FP Dealmakers: Interest rate peak fuels optimism on Bay Street

financialpost.com:

Peter Miller doesn’t mince words when describing the dealmaking doldrums that Bay Street has slipped into over the past couple of years. But the head of global equity capital markets at BMO Capital Markets and other investment bankers are cautiously optimistic that the action is about to pick up, and anxious to talk about the reasons why.

“You know, 2023 was a tough year,” Miller said in a recent interview, pointing out that new issue activity barely matched levels reached in a “weak” 2022.

The primary culprit, he and other investment bankers said, was uncertainty, as questions about how high interest rates would go — and how quickly they might come down once they peaked — kept a lid on activity.

There were fewer deals overall last year — 864 compared to 937 in 2022 — according to figures from Financial Post Data. The total value of all deals also declined, to $460.3 billion from $475.7 billion a year earlier.

RBC Capital Markets topped 2023’s all-deals category, which includes corporate debt and equity as well as government debt issues, with a 14.78 per cent share. RBC had 238 mandates and $68.03 billion in deals, according to Financial Post Data. TD Securities, the investment banking division of Toronto-Dominion Bank, came second in the all-deals ranking with an 11.22 per cent share on 170 mandates and a dollar figure of $51.63 billion. National Bank Financial rounded out the top three for all deals with a 9.97 per cent market share 151 mandates and $45.91 billion in deals. 

It was a far cry from the dealmaking frenzy of 2020 and 2021, when interest rates remained at historic lows, making capital accessible and cheap, and pent-up demand helped drive a post-shutdown boom in activity. More than a thousand deals were done