It will be another strong year across global debt and equity capital markets, while global M&A will see yet more growth. That’s the conclusion of more than 470 experienced deal makers interviewed for Refinitiv’s Deal makers Sentiment Survey.
- According to Refinitiv’s Deal makers Sentiment Survey, equity capital markets and debt capital markets deal makers anticipate growth of 8 percent globally.
- Meanwhile, following a record year in 2021, the M&A market is eyeing 10 percent growth.
- Among deal makers, there is a shift in focus from macro to company-specific factors.
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The historically high levels of debt and equity finance that have been raised across global capital markets since the start of the COVID-19 pandemic will continue through 2022, according to respondents to Refinitiv’s annual Deal makers Sentiment Survey.
With global equity markets on a run-rate of more than $300bn per quarter through much of the pandemic, nine out of 10 deal makers expect this unprecedented level of issuance to persist or be surpassed during 2022.
On average, deal makers expect equity markets to grow by 8.2 percent globally.
Deal makers in Asia and the Americas are most bullish, expecting global market growth to push double-digit percentage points. Bucking the overall trend of positivity, more than half of deal makers in EMEA expect no growth in equity markets at all during 2022.
What’s the buzz around SPACs in capital markets?
If there is a ‘buzz’ topic going into 2022, it is around IPOs and their upstart competitor – the special purpose acquisition company (SPAC).
While rarely spotted in EMEA, the rapid growth of SPACs in the past year or so has become a global discussion point among global equity and debt market-makers.
Opinions appear relatively split between their various merits, although only a minority expect to see the SPAC market continue to grow through 2022.
Americas led bullish M&A pack
Corporate M&A ‘rainmakers’ have renewed confidence in their weather-setting ability, with an expected average growth rate of nearly 10 percent in 2022. That would be one-tenth higher than the all-time record set in 2021, of $5.9trn from 63,000 transactions, which itself was the result of an annual surge of 64 percent by value and 24 percent by number of deals.
This bullish sentiment is also reflected within corporates, with only a quarter of in-house M&A professionals not expecting to do a deal in their own industry this year (although there is less certainty around cross-industry activity.)
For corporates, the key deal motivations concern economic goals and return-on-investment that would compensate for losses, reduce risk or increase turnover.
Deal makers in the Americas expect the market to grow fastest, with an eye-popping 13 percent predicted average growth rate – more than double the growth expectations for EMEA.
The majority of sectors are expected to see low single-digit growth in acquisition activity.
The exception is technology, which has consistently topped the leaderboard and is now growing significantly more than all other sectors. In terms of the sector leader ranking, there are no big changes in the M&A top four of technology, healthcare, financials and telecoms (although the predicted growth rate for healthcare has fallen from 8 percent to 5 percent).
Meanwhile, M&A professionals are grappling with a growing list of context- and theme-specific concerns, from the rise of SPACs, through to working from home.
Debt markets just taking a breather
Global debt issuance, which is currently worth more than $10trn per year, is expected to increase by 8.6 percent during 2022.
This optimism is despite a notable decline in activity in the second half of 2021 and a near-certain rising interest rate environment.
As with equity markets, debt market participants in the Americas and Asia are leading the positive sentiment, with double-digit growth predictions. But in contrast to equity markets, players in EMEA are also sanguine, with the vast majority (95 percent) of respondents expecting debt issuance to hold up at 2021’s historically high levels.
A large majority of deal makers believe sustainable finance is important when it comes to raising capital, and most eyes are on interest rates and debt serviceability to be key influencing factors for the year ahead.
Relatively fewer respondents are concerned about the threat of a recession or economic slowdown than in previous years, but economic and financial factors remain key.
Few respondents mention COVID-19 or vaccines. Instead, deal makers are focused on company-specific factors, such as their liquidity and requirement for capital; or thematic issues such as the pros and cons of bonds, and ESG.