Equity Insurance in Canada Decreases – 3rd Q 2006

Third quarter equity issuance in Canada decreased by 26 per cent from the second quarter while trading fell 17 per cent, according to a report released by the Investment Industry Assoc of Canada. The Association’s quarterly Review of Equity New Issues & Trading records total equity issuance at $9.1 billion for the third quarter, a decrease of 29 per cent over the same period last year. Trading volume stood at 17.2 billion, an increase of seven per cent over the third quarter in 2005.

In the third quarter, the summer lull in financings was buffeted by headwinds in the market. Rising interest rates, falling commodity prices and a leveling-out in record financing activity over the past several months all contributed to the quarter’s overall softer issuance market. Common equity issuance was down 42 per cent, while income trusts fell 10 per cent from the second quarter.

Total financings in the first nine months of this year were $33.5 billion, down seven per cent from last year’s banner level. The major drag on issuance this year has come from the income trust sector. Even before Ottawa’s surprise Halloween income trust tax proposal, the more expensive credit environment this year and corporate dividend reduction had hit the trust market hard: trust issuance in the first nine months was down 37 per cent from last year’s record pace.

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