When the Bank of Canada governor warns that “the first quarter of 2015 will look atrocious” due to the oil shock and underscores “how uncertain the outlook is” for the Canadian economy, it would be fair to brace ourselves for a major slump in the Canadian capital markets.
But despite these cautionary statements and the continuing volatility in energy prices, the Canadian capital markets appear to be keeping a steady pace. For the first quarter of 2015, there were 214 offerings completed in Canada raising an aggregate of approximately $83 billion in gross proceeds (compared to 277 deals in the first quarter of 2014 raising approximately $71 billion in gross proceeds).
But the confidence the market is demonstrating is tempered by recent history. With the economic and regulatory fallout of the ‘08 crash still in the rear-view mirror, scrutiny by many players remains fixed on proper oversight. In this year’s report, we discuss two important regulatory developments impacting North American capital markets—in the U.S., the recent clampdown on leveraged lending is leading to significant changes in the debt markets, and in Canada, we are seeing a continued focus on insider trading enforcement and the adoption of whistleblower initiatives.
Against this backdrop of heightened regulation and uncertain macro-economic factors, issuers and investors are responding to the current climate with inventive solutions. Participants in the mining industry, who have been hard hit by volatility in commodity prices, are using creative financing solutions where more conventional financing resources are unavailable. Cash-strapped governments are partnering with institutional investors with access to large capital pools to form public-private partnerships as an effective model to meet the growing demand in the infrastructure space. And Canadian, U.S. and foreign issuers publicly listed in the U.S. are successfully tapping into the robust U.S. capital markets through confidentially marketed public offerings.
This year’s report also features an analysis of how Canadian public companies have been responding to the new disclosure requirements regarding the representation of women in board and executive officer positions. Ultimately, these rules are designed to drive the development of a market standard that will lead to the advancement of gender equality in the C-Suite. If investors buy into the premise that companies with stronger female representation at the board and senior management levels perform better, issuers may start building diversity objectives into broader strategies to improve their long-term performance.
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