(Reuters) – Royal Bank of Canada topped Canadian equity issuances in the first quarter, lifted by a surge in financings for energy companies looking to beef up their balance sheets in the face of sluggish oil prices, Thomson Reuters figures showed on Thursday.
Bank of Nova Scotia and Deutsche Bank came in second and third, respectively, while BMO Capital Markets and CIBC World Markets rounded out the top five, according to the data.
First-quarter equity issuances jumped 86 percent to $15.8 billion, from $8.5 billion in the same period a year ago.
A sharp sell-off in oil prices in the second half of 2014 has hit energy producers, pushing them to trim capital expenses and scale back production plans.
Some energy companies have responded by raising equity to offset any further commodity-price impact. Cenovus Energy Inc‘s $1.5 billion equity offering and Encana Corp‘s $1.4 billion raise were among the highlights.
While oil prices remained much lower than they were in the middle of last year, their decline in the first quarter was not as steep as in the previous two quarters. Brent crude slipped 3.9 percent in the first quarter, compared with a near 40 percent drop in the fourth quarter of 2014.
“It’s stabilizing energy prices that gave the real juice to the market in the quarter,” said Peter Miller, head of Canadian equity capital markets at BMO Capital Markets.
“Many of the oil companies, including the very highest-quality and largest, are looking at a new environment,” he said. “They are saying, ‘let’s be proactive, let’s access the market, let’s get our balance sheet stronger now.'”
Some bankers said they were seeing strength across sectors. Bombardier Inc‘s $1.1 billion equity offering was one of the biggest deals outside the energy sector.
“We’re seeing a significant appetite from Canadian investors for non-resource deals,” said Benoit Lauzé, the head of equity capital markets at CIBC. “We see a very healthy pipeline of new issues coming from all sectors.”
“Another way to deal with the challenging environment is by selling assets,” he added. “For some companies with strong balance sheets, this would be a very opportune time to make acquisitions.”
Canadian mergers and acquisitions climbed nearly 19 percent to US$40.6 billion in the first quarter, reflecting an improving global environment for deals.
RBC Capital Markets also came out on top of the M&A list, followed by Deutsche Bank and JPMorgan & Chase.
Thomson Reuters global M&A report, which includes details of Canadian trends, is found here.
(Reporting by John Tilak and Euan Rocha; Editing by Paul Simao)
(This story has been edited by Kirk Falconer, editor of peHUB Canada)
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