Annual US Capital Markets: What to Watch for in 2017

January 25, 2017

By Derek Thomson, US Capital Markets Research Leader, PwC

Among the many factors that influence the US capital markets, the big news from this weekend — the inauguration of a new US president – may prove the most significant unknown when trying to anticipate 2017 capital markets activity. Certain policies proposed by the new administration could end up boosting growth, while others could prove contractionary to capital markets activity. How can organizations looking to fuel their future navigate in the meantime?

For organizations looking to open paths to capital – whether that be through an equity offering such as an IPO, high-yield debt offering, spin-off or other transaction – it is useful to understand how quickly windows of opportunity can open and close. An understanding of recent market trends can help ensure you’re able to leverage the right insights to make the right moves at the right times.

Our 2016 Annual US Capital Markets Watch takes a look at the primary capital markets issuances in 2016 and the economic drivers which will likely carry into the new year. It’s a data-rich analysis of major trends in the capital markets environment (both equity and debt), along with a perspective on what last year’s trends may mean for 2017. Look inside for helpful infographics and charts that help distill the major findings.

A sample of the report’s findings follows. Check out the full report, and stay tuned to this blog for a deeper look at the detailed analysis contained therein.

Capital markets activity decreased in 2016

Overall, 2016 was a year of global uncertainty and volatility. Falling oil prices in the first quarter, geopolitical concerns such as the Brexit vote in June, the US presidential election in November, and ongoing speculation on Fed monetary policy contributed to a slide in primary capital markets issuances by 3% in 2016. This was the first year-over-year decrease in capital markets proceeds in over five years. However, the slowdown was most severe in the first quarter of the year, with activity recovering in the second and third quarters as market volatility subsided.

Declines in capital market activity were felt across the board. For the second year in a row, US IPO market activity declined, falling by 37% with 123 IPOs raising $22 billion in 2016. This was the slowest year for the IPO market since 2009 and the lowest value raised since 2003. Equity follow-ons, high-yield debt and investment-grade debt activity also saw declines, with only convertible transactions able to maintain their 2015 level. Proceeds raised were down for all products, with the exception of investment-grade debt. Strong demand from investors for highly-rated paper saw increases in investment-grade deal sizes, driving proceeds to a record $1.3 trillion.

Strong 2016 finish fuels 2017 momentum

Investor uncertainty gave way to renewed confidence in the tail end of 2016. A strong rally in the broader markets carried all major US indices to record highs. This positive ending to the year created strong momentum entering 2017 and was supported by healthy economic indicators signaling a robust US economy. Positive fundamentals also solidified the Fed’s decision to raise interest rates – the first rate increase this year and only the second increase since the financial crisis.

US capital markets hot spots

In terms of sectors, the Pharma & Life Sciences sector led IPO activity, though there were half as many pharma & life sciences IPOs in 2016 as there were in 2015. Meanwhile, the Technology sector saw the second largest volume of IPOs, accounting for 20% of the deal activity, up from 14% in 2015. Entertainment, Media & Communications companies led high-yield debt activity for the second year in a row.

In general, IPO returns averaged 23%, handily beating the market for the fourth time in five years. Banking & capital markets, industrial manufacturing, and technology IPOs all saw strong aftermarket performance, closing 2016 up 42%, 38%, and 32%, respectively.

Looking ahead

US economic growth is expected to rebound in 2017 as the commodity price drag deteriorates. Consumers remain the relative bright spot, thanks to a solid labor market, modest improvement in wages, and low gas prices. However, global divergence is expected to accelerate, with forecasted growth rates slowing in the EU and China.

This year, the ability to address the numerous complexities associated with a successful offering can require significant effort and commitment on the part of companies’ management teams. A thorough readiness assessment that highlights key areas – from building a finance department to the quarterly close process and from tax structuring to executive compensation plans – can help companies to successfully access capital as well as improve their operating structure. We expect many companies to seek trusted capital markets advisors with independent viewpoints to help guide them along this journey in the New Year.

Visit for the full report and subscribe here to our weekly markets watch.



Colin Wittmer

Deals Leader, PwC US Email

Curt Moldenhauer

Deals Solutions Leader, PwC US Tel: +1 (408) 817 5726 Email: