Equity underwriting fees drop in 2012

Yet, notwithstanding the modest increase in deal value, estimated fees from equity capital markets transactions totaled US$13.5 billion for the year, which is a decrease of 18% from last year. The firm says this represents the slowest period for global equity capital markets fees since 2003.

Goldman Sachs topped the equity underwriting league tables for the year, with US$57.3 billion in proceeds from 264 issues, an increase of 0.3 market share points compared to 2011. JPMorgan, which ranked fourth by proceeds raised for full year 2012, led all underwriters with estimated fees of US$976.3 million, or 7.3% of the equity capital markets fee pool this year.

Thomson Reuters reports that follow-on offerings totaled US$448.8 billion during the year, an increase of 15% compared to 2011, driven by $45.8 billion in common stock sales from insurance giant AIG. Whereas, initial public offering activity was down 29% year over year to US$117.4 billion. However, IPO activity during the fourth quarter totaled US$34.6 billion, up 54% compared to the third quarter of this year.

By sector, financial issuers were the biggest source of deal activity, representing 30%. Indeed, the overall volume of equity capital markets activity remained highly concentrated among four main sectors, with energy & power (15%), real estate (11%) and industrials (10%) making up the rest of the top four.

Global debt markets were much healthier in 2012, Thomson Reuters reports, with overall debt market activity totaling US$5.6 trillion during the year. This represents a 10% increase from the comparable period in 2011 and the strongest annual period for global debt capital markets activity since 2009. Fourth quarter debt activity totaled US$1.3 trillion, down 5% from the third quarter, but up 28% from the fourth quarter of 2011.

It was a particularly strong year for global high yield and investment grade debt issuance. The firm reports that the volume of global high yield corporate debt reached US$389.0 billion during the year, a 38% increase compared to 2011 and the strongest annual period for high yield debt activity since records began in 1980. Also, global investment grade corporate debt totaled US$2.7 trillion during full year 2012, a 15% increase compared to 2011, and an all-time annual record.

JPMorgan led the global debt underwriting league tables with total proceeds of $438.6 billion, increasing its market share by 1.0 point. Deutsche Bank ranked second, and Barclays fell to third place. JP Morgan’s underwriting fees for 2012 topped all other underwriters at an estimated $1.9 billion, or 8.6% of overall fees this year, it reports.

Estimated fees from debt capital markets activity totaled US$21.7 billion during full year 2012, up 28% from full year 2011. Fees from investment grade debt underwriting totaled US$10.4 billion, or 48% of the overall total, while fees from high yield debt totaled $6.1 billion or 28% of overall fees, it reports, adding that high yield underwriting fees increased 37% compared to 2011.

The financial sector accounted for about half of all deal activity, totaling US$2.8 trillion, it says. By region, new issuance of corporate debt from emerging markets issuers totaled US$305.9 billion during the year 2012, a 32% increase from 2011, which Thomson Reuters says was the strongest annual period for emerging markets corporate debt since records began in 1980.