Corporate finance activity slides amid volatile markets, rising interest rates

Corporate finance activity across the country fell sharply over the past three months, as volatile markets, rising interest rates and recession fears cut into equity and debt underwritings.

Canadian companies sold $2.8-billion of stock in the second quarter of 2022, a 78-per-cent decline from the same period a year ago, according to statistics released Wednesday by data service Refinitiv. Corporate debt offerings fell by 67 per cent, quarter over quarter, to $7.7-billion.

The slowdown in domestic underwriting reflects a worldwide downturn, with activity in global equity capital markets declining 67 per cent through the first six months of 2022, setting a 17-year low.

Bank of Canada’s rapid rate hikes likely to cause a recession, study finds

In this mergers and acquisitions market, the strong eat the weak

The one bright spot for capital markets is in mergers and acquisitions, which continue at a torrid pace. Canadian companies were involved in $62.8-billion worth of takeovers in the second quarter of 2022, up 7 per cent from the same period in 2021. Globally, last year set records for M&A activity.

The downturn in equity and debt financings follows two years of record-breaking underwriting activity, leaving corporate Canada flush with cash. When…