By Nivedita Balu

TORONTO, April 4 (Reuters) - Canadian companies tapped

equity and debt capital markets with vigor in the first quarter,

but mergers and acquisitions slowed and a dry spell for initial

public offerings extended into the new year, LSEG data released

on Thursday showed.

Equity issuance in Canada soared more than two-fold from the

year-ago quarter to $4.97 billion, while debt deals jumped 35%

to $21.39 billion, the data showed.

First Quantum Mineral's $1 billion stock offering

and $1.6 billion debt issuance to bolster its balance sheet were

among the notable capital market deals.

Royal Bank of Canada ( RY ) and Bank of Montreal ( NRGD )

topped the bookrunner league for equity capital markets.

Canada's main stock exchange had no new listings, just as in

full-year 2023.

Appetite for domestic and cross border M&A remained weak.

For the quarter ended March 31, Canadian M&A volumes fell 24%

from a year ago to $27.5 billion, the data showed.

J.P. Morgan and RBC Capital markets topped the list of M&A

advisers.

WHY IT'S IMPORTANT

A revival in dealmaking is key to boosting Canadian bank

profits as their core lending business faces high borrowing

costs and rising provisions for bad debt. On average Canadian

banks derive about a fifth or more of their revenues from

investment banking.

The first quarter marked the smallest number of deals since

2016, while high interest rates helped keep debt issuance

volumes at nearly a four-year high.

Big Canadian banks logged capital market business growth as

trading revenues and in some cases, advisory fees, rose.

CONTEXT

The Bank of Canada has held interest rates at a 22-year high

of 5% since last summer, limiting M&A equity as borrowing has

become more expensive.

Macroeconomic, geopolitical and regulatory pressures also

have curbed appetite for deals.

BY THE NUMBERS

Quarter Equity Corporate Debt M&A

Issuance Issuance (in $ activity

(in $ bln) bln) (in $ bln)

Q1 2022 3.75 14.71 60.65

Q2 2022 3.02 9.41 69.45

Q3 2022 3.46 10.55 41.31

Q4 2022 2.75 14.20 79.17

Q1 2023 1.86 15.79 36.22

Q2 2023 4.19 17.91 47.86

Q3 2023 6.84 19.56 46.63

Q4 2023 4.02 14.41 56.53

Q1 2024 4.97 21.39 27.51