Indigestion or vigor after a record year for capital markets?


  1. It was a banner year in equity capital markets, with global equity issuance hitting a new record high of $1.3 billion.
  2. IPOs rose 83% to an all-time high of $413 billion. The United States alone saw a 78% increase to $150 billion.
  3. For a second consecutive year, debt markets exceeded $10 billion. However, there was a retraction in H2.

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In 2021, global stock markets eclipsed the pandemic year 2020 set an all-time record for global fundraising. Meanwhile, a flurry of year-end trading showed no sign of a slowdown in the equity market.

Stock markets ended the year up 19% from 2020, raising $1.3 billion on 7,206 issues. A lull in the summer period was followed by a 20% increase in the last three months of the year, with the fourth quarter surpassing $300 billion for the sixth quarter since the start of the pandemic, mainly due to larger transactions.

The Global State of Equity Capital Markets

US dominance in ECM markets has eroded somewhat, dropping from a third of market share in 2020 to 29% in 2021.

In contrast, Asia-Pacific saw a 21% increase in equity issuance to $463 billion, giving it a quarter of the market. EMEA issuers also caught up, with a 35% increase in equity issuance compared to 2020. The European market was dominated by a strong UK, both in number and value of issuance of shares.

Best year ever for global IPOs

The global IPO market has seen a dramatic resurgence in 2021, after spending much of the past decade on a plateau.

Global IPO activity (including SPACs) totaled $413 billion, an 83% increase from 2020, and the strongest performance since records began in 1980. New listings have been driven by US stock exchanges, which recorded a 78% increase, to exceed $150 billion in capital from nearly 400 newly created public companies.

The U.S. market suffered a major year-end shock from the “aberrant” IPO of electric truck company Rivian Automotive, generating initial proceeds of nearly $14 billion.

Across the Atlantic, European IPOs rebounded from a forgettable 2020, but remained well below the 2017-2019 pre-pandemic positive trend line.

Despite this rebound in first issues, the secondary issues market continued to dominate. It set an all-time high of $691 billion, up from $4,600, up 3% in overall value from a year earlier.

Refinitiv’s rankings for global equity underwriters show the top five rankings static since 2019, with Goldman leading the pack, followed by Morgan Stanley, JP Morgan, BofA Securities and Citi.

It will be interesting to see if January’s jitters around tech stocks turn into prolonged indigestion or if the IPO party continues into the new year.

Debt tops $10 billion for second time

Global debt markets saw second consecutive year over $10 billion — $10.2 billion to be exact, out of 29,124 bids — a stunning achievement, even if it’s 3% below the all-time high of 2020.

Regardless of the strength of the full-year count, 2021 has been a two-game show for debt markets. A decline in the third quarter was compounded in the fourth quarter by a further 14% decline in the number and value of deals, to levels not unheard of before the pandemic.

The fall was largely driven by investment grade corporate debt, which fell 6% on a full-year basis to $4.6 billion, while remaining the second highest on record. The US dollar market saw the steepest fall, down 22% from 2020.

As the engine of corporate growth slowed, global high-yield debt passed the $600 billion threshold. It rose 17% on the year to nearly $650 billion as slightly smaller, riskier, private equity-backed issuers entered the market.

However, in the global high yield market, 2021 has been an even more pronounced “game of two halves” with activity in the second half falling back towards pre-pandemic levels.

Another strong contribution to the total came from green bonds, which broke previous records to raise $485 billion. According to data from Refinitiv and the Climate Bonds Initiative, this nearly doubled the amount raised in 2020, up 98%.

In other markets, emerging market corporate debt issuance rose 2% to $384 billion, a rise that was more than offset by a 3% drop in international bond issuance to $5.1 billion. of dollars.

JP Morgan continued a four-year streak as the top underwriter of global debt, followed by Citi, BofA Securities and Goldman, respectively.

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Indigestion or vigor after a record year for capital markets?

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Global financial markets have maintained their high level in 2021, with debt and equity issuance maintaining their post-pandemic cruising speed. Quarterly data suggests that debt markets may have started their descent before the end of the year, but risky markets such as IPOs continued to soar.

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Last update: February 04, 2022

Posted: February 04, 2022