Industrial Monthly Market Roundup

Real-Time Markets Perspectives

According to the Department of Labor, the Consumer Price Index (CPI) rose 0.6% in March 2021 from the prior month and 2.6% from the prior year, versus the Dow Jones estimates of 0.5% and 2.5%, respectively
- Gasoline prices were the biggest contributor to the monthly gain, surging 9.1% in March 2021 and were responsible for approximately half of the overall CPI increase
  - Gasoline prices are currently up 22.5% from a year ago, part of a 13.2% increase in energy prices
The deficit for the first six months of the 2021 fiscal year ballooned to a record $1.7 trillion, compared to a $743 billion deficit for the comparable period last year

The U.S. government posted a March budget deficit of $660 billion, a record high for the month, as direct payments to Americans under the latest stimulus package were distributed

The March 2021 deficit was the third highest U.S. monthly deficit on record, surpassed by $864 billion in June 2020 and $738 billion in April 2020

M&A Markets

Carrying forward the momentum of 4Q20, M&A activity turned in a strong first quarter performance with North America, dominated by the U.S., netting 54.4% of global deal value (its highest market share in 14-years)
For the second consecutive quarter, U.S. M&A activity by value was the highest quarterly level since 2001
- There were ~1,595 deals worth $563 billion recorded in 1Q21, up slightly by value compared to the previous quarter of 1,708 deals worth $554 billion in 4Q20
U.S. M&A activity in 1Q21 was also bolstered by the quarter’s record amount of divestiture activity
- There were 29 deals worth $50.3 billion announced in 1Q21, breaking the previous record set in 2Q07 of 34 divestitures worth $49 billion
Financial sponsors continue to remain very active, with strong M&A and exit activity in 1Q21
- U.S. buyout activity reached its second-highest quarterly level by value since 2001, with 477 LBOs announced worth $160 billion
  - The previous record was set in 2Q 2007, when 286 buyouts were announced worth $178 billion
- 1Q21 was the third quarter in a row where U.S. exit activity exceeded $100 billion, with 322 exits announced worth $114 billion

Debt Capital Markets

Market conditions in the broadly syndicated leveraged loan market continue to remain favorable but are better suited for issuers versus more aggressive transactions
- Institutional leveraged loan volume surged to $182 billion in 1Q21, the highest quarterly volume after the record of $171 billion in 1Q17
CLO issuance remains strong, with $42.3 billion of issuance year-to-date and a healthy deal pipeline, issuance is expected to reach $105 billion in 2021
The middle market leveraged loan pipeline stands at $4.9 billion for the week ending April 9th, with deal activity gaining momentum in recent weeks
The high yield bond market continues to remain strong, with March 2021 new issue volume setting a record of $63.0 billion
- 1Q21 high yield bond revenue totaled $153.5 billion versus $73.9 billion in 1Q20
  - 1Q21 high yield bond volume annualized would be a ~27% increase from the 2020 record
Outflows for the high yield bond funds totaled $5.9 billion in March 2021
- This follows outflows in January and February of $1.6 billion and $2.7 billion, respectively
  - Outflows for high yield bond funds total $6.5 billion year-to-date, which follows inflows totaling $44.9 billion in 2020
With the investment grade bond market currently at $459.8 billion, 1Q21 was the second busiest quarter of all-time compared to the $491.2 billion record posted in 1Q20
- March 2021 volume ended just above $200 billion, making it the fourth time ever that monthly issuance surpassed that mark
- April 2021 volume is currently at just over $25 billion, with 2021 total estimated issuance volume at approximately $1.2 trillion
The 2021 investment grade M&A total now stands at $52.9 billion, or 11.3% of the total $467.5 billion 2021 supply

Equity Capital Markets

U.S. stocks were up ~4.0% in the month of March and momentum has continued into early April, with the S&P 500 eclipsing the 4,000 mark for the first time in history
Issuers continue to take advantage of peak market conditions, elevated multiples and strong recent financial performance to launch transactions (100 IPOs and 250 follow-ons priced in 1Q21)

Industrial Monthly Market Roundup

Real-Time Markets Perspectives

M&A Markets

Debt Capital Markets

Equity Capital Markets

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