TORONTO, April 4 (Reuters) - Canadian companies tapped equity and debt capital markets with vigor in the first quarter, but mergers and acquisitions slowed and a dry spell for initial public offerings extended into the new year, LSEG data released on Thursday showed.
Equity issuance in Canada soared more than two-fold from the year-ago quarter to $4.97 billion, while debt deals jumped 35% to $21.39 billion, the data showed.
First Quantum Mineral's (FM.TO), opens new tab $1 billion stock offering and $1.6 billion debt issuance to bolster its balance sheet were among the notable capital market deals.
Royal Bank of Canada (RY.TO), opens new tab and Bank of Montreal (BMO.TO), opens new tab topped the bookrunner league for equity capital markets. Canada's main stock exchange had no new listings, just as in full-year 2023.
Appetite for domestic and cross border M&A remained weak. For the quarter ended March 31, Canadian M&A volumes fell 24% from a year ago to $27.5 billion, the data showed.
J.P. Morgan and RBC Capital markets topped the list of M&A advisers.
WHY IT'S IMPORTANT
A revival in dealmaking is key to boosting Canadian bank profits as their core lending business faces high borrowing costs and rising provisions for bad debt. On average Canadian banks derive about a fifth or more of their revenues from investment banking.
The first quarter marked the smallest number of deals since 2016, while high interest rates helped keep debt issuance volumes at nearly a four-year high.
Big Canadian banks logged capital market business growth as trading revenues and in some cases, advisory fees, rose.
The Bank of Canada has held interest rates at a 22-year high of 5% since last summer, limiting M&A equity as borrowing has become more expensive.
Macroeconomic, geopolitical and regulatory pressures also have curbed appetite for deals.
Reporting by Nivedita Balu in Toronto; Editing by Richard Chang
