According to Dealogic’s DCM review for the first half of the year there has been a sharp drop in DCM volumes in Europe, particularly in the second quarter. This underscores the perception that the comparatively favourable Q1 was floated on the back of the ECB’as three-year LTRO largesse. Given the reluctance so far by the ECB to initiate LTRO3 – and the lack of positive sentiment on a reversal of the eurozone crisis – this doesn’t bode well for the second half of the year. EMEA DCM issuance for the first half of 2012 dropped sharply in comparison to the same period last year. Total issuance was $1.30 trillion, down 16% from last year’s $1.56 trillion. Most of the decline came in the second quarter –Q2 issuance declined by 34% - suggesting that without the impact of the LTRO in the first quarter, the overall decline for the period could have been much worse.
Countries on the eurozone’s periphery felt the impact from the eurozone crisis – and the lack of the LTRO – far more acutely than elsewhere, with Spanish issuance volume declining by 82% and Italian volume by 75% over the second quarter.
While DCM issuance has declined on a global level, it has done so at a far more modest rate than in Europe. Volumes for the half declined by 4% to $3.31 trillion, the lowest first half volume since 2008.
Global revenues also declined by 6%. Leader-by-revenue JPMorgan saw its DCM revenues decline 7.5%, whereas second placed Bank of America Merrill Lynch saw a 19.4% decline. A comparable 19.2% decline saw Deutsche drop out of the top three, to be replaced by Citi.
However, in revenue terms DCM remains one of the more resilient elements of the earnings mix: over the period DCM has made up 33% of investment bank earnings, up from 27% last year.
Asia Pacific (excluding Japan) played a significant role in buoying global issuance levels. Volume reached a record high of $455 billion, a 19% increase on 2011. The rise in issuance, coupled with the decline in other regions, means that Asian volume makes up 14% of global issues.
There has been little movement at the top of the global bookrunner rankings. JPMorgan has continued to be the most prolific bookrunner for the first half of the year, acting on nearly 1,100 deals with a total value of $230 billion. This gives it a 7% market share, matching last year. Barclays remains in second place with a 6.8% market share, again identical to last year.
Deutsche Bank saw a slip in its market share from 6.5% to 6.1%, leaving it slightly ahead of Citi’s 5.9%, up from 5.3% last year. The biggest drop experienced by any bookrunner was the 0.9% drop in market share for Bank of America Merrill Lynch, resulting in a market share of 4.8%.