Mergers and acquisitions aren't delivering the fees that investment bankers used to enjoy, but fortunately, the money's coming from elsewhere. Data from Thomson Reuters reports a 29% increase in capital markets and M&A fees for the first time in more than a year. Share sales (e.g., rights offerings) were where dealmakers found the action. In the shrinking M&A space, Morgan Stanley (NYSE: MS) has taken the lead spot.
Since there are fewer banks in the marketplace than there were a year ago -- and they have less money -- the capital is starting to come from elsewhere. Because they aren't lending at their previous pace, companies are issuing bonds and equity to replenish their coffers. Pfizer (NYSE: PFE), for example, raked in more than $23 billion from the bond market to fund its acquisition of Wyeth (NYSE: WYE), and Roche nabbed Genentech with the help of a $30 billion debt issuance.
This year, the volume of bonds issued has reached $589 billion, which already tops any previous full-year level. The second quarter was a bit slower, as the first three months of 2009 were record-setting.
And, equity is moving, too. JPMorgan Chase & Co. (NYSE: JPM) has raked in an estimated $1 billion in fees from underwriting 166 equity issues. In the first quarter, $88 billion in equity securities were issued. The second quarter surged, however, reaching $259 billion -- not including initial public offerings (IPOs) and convertibles. Though, it's off 7% from a year ago, the future remains bright: 977 deals have been announced.
M&A, on the other hand, just ain't what it used to be. Deal-flow fell 44.5% year-over-year (based on the first half), marking the steepest decline since 2001. At present, Morgan Stanley leads this ailing market, beating out Goldman Sachs (NYSE: GS). M&A fees plunged 66% for the second quarter (relative to 2Q 2008), accounting for a mere 19% of investment banking fees, the lowest level in three years.
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Reader Comments (Page 1 of 1)
6-26-2009 @ 1:33PM
Kent said...
Caveat emptor with bonds .... GM and Chrylser bondholders even as primary creditors lost everything ... even municiple bonds fall into that category....I'll wait....