on pace for a record year in issuance for 2008.

“The global economic slowdown, weakening commodity prices and gyrations in world equity markets don’t make for an ideal equity issuance environment,” said Jack Rando, director of capital markets at IIAC, in a release. “When combined with the liquidity concerns already existing in credit markets, access to capital will be an issue of paramount importance in the months ahead.”

IE