(Bloomberg) — Fees from underwriting US IPOs, stock sales and convertible bonds have already surpassed last year’s, even as tariff angst and the government shutdown curbed dealmaking opportunities.
With a few weeks left in 2025, fees from stock and convertible bond sales by US-listed companies total $8.78 billion for the year through Dec. 2, versus $8.06 billion in all of 2024, according to London Stock Exchange Group Plc data.
A record year for convertible bond issues, as well as an IPO market helped by a surge in blank-check firm listings, underpinned the rebound in fees.
The tariff back-and-forth and the federal government shutdown that halted some of the US Securities and Exchange Commission’s functions probably meant about a quarter of this year was lost to dealmakers, said Mangesh Ghogre, founder of New York-based One Capita Advisors and a former head of equity capital markets at Nomura Holdings Inc.’s India unit.
“With fewer windows, the car, so to speak, was running on three tires this year,” Ghogre said.
The trifecta of relatively high interest rates, soaring equity prices and elevated single-stock volatility made convertible bonds especially attractive this year to companies seeking the lowest-cost capital, making it the fastest-growing product within ECM with $2.38 billion in fees, up 46% from 2024. There were nine single or dual-tranche offerings raising more than $2 billion, led by two-part deals from artificial intelligence data center operator Nebius Group NV and crypto exchange Coinbase Global Inc.
Helped by a decent stretch from June to September when markets were wide open for business, as well as a substantial pickup in SPAC listings, banks have still generated $2.45 billion of fees this year from US-traded IPOs. That’s a nearly 13% increase from last year, according to the LSEG data, led by the listings for gas exporter Venture Global Inc., payments firm Klarna Group Plc and AI infrastructure company CoreWeave Inc.
As in most years, the biggest source of fees for the banks’ ECM units was sales of shares in already listed companies. These generated $3.94 billion of fees, 7% behind last year’s haul, as the dealmaking hiatuses made it harder to confidently time offerings.
February’s $13.1 billion sell-down by Toronto-Dominion Bank of its stake in Charles Schwab Corp. holds the mantle of this year’s biggest stock sale, well ahead of insurance broker Brown & Brown Inc.’s $4.4 billion offering in June.
The biggest sectors in terms of ECM fees across all products this year were financials – a category which includes vehicles such as SPAC IPOs — and technology. Health care, last year’s busiest sector, was weighed down by policy uncertainty in Washington.
While this year’s fees are modestly higher than 2024’s, they remain well below the $20.4 billion reeled in during the easy money conditions of 2021 and the 10-year average of $9.41 billion, LSEG’s data show.
With the government shutdown delaying some activity, bankers are optimistic that next year will be bigger again in terms of fees and share-sale volume.
“The highway could turn into a runway in 2026 given expected interest rate cuts and assuming the full year will be available,” Ghogre said.
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