2014 US Capital Markets Activity Reached $1.8 Trillion, According to PwC's Deals Practice Annual US Capital Markets Watch

NEW YORK, Feb. 10, 2015 /PRNewswire/ -- The improving U.S. macro environment, record low interest rates, the stock market's steady rise, and overall low volatility all contributed to strong U.S. capital markets in 2014. These market dynamics also drove initial public offering (IPO) volume leading to value highs not seen since 2000, according to PwC's Deals Practice 2014 US Capital Markets Watch, issued today by PwC US. This report provides a full year view and comprehensive breakdown of capital markets activity across the equity and debt markets, including IPOs, follow-ons, spinoffs, convertibles, and high-yield and investment-grade debt issuances in 2014.

"We saw the U.S. capital markets continue to strengthen in 2014 with the improving domestic economy and investors' search for yield fueling the year's high IPO activity. As we kick off 2015 with a full IPO pipeline, we are optimistic that the U.S. capital markets will remain strong," said Henri Leveque, leader of PwC's Deals Practice U.S. Capital Markets and Accounting Advisory Services.

Equity Markets

The U.S. stock indices closed at record highs in 2014 and positive market performance made for strong showings by all equity capital products, which raised $290 billion in 2014. The market was receptive to both veteran companies and debuts, with follow-on offerings leading in terms of capital raised.

According to PwC, 304 companies debuted on the U.S. IPO market in 2014, raising $87.1 billion. Eleven companies had deal sizes in excess of $1 billion, compared to six companies in 2013. The healthcare sector led IPO activity in terms of volume with 115 IPOs, followed by the technology and financial sectors with 60 and 48 deals, respectively. The technology sector delivered the highest amount of proceeds with $34.6 billion or 40 percent of total value, largely driven by the record-setting Alibaba IPO. Spin-offs continued their rise in popularity in 2014, with 18 spin-off IPOs and another 37 spin-offs that didn't raise additional capital.

Consistent with 2012 and 2013, financial sponsors remained active participants in the 2014 IPO market, backing approximately 60 percent of total volume and approximately 70 percent of total proceeds raised.

Debt Markets

PwC reported a banner year for the U.S. debt market in 2014, with a total of $1.5 trillion in high-yield and investment-grade issuances, surpassing 2012's total of $1.4 trillion and $1.4 trillion in 2013. "The debt markets thrived in the low interest rate environment, which not only encouraged large numbers of refinancings, but also led to a moderate uptick in merger and acquisition activity," said Neil Dhar, PwC's Deals Practice U.S. Capital Markets Leader.

The high-yield bond market continued its strong momentum from 2013, reaching a total of $314.0 billion in proceeds from 577 issuances. Refinancing was the main driver behind high-yield issuances in 2014, accounting for approximately 50 percent of total value. Additionally, high-yield spreads tightened in 2014, compared to 2012 and 2013, as investors sought to maximize returns amid the current low interest rate environment.

Total investment-grade issuances reached $1.2 trillion, surpassing the previous two years, despite volume being lower than each of the previous four years, partly driven by large U.S. corporations continuing to buy back shares in the face of an increasingly activist environment.

"According to our 18th Annual Global CEO Survey, U.S. CEOs are intent on making their companies smarter. They expect to take risks to operate within diverse and fluid markets, make new alliances to enhance capabilities, and to be active dealmakers in 2015.  As the capital markets become more crowded, the need for companies to be ready and prepared to operate in an increasingly regulated environment, is critical," concluded Dhar.

PwC helps corporate and financial sponsors achieve their growth initiatives and optimize deals from strategy through value capture. PwC's Deals professionals support clients on a wide range of transactions including domestic and cross-border acquisitions, alliances, divestitures and spin-offs, capital events such as IPOs and debt offerings, as well as business reorganizations.

For more information, visit: www.pwc.com/us/deals 

About PwC US
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