- REUTERS/Luke MacGregor
It has been a quiet year for dealmaking activity so far in 2016.
There has been much less deal activity in the equity markets, while mergers and acquisitions activity has also slowed. Syndicated loan activity has also dropped.
That has led to a 14% drop in global investment banking revenue for the year to September 23, according to Dealogic.
There is one bright spot, though.
Debt capital markets is the only business to see an increase in revenue, with fees up to $15.9 billion.
Here’s what’s driving the strong activity:
It’s all about the highest quality bonds
Investment-grade bond issuance stands at a record $1.54 trillion, through 4,193 deals, up from $1.41 trillion last year.
That has fees from these kinds of deals at a record high, with banks earning $9.4 billion for running investment-grade bond deals.
And the dollar
Yankee bonds – or bonds issued by foreign companies in the US in dollars – are also at a record, with yankee volume hitting $753.8 billion.
Sovereigns, supranational and agency (SSA) issuers are responsible for a big chunk of this issuance, adding up to a record high $252 billion.
The volume of US dollar-denominated debt issued by issuers in Europe, the Middle East and Africa is also at a record high, at $513.1 billion.
There have been a bunch of mega bonds
There has been a big increase in the number mega bonds – or $10 billion plus bonds – in the past year.
These deals add up to $179.8 billion for the year to September 23, a record high and up 7% from last year. Most recently, Microsoft raised $19.8 billion in a bond deal.
Here are the beneficiaries
JPMorgan ranks top for revenues from global debt capital markets activity, with $1.1 billion in fees. Bank of America Merrill Lynch is close behind, with Citigroup in third.