Author Archives: michael

Mergers and Acquisitions Increase 28%

Posted on August 13, 2012 by michael

Announced M&A volumes of $29.7 billion improved by 28% from the prior week. Thus far in 3Q12, announced M&A volumes are averaging 9% below the 2Q12 weekly average level and 12% below the 3Q11 average weekly level.

Sandler O’Neill’s Weekly M&A Trends:

The S&P 500 rose for the fifth consecutive week

• The S&P 500 improved by 1.1% in the week and the Russell 2000 growth index rose by 1.7%. In 3Q12, the S&P 500 has risen by 3.2% while the Russell 2000 index is essentially flat.
• Average daily U.S. equity trading volumes declined by 15% from the prior week. Thus far in 3Q12, volumes are averaging 11% below the 2Q12 weekly average and 30% below the 3Q11 average. Average daily U.S. volumes reflect the total number of shares traded on Tape A, Tape B, and Tape C in millions.
• Equity mutual funds experienced net outflows of $6.9 billion in the week according to ICI data (on a one week lag), the highest amount of net outflows since mid-May. In total, equity mutual funds have experienced $12.7 billion of net outflows in 3Q12 after experiencing net outflows of $22 billion in 2Q12.
• Volatility, measured by the average CBOE VIX, declined by 13% to 15.5, and the DB currency VIX declined by 4% to 8.8.

Corporate debt underwriting improved while M&A and equity capital raising remain muted

• Equity underwriting volumes of $9 billion declined by 50% from the prior week. Thus far in 3Q12, equity underwriting volumes are averaging 9% below the 2Q12 weekly average level and 8% below the 3Q11 average level.
• Corporate debt underwriting volumes of $62.6 billion increased by 21% from the prior week. Thus far in 3Q12, corporate debt underwriting volumes are averaging 18% above the 2Q12 weekly average level and 65% above the 3Q11 weekly average level.
• Announced M&A volumes of $29.7 billion improved by 28% from the prior week. Thus far in 3Q12, announced M&A volumes are averaging 9% below the 2Q12 weekly average level and 12% below the 3Q11 average weekly level.
• Completed M&A volumes of $19.4 billion declined by 71% from the prior strong week. Thus far in 3Q12, completed M&A volumes are averaging 1% above the 2Q12 weekly average level and 17% above the 3Q11 average weekly level.

Credit spreads tightened on lower trading volume

• The Merrill Lynch high yield corporate bond spread (Merrill Lynch High Yield Corporate Bond Index less the 10-year treasury) tightened (improved) by 15 bps in the week to 576 bps. After widening (deteriorating) by 62 bps in 2Q12, the spread has tightened (improved) by 34 bps thus far in 3Q12.
• The CDX investment grade index (IG18) tightened (improved) by 1 bp in the week to 103 bps. After widening (deteriorating) by 26 bps in 2Q12, the index has tightened (improved) by 10 bps in 3Q12 QTD.
• The Markit iTraxx 5-year SovX Western Europe Index, which tracks Western European sovereign debt CDS (cost of insuring against default), declined (improved) by 2% in the week, and has declined (improved) in nine of the prior ten weeks. While the index rose (deteriorated) by 5% in 2Q12, the index has declined (improved) 12% thus far in 3Q12.
• Daily average bond trading volumes declined by 5% from the prior week. In the week, average investment grade bond volumes declined by 8%, average high yield bond volumes improved by 6%, and average convertible bond volumes declined by 21%. 3Q12 total bond volumes are averaging 10% below the 2Q12 weekly average and 5% below the 3Q11 weekly average.
• The AAA ABX-HE rose by 2% and the CMBX was flat in the week.
• The trade-weighted U.S. Dollar Index (DXY) declined by 0.1% in the week and the Commodity Research Board Index (CRB) rose by 0.8%.
• The TED spread (3-month U.S. Treasuries vs. 3-month LIBOR), which is an indicator of perceived default risk, declined (improved) by 3 bps in the week to 34 bps. The TED spread remains materially below the 464 bps reached during the peak of the 08-09′ credit crisis.

Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.

Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.

Investment Banking M&A Down 59% [Weekly M&A Trends]

Posted on August 6, 2012 by michael

Announced M&A volumes of $21 billion declined by 59% from the prior week’s relative strength. Thus far in 3Q12, announced M&A volumes are averaging 6% below the 2Q12 weekly average level and 10% below the 3Q11 average weekly level.

Sandler O’Neill’s Weekly M&A Trends:

The S&P 500 rose modestly and for the fourth consecutive week

• The S&P 500 improved by 0.4% in the week, but the Russell 2000 growth index declined by 1.3%. In 3Q12, the S&P 500 has risen by 2.1% while the Russell 2000 index has declined by 1.6%.
• Average daily U.S. equity trading volumes declined by 4% from the prior week. Thus far in 3Q12, volumes are averaging 10% below the 2Q12 weekly average and 28% below the 3Q11 average. Average daily U.S. volumes reflect the total number of shares traded on Tape A, Tape B, and Tape C in millions.
• Equity mutual funds experienced net outflows of $2.7 billion in the week according to ICI data (on a one week lag). In total, equity mutual funds have experienced $5.5 billion of net outflows in 3Q12 after experiencing net outflows of $22 billion in 2Q12.
• Volatility, measured by the average CBOE VIX, declined by 4% to 17.8, and the DB currency VIX declined by 2% to 9.1.

 

Equity underwriting had its biggest week since Mid-May, but Corporate Debt underwriting strength cooled and Announced M&A remained relatively quiet

• Equity underwriting volumes of $16 billion more than doubled from $7 billion in the prior week. A notable deal in the week was the U.S. Treasury Department selling approximately $5 billion of their stake in AIG. The USG now owns 53.4% of the company from 61.3% previously. Thus far in 3Q12, equity underwriting volumes are averaging 8% below the 2Q12 weekly average level and 8% below the 3Q11 average level.
• Corporate debt underwriting volumes of $30 billion declined by 38% from the prior week. Thus far in 3Q12, corporate debt underwriting volumes are averaging 6% above the 2Q12 weekly average level and 49% above the 3Q11 weekly average level.
• Announced M&A volumes of $21 billion declined by 59% from the prior week’s relative strength. Thus far in 3Q12, announced M&A volumes are averaging 6% below the 2Q12 weekly average level and 10% below the 3Q11 average weekly level.
• Completed M&A volumes of $55 billion improved by 53% from the prior strong week. Thus far in 3Q12, completed M&A volumes are averaging 5% above the 2Q12 weekly average level and 3% above the 3Q11 average weekly level.

 

Credit spreads improved on higher volume

• The Merrill Lynch high yield corporate bond spread (Merrill Lynch High Yield Corporate Bond Index less the 10-year treasury) tightened (improved) by 16 bps in the week to 591 bps. After widening (deteriorating) by 62 bps in 2Q12, the spread has tightened (improved) by 19 bps thus far in 3Q12.
• The CDX investment grade index (IG18) tightened (improved) by 2 bps in the week to 104 bps. After widening (deteriorating) by 26 bps in 2Q12, the index has tightened (improved) by 9 bps in 3Q12 QTD.
• The Markit iTraxx 5-year SovX Western Europe Index, which tracks Western European sovereign debt CDS (cost of insuring against default), declined (improved) by 4% in the week, and has declined (improved) in eight of the prior nine weeks. While the index rose (deteriorated) by 5% in 2Q12, the index has declined (improved) 11% thus far in 3Q12.
• Daily average bond trading volumes improved by 4% from the prior week. In the week, average investment grade bond volumes improved by 3%, average high yield bond volumes improved by 4%, and average convertible bond volumes improved by 12%. 3Q12 total bond volumes are averaging 12% below the 2Q12 weekly average and 6% below the 3Q11 weekly average.
• The AAA ABX-HE rose by 6% and the CMBX rose by 1% in the week.
• The trade-weighted U.S. Dollar Index (DXY) declined by 0.1% in the week and the Commodity Research Board Index (CRB) declined by 0.1%.
• The TED spread (3-month U.S. Treasuries vs. 3-month LIBOR), which is an indicator of perceived default risk, rose (deteriorated) by 2 bps in the week to 36 bps. The TED spread remains materially below the 464 bps reached during the peak of the 08-09′ credit crisis.

Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.

Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.

M&A Activity Spiked Increasing 65% [Weekly M&A Trends]

Posted on August 3, 2012 by michael

Announced M&A volumes of $57.6 billion increased 65% from the prior week. AB-InBev’s $20.1 billion acquisition of the remaining share of Grupo Modelo that it did not already own and Bristol-Myers Squibb’s acquisition of Amylin Pharmaceuticals in a deal valued at $7 billion.

Sandler O’Neill’s Weekly M&A Trends:

Equity markets rallied in the week but ended the quarter in negative territory

• The S&P 500 rose by 2.0% and the Russell 2000 growth index rose by 3.0% in the week. In 2Q12, the S&P 500 declined by 3.3% and the Russell 2000 growth index declined by 4.1%.  
• Average daily U.S. equity trading volumes declined 10.6% in the week. 2Q12 volumes were flat with the 1Q12 weekly average. Average daily U.S. volumes reflect the total number of shares traded on Tape A, Tape B, and Tape C in millions.
• Equity mutual funds experienced net outflows of $1.5 billion in the week according to ICI data (on a one week lag). Flows into equity funds have been positive in two of the previous four weeks, after being negative in twelve of the prior thirteen weeks. Equity mutual funds experienced net outflows of $20.9 billion in 2Q12 with one week of data yet to be reported. This is more than double the amount of net outflows experienced in 1Q12, but below the $80.7 billion net outflows in 3Q11.
• Volatility, measured by the average CBOE VIX, rose by 4.6% to 19.3, and the DB currency VIX declined by 4.8% to 9.7.

Investment banking improved as announced M&A was a highlight

• Equity underwriting volumes of $10.8 billion improved by 25% from the prior week’s level. 2Q12 equity underwriting volumes averaged 22% below the 1Q12 weekly average level. The week was highlighted by ServiceNow Inc.’s IPO, which rose 37% on Friday during it’s first day of trading. Four IPO’s priced in the week, marking the most active week for U.S. IPO’s since the Facebook offering in mid-May.
• Corporate debt underwriting volumes of $51.6 billion declined by 11% from the prior week. 2Q12 corporate debt underwriting volumes averaged 35% below the seasonally strong 1Q12 weekly average.
• Announced M&A volumes of $57.6 billion improved by 65% from the prior week. 2Q12 announced M&A volumes averaged 5% above the 1Q12 weekly average. The week was highlighted by two acquisitions on Friday: AB-InBev’s $20.1 billion acquisition of the remaining share of Grupo Modelo that it did not already own and Bristol-Myers Squibb’s acquisition of Amylin Pharmaceuticals in a deal valued at $7 billion. The M&A market was also relatively active last night and this morning, with four deals with values of at least $2 billion were announced.
• Completed M&A volumes of $43.7 billion improved by 19% from the prior week. 2Q12 completed M&A volumes averaged 25% above the 1Q12 weekly average.

FICC markets strengthened to close out the quarter

• The Merrill Lynch high yield corporate bond spread (Merrill Lynch High Yield Corporate Bond Index less the 10-year treasury) tightened (improved) by 8 bps in the week to 611 bps. In 2Q12, the index widened (deteriorated) by 62 bps.
• The CDX investment grade index (IG18) tightened (improved) by 3 bps in the week to 112 bps. The index widened (deteriorated) by 26 bps in 2Q12.  
• The Markit iTraxx 5-year SovX Western Europe Index, which tracks Western European sovereign debt CDS (cost of insuring against default), declined (improved) by 4.4% in the week, marking the fourth consecutive week of improvement. While the index rose (deteriorated) by 5% in 2Q12, the index declined (improved) by 14% in June alone, after rising (deteriorating) by 20% in May.
• Daily average bond trading volumes were flat from the prior week but averaged 14% below the seasonally strong 1Q12 in the quarter. In the week, average investment grade bond volumes improved by 5%, average high yield bond volumes declined by 15%, and average convertible bond volumes improved by 20%.
• The AAA ABX-HE rose by 1.4% and the CMBX rose by 0.7% in the week.
• The trade-weighted U.S. Dollar Index (DXY) declined by 0.4% in the week while the Commodity Research Board Index (CRB) rose by 6.1%.
• The TED spread (3-month U.S. Treasuries vs. 3-month LIBOR), which is an indicator of perceived default risk, declined (improved) by 1 bp in the week to 38 bps. The TED spread remains materially below the 464 bps reached during the peak of the 08-09′ credit crisis. 

Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.

Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.

M&A Deal Update, Volumes Up 24% [Weekly M&A Trends]

Posted on July 30, 2012 by michael

Announced M&A volumes of $49.8 billion improved by 24% from the prior week.  M&A highlights included Cnooc’s announced acquisition of Nexen for $15 billion, NRG Energy’s announced acquisition of GenOn Energy for $1.7 billion, Genesee & Wyoming’s announced acquisition of RailAmerica for $1.4 billion, and Peets Coffee & Tea’s agreement to be taken private by Joh. A. Benckiser for $1 billion.

Sandler O’Neill’s Weekly M&A Trends:

Equity markets rose on higher volume

• The S&P 500 improved by 1.7% and the Russell 2000 growth index grew by 0.6% in the week. In 3Q12, the S&P 500 has risen by 1.7% while the Russell 2000 index has declined by 0.3%.
• Average daily U.S. equity trading volumes improved by 11.6% from the prior week. Thus far in 3Q12, volumes are averaging 12% below the 2Q12 weekly average. Average daily U.S. volumes reflect the total number of shares traded on Tape A, Tape B, and Tape C in millions.
• Equity mutual funds experienced modest net inflows of $0.6 billion in the week according to ICI data (on a one week lag). After four consecutive weeks of net outflows, last week marked the first week of net inflows since the week ended June 15. In total, equity mutual funds have experienced $2.8 billion of net outflows in 3Q12 after experiencing net outflows of $22 billion in 2Q12.
• Volatility, measured by the average CBOE VIX, rose by 13.7% to 18.5, and the DB currency VIX rose by 6.2% to 9.3.

M&A activity picked up with a flurry of announcements early in the week

• Equity underwriting volumes of $7.2 billion declined by 50% from the prior week. Thus far in 3Q12, equity underwriting volumes are averaging 19% below the 2Q12 weekly average level.
• Corporate debt underwriting volumes of $47 billion declined by 25% from the prior week. Thus far in 3Q12, corporate debt underwriting volumes are averaging 17% above the 2Q12 weekly average level.
• Announced M&A volumes of $49.8 billion improved by 24% from the prior week. Thus far in 3Q12, announced M&A volumes are averaging 3% above the 2Q12 weekly average level.
• Completed M&A volumes of $34.5 billion more than doubled from the prior week. Thus far in 3Q12, completed M&A volumes are averaging 3% below the 2Q12 weekly average level.

Credit spreads improved and volume fell modestly

• The Merrill Lynch high yield corporate bond spread (Merrill Lynch High Yield Corporate Bond Index less the 10-year treasury) tightened (improved) by 9 bps in the week to 607 bps. After widening (deteriorating) by 62 bps in 2Q12, the spread has tightened (improved) by 4 bps thus far in 3Q12.
• The CDX investment grade index (IG18) tightened (improved) by 6 bps in the week to 105 bps. After widening (deteriorating) by 26 bps in 2Q12, the index has tightened (improved) by 7 bps in 3Q12 QTD.
• The Markit iTraxx 5-year SovX Western Europe Index, which tracks Western European sovereign debt CDS (cost of insuring against default), declined (improved) by 3% in the week, and has declined (improved) in seven of the prior eight weeks. While the index rose (deteriorated) by 5% in 2Q12, the index declined (improved) by 14% in June alone, after rising (deteriorating) by 20% in May. The index has declined (improved) 7% thus far in 3Q12.
• Daily average bond trading volumes declined by 2% from the prior week. In the week, average investment grade bond volumes declined by 1%, average high yield bond volumes declined by 4%, and average convertible bond volumes declined by 10%. 3Q12 total bond volumes are averaging 15% below the 2Q12 weekly average.
• The AAA ABX-HE rose by 5.4% and the CMBX rose by 0.2% in the week.
• The trade-weighted U.S. Dollar Index (DXY) declined by 0.9% in the week while the Commodity Research Board Index (CRB) declined by 1.6%.
• The TED spread (3-month U.S. Treasuries vs. 3-month LIBOR), which is an indicator of perceived default risk, declined (improved) by 2 bps in the week to 35 bps. The TED spread remains materially below the 464 bps reached during the peak of the 08-09′ credit crisis.

Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.

Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.

Investment Banking M&A Volumes +27% [Weekly M&A Volumes]

Posted on July 23, 2012 by michael

Announced M&A volumes of $37.7 billion improved 27% from the prior week.  Thus far in 3Q12, announced M&A volumes are averaging 9% below the 2Q12 weekly average level.

Sandler O’Neill’s Weekly M&A Trends:

Equity markets were mixed in the week as volume improved

• The S&P 500 improved by 0.4% and the Russell 2000 growth index declined by 1.0% in the week. In 3Q12, the S&P 500 is essentially flat while the Russell 2000 index has declined by 0.9%.
• Average daily U.S. equity trading volumes improved by 6.2% from the prior week. Thus far in 3Q12, volumes are averaging 16% below the 2Q12 weekly average. Average daily U.S. volumes reflect the total number of shares traded on Tape A, Tape B, and Tape C in millions.
• Equity mutual funds experienced net outflows of $0.5 billion in the week according to ICI data (on a one week lag). In total, equity mutual funds have experienced $3.4 billion of net outflows in 3Q12 after experiencing net outflows of $22 billion in 2Q12. This is more than double the amount of net outflows experienced in 1Q12, but below the $80.7 billion net outflows in 3Q11.
• Volatility, measured by the average CBOE VIX, declined by 9.2% to 16.3, and the DB currency VIX declined by 6.4% to 8.7.

Equity underwriting was a highlight as several IPOs “popped” in their first day of trading

• Equity underwriting volumes of $14.5 billion improved by 15% from the prior week. Thus far in 3Q12, equity underwriting volumes are averaging 15% below the 2Q12 weekly average level. The week was highlighted by the strong price performance of the IPOs coming to market, including the offerings of Five Below Inc. (+56% on the first day of trading), Palo Alto Networks Inc. (+27% on the first day of trading), and Kayak Software Corporation (+28% on the first day of trading). This week there are seven IPOs that could potentially price, the largest of which is Northern Tier Energy LP’s $392.4 million offering.
• Corporate debt underwriting volumes of $61.1 billion improved by 21% from the prior week. Thus far in 3Q12, corporate debt underwriting volumes are averaging 22% above the 2Q12 weekly average level.
• Announced M&A volumes of $37.7 billion improved by 27% from the prior week. Thus far in 3Q12, announced M&A volumes are averaging 9% below the 2Q12 weekly average level. In M&A news this morning, Cnooc announced it will acquire Nexen for $15 billion, NRG Energy agreed to acquire GenOn Energy for $1.7 billion, Genesee & Wyoming announced it will acquire RailAmerica for $1.4 billion, and Peet’s Coffee & Tea agreed to be taken private by Joh. A. Benckiser for $1 billion.
• Completed M&A volumes of $12.2 billion declined by 49% from the prior week. Thus far in 3Q12, completed M&A volumes are averaging 4% below the 2Q12 weekly average level.

FICC markets improved on better volume

• The Merrill Lynch high yield corporate bond spread (Merrill Lynch High Yield Corporate Bond Index less the 10-year treasury) tightened (improved) by 10 bps in the week to 616 bps. After widening (deteriorating) by 62 bps in 2Q12, the spread has widened (deteriorated) by 5 bps thus far in 3Q12.
• The CDX investment grade index (IG18) tightened (improved) by 1 bp in the week to 111 bps. After widening (deteriorating) by 26 bps in 2Q12, the index has tightened (improved) by 1 bp in 3Q12 QTD.
• The Markit iTraxx 5-year SovX Western Europe Index, which tracks Western European sovereign debt CDS (cost of insuring against default), declined (improved) by 1.2% in the week, and has declined (improved) in six of the prior seven weeks. While the index rose (deteriorated) by 5% in 2Q12, the index declined (improved) by 14% in June alone, after rising (deteriorating) by 20% in May. The index has declined (improved) 4% thus far in 3Q12.
• Daily average bond trading volumes improved by 3% from the prior week. In the week, average investment grade bond volumes improved by 4%, average high yield bond volumes were flat, and average convertible bond volumes improved by 19%. 3Q12 total bond volumes are averaging 19% below the 2Q12 weekly average.
• The AAA ABX-HE rose by 0.5% and the CMBX declined by 0.1% in the week.
• The trade-weighted U.S. Dollar Index (DXY) rose by 0.2% in the week while the Commodity Research Board Index (CRB) rose by 3.6%.
• The TED spread (3-month U.S. Treasuries vs. 3-month LIBOR), which is an indicator of perceived default risk, declined (improved) by 1 bp in the week to 37 bps. The TED spread remains materially below the 464 bps reached during the peak of the 08-09′ credit crisis.

Disclosure: I do not have a position in any stocks mentioned in this article, do not have a plan to initiate a position within the next 72 hours.

Disclaimer:  The information, opinions, material, and any other content provided in this article is for informational purposes only and is not to be used or considered an offer or solicitation to buy or sell securities, investment products, financial instruments, or to participate in any particular investment strategy. The information, opinions, material, and any other content provided in this article does not constitute as a recommendation or as advice to buy or sell securities, investment products,  financial instruments, or to participate in any particular investment strategy.