How Have Debt Origination Deal Volumes For U.S. Investment Banks Changed In The Last 5 Quarters?

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Debt capital market deal volumes for the largest U.S. banks tanked in Q4 2016 from the unusually high levels seen in the previous two quarters to among the lowest levels in the last five years due to a combination of seasonal effects and a sharp reduction in debt origination activity by corporates as well as federal agencies in the U.S. In fact, the U.S. banks reported a larger combined deal size in the much slower period of Q4 2015 compared to Q4 2016.

IB_QA_US_DCMSizeChange_16Q4

Debt origination volumes for individual banks were taken from Thomson Reuters’ investment banking league tables for the last five quarters. The table below captures the respective market shares for each of these banks over this period. The green-to-yellow shading for figures in a quarter should help compare the relative standings of these 5 banking giants in a particular quarter.

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IB_QA_US_DCMShareChange_16Q4

It should be noted that the largest debt capital market deals employ more than one investment bank, so the market share figures are not exclusive.

Notably, the combined market share of these 5 banks has slid steadily over the last four quarters from a peak of 34% in Q4 2015 to below 23% now. This is primarily because of the fact that debt origination activity saw the largest quarter-on-quarter jump in emerging markets. As debt markets in emerging economies are highly fragmented, with local players garnering a sizable share, this translated into a lower share of the global debt origination figure for the U.S. banking giants. Incidentally, Citigroup’s strong presence in key developing nations is an important factor behind its leading market share in Q4 2015 and Q4 2016 – when market conditions in the U.S. and Europe were particularly weak.

The chart below captures Citigroup’s share of the global debt origination market. You can see how changes to this metric affects our price estimate for the geographically diversified banking giant by modifying our forecast here.

See the links below for more information and analysis about the 5 largest U.S. investment banks:

See full Trefis analysis for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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