Year's busiest week for U.S. IPOs offers little comfort to banks

Fri Sep 23, 2016 5:05pm EDT
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By Sweta Singh and Ankur Banerjee

(Reuters) - Friday capped the busiest week for the U.S IPO market this year, but the country's six largest banks have little reason to cheer.

Combined fees from advising on deals and from equity and debt underwriting have dropped a 18.5 percent this year at JPMorgan Chase & Co, Wells Fargo & Co, Bank of America Corp, Citigroup Inc, Morgan Stanley and Goldman Sachs Group Inc, Thomson Reuters data shows.

Despite an uptick in IPOs since June, activity remains below 2015 levels, largely due to low U.S. interest rates that have made it easy for companies to borrow cheaply and made it more attractive for them to raise funds through debt offerings.

Fees for debt issues are typically lower than those on equity offerings.

The U.S. Federal Reserve had been expected to raise interest rates four times this year, but the central bank hasn't budged.

Eight companies made their market debut this week, raising a total of $1.22 billion. Five listed one or more of the six big banks as a lead manager, according to Renaissance Capital, a manager of IPO-focused ETFs.

Just 70 companies have gone public this year through Friday, down from 122 in the same period last year - the lowest since 2009. The amount raised totaled about $11.8 billion, a drop of 52 percent, according to Thomson Reuters data.

Equity offerings in the United States fell 36 percent to $122.7 billion through the week of Sept. 16. Debt offerings were little changed at $1.7 trillion.   Continued...

The logo of Dow Jones Industrial Average stock market index listed company JPMorgan Chase (JPM) is seen in Los Angeles, California, United States, in this October 12, 2010 file photo. REUTERS/Lucy Nicholson/File Photo