BofA Securities eclipsed other North American equity capital markets bookrunners in the first quarter, thanks to an ample flow of follow-on offerings and convertible debt deals that lifted it to the top of Dealogic’s league table in the region.
The bank was the lead underwriter for the accelerated bookbuild for American Water Works’ [NYSE:AWK] USD 1.71bn follow-on offering, which was the biggest of its kind for the quarter. It also underwrote the quarter’s four largest convertible debt deals, which included Southern Co.’s [NYSE:SO] USD 1.73bn raise, On Semiconductor’s [NASDAQ:ON] USD 1.5bn raise, Rivian Automotive’s [NASDAQ:RIVN] USD 1.5bn raise, and Liberty Broadband’s [NASDAQ:LBRDA] USD 1.27bn raise.
With USD 3.7bn in deal volume in 1Q, BofA improved on the previous quarter, when it underwrote USD 3bn in deals and placed third in the league table. BofA accounted for 11.13% of the 1Q market share.
Goldman Sachs came in as second busiest in 1Q, with USD 3.16bn in deal volume. JPMorgan was third with USD 3.1bn. The top finisher in 4Q22, Morgan Stanley, fell to fourth with USD 2.7bn in deal volume.
Those banks collaborated with BofA on some of the quarter's biggest converts. Goldman Sachs, Citi, and Morgan Stanley also underwrote 1Q’s second largest follow-on: AerCap Holdings’ [NYSE:AER] USD 1.35bn raise.
Barclays placed fifth in the ECM advisor rankings with USD 1.48bn in deal volume.
In terms of deal count, BofA and JPMorgan led the bulge bracket banks with 37 transactions each in 1Q, followed by Goldman Sachs with 35, Morgan Stanley with 27, RBC Capital Markets with 21 and Citi with 19.
While follow-ons and convertibles dominated the ECM market in 1Q, initial public offerings were muted as rising interest rates, rampant inflation, the war in Ukraine, and fears of a recession kept issuers at bay.
Recording USD 182m in IPO deal volume, Citi was the top IPO advisor in North America last quarter. BofA finished second, underwriting new listings worth USD 164m. Barclays was third with USD 153m in IPOs.
“There was a nice little window at the end of January and into February where we saw a lot of activity on the deal side,” one banker said. But the collapse of Silicon Valley Bank in March cast a pall over the market that dashed hopes of a swift recovery, he said.
Once central banks stop hiking interest rates, the IPO window could open back up. Until then, the banker said he expects to see follow-ons continue to fill the deal void.
“We are working on some fully marketed secondary offerings,” he said. “A lot of companies want to strengthen their shareholder base with institutions that buy in or re-up their positions without dilution.”
Subdued market activity has been a blow to banks’ top lines. Banks across North America notched USD 914m in net ECM revenue in 1Q, according to Dealogic. That figure is down from USD 978m in 4Q22, but an improvement over 3Q22 and 2Q22. The banks’ net ECM revenue is nonetheless far below other quarters in recent years.
