Toronto’s financial district on Wednesday. LSEG data shows M&A was especially strong between early July and late September, with deals involving Canadian companies totalling nearly US$84-billion.Fred Lum/The Globe and Mail
Bay Street is booming.
Stock sales, corporate borrowing rates, and merger and acquisition activity all posted dramatic gains in the third quarter, according to data from LSEG Data & Analytics to be released Friday, as investors and executives shrug off rising geopolitical risks. M&A was especially strong, with deals involving Canadian companies between early July and late September totalling nearly US$84-billion, or more than 51 per cent above the same period in 2024.
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Peter Castiel, chair of Stikeman Elliott LLP, which was the top legal adviser for M&A during the first nine months of the year, said companies are getting used to doing deals in a volatile economic environment.
“After a while, this uncertainty almost becomes a new normal and people say, ‘We need to figure it out and move on, because one thing we know we cannot do is stay static,’ ” Mr. Castiel said in an interview.
While overall deal value is higher, the actual number of deals for the third quarter is down slightly to 803, or about 54 transactions below the most recent third-quarter average over the past 10 years. That, Mr. Castiel said, is largely a function of higher average deal size.
“The deals we are seeing are a lot larger, a lot larger,” he said.
Teck Resources Ltd.’s TECK-B proposed $50-billion megamerger with Anglo American PLC NGLOY, Cenovus Energy’s friendly $7-billion offer to buy MEG Energy Inc. MEG and Gildan Activewear Inc.’s GIL US$2.2-billion planned acquisition of Hanesbrands Inc. are just a few examples of the many multibillion-dollar deals that were announced during the quarter.
Corporate stock sales also continued their steady climb out of multidecade lows. While the third quarter of 2024 saw the lowest Canadian equity issuance for any three-month period since 1998, the total for the third quarter of this year was $3.7-billion. That is still 41 below the most recent 10-year average for the third quarter, but is more than double the total equity issuance of $1.8-billion from the same period in 2024.
“We are not back to long-term averages, but it definitely feels like the activity has picked up,” Jackie Nixon, head of Canadian equity capital markets at Royal Bank of Canada RY, the top investment bank for equity issuance during the first nine months of the year, said in an interview.
“The tone feels very good,” Ms. Nixon said. “Investors are engaged and we are seeing issuance across sectors and products.”
Nitin Babbar, global head of equity capital markets at RBC, said the recent upswing should be sustainable because it is based on the longer-term expectations of business-friendly government policy globally.
“This isn’t about people having high pain tolerance. This isn’t about seeing through the pain of tariffs,” Mr. Babbar said in an interview. “This is about realizing that many administrations are promoting a pro-growth strategy.”
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LSEG said corporate borrowing activity jumped more than 31 per cent on a year-over-year basis, with Canadian companies issuing a total of $29.9-billion in debt during the third quarter. That comes after Canadian businesses had already spent much of 2024 on a borrowing binge fuelled by falling interest rates.
When compared with the most recent 10-year third-quarter average of $17.6-billion in Canadian corporate debt issuance, the latest quarter surpasses that figure by nearly 70 per cent.
“Underlying rates have come down, credit spreads have compressed and the end coupon has created an improved funding environment by way of cost,” said Patrick MacDonald, co-head of Canadian debt capital markets at RBC Capital Markets, the top investment bank for debt deals during the first nine months of the year. “That is one of the variables enticing issuers into the bond market.”
Canada’s corporate debt market is even stronger when factoring in so-called maple deals, which refer to non-Canadian companies issuing debt in the Canadian market. Such transactions are not included in the LSEG figures.
McDonald’s Corp. MCD and BNP Paribas BNPQY raised $750-million and $650-million respectively in Canadian debt markets during the third quarter, according to RBC data, which found total maple issuance hit nearly $6-billion between early July and late September.
The strength of the Canadian corporate debt market between July and September is additionally noteworthy for having followed an extremely slow second quarter. Companies drastically slowed borrowing in April, after what U.S. President Donald Trump dubbed “Liberation Day” on April 2, when his administration announced global tariffs and international trade war concerns were at their peak.
“April seems like eons ago, when Liberation Day gave us one of the slowest months we have seen in the Canadian market,” said Rob Brown, who co-heads the Canadian debt capital markets practice at RBC alongside Mr. MacDonald. “But almost every other month has been among the top five most active ever.”