European companies doubled their issuance of convertible bonds in 2003 while shunning stock sales as a source of funds, though equity may regain favour this year, financial data provider Thomson Financial said on Friday.
Near perfect conditions of low interest rates and rising equity prices made fund raising through convertible bonds extremely cost effective in 2003 and touched off a bumper year.
The value of initial public offerings halved and funds raised from the placing of large blocks of shares fell by a quarter - but there were signs in the last few months of the year that equity issuance may be fighting back against convertibles as a favoured asset class.
Common stock issuance outpaced convertibles in the fourth quarter as stock prices continued to climb and a hike in interest rates loomed.
The number of deals in run-up to Christmas gave rise to hopes there are further deals in the offing.
"The final quarter of the year did see a pick-up in activity globally, and expectations for 2004 are running very high," said Thomson.
"The pipeline for equity capital raisings of all sorts is swelling." A series of multibillion-dollar IPOs are scheduled for this year.
Stock issues fell 24.7 percent in 2003 to $51.9 billion but increased throughout the year, culminating in a quarter-on-quarter increase of 35 percent in the fourth quarter.
Goldman Sachs ranked first among bookrunners for common stock in 2003, completing the most deals in the region. Citigroup jumped five notches to take the runner-up slot.
Funds raised from IPOs fell 49.6 percent to $8.9 billion, the lowest amount since 1992.
Again Goldman Sachs topped the rankings table, jumping 10 notches from 2002 after winning bookrunner roles on some of the largest deals of the year, including the IPO of British telephone directory publisher, Yell.
Convertible bond issuance increased 113 percent to $46.2 billion in 2003.
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