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UniCredit rights issue will pave the way for European ECM next year

European equity capital markets volume for 2012 is impossible to predict. One thing is for sure though: much depends on resolution of the eurozone crisis and also on the reception for UniCredit’s rights issue

Craig Coben, head of EMEA equity capital markets at Bank of America Merrill Lynch, and Oliver Holbourn, head of equity syndicate, presented the firm’s forecast for the business in 2012 today. The volume charts paint a disappointing pattern. EMEA equity capital markets volume was $301 billion in the first full year of the financial crisis in 2008; it rose to $374 billion in 2009, as banks and corporations repaired balance sheets; volume declined to $210 billion in 2010 and looks on course for barely $180 billion for 2011.

Historic EMEA equity issuance 
 
Source: Dealogic, Bank of America Merrill Lynch 

The short-term trend is even more alarming with just $33 billion raised in the five full months from July to November 2011. Annualize that and the outlook for next year would be a pitiful $80 billion of equity raising volume. The firm projects volume of between $150 and £200 billion next year but that’s just a guess. “In all honesty, no-one has any idea,” says Holbourn. He adds: “It’s hard to see the market for equity issuance recovering until investors see a credible plan for resolving the eurozone’s sovereign issues.”

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