CIBC Capital Market’s Mike Freeborn leads a mid-year discussion with CIBC Investment Banking and Corporate Banking leaders on the trends shaping capital markets in 2026. The panel reviews strong activity across equity, debt, bank and M&A markets, including robust IPOs, record Canadian debt issuance, strength in project finance and infrastructure, and healthy dealmaking, while highlighting opportunities and risks for the remainder of the year and into 2027..
CIBC PERSPECTIVES
2026 Outlook - Mid-Year Market Update
Michael Freeborn
Managing Director & Co-Head, Global Corporate & Investment Banking, CIBC Capital Markets
Hi everybody. Welcome to our first half Capital Markets summer tale of the tape as it were. I'm Mike Freeborn with CIBC. Coming to you live from the studio in Toronto. We've had a busy summer, so it's not going to be a conversation about our vacation plans and our morning routines. Probably, fortunately, we're going to talk markets and deals.
Let me first introduce the team. To my left, Rob Magwood, one of our very senior professionals in the Equity Capital Markets department. To his left, Sean Gilbert from the Debt Capital Markets department. To his left, Jordan Spellman, who will talk about all things bank market. And finally to his left, Alex Prunier from our M&A department. Let me frame it with just a few headlines.
You all read the press. So I'll get these out of the way so we can talk about more interesting things. It's been a six month period where we've seen an $86 billion spaceship IPO. We've got hyperscalers or “hyper-spenders” spending $700 billion. They've taken $200-250 million out of the bond market. They started the year with $450 billion of liquidity on balance sheet.
Yet they've still gone and also raised Google $85 billion in equity markets. We've seen seminal deals from the likes of Intel, $20 billion. Closer to home, Celestica that Rob will talk about. So clearly we're in the midst of a seismic reshaping of the economy. So clearly we're in the midst of a seismic reshaping of the economy. But there's a lot more going on than that. So we'll get you behind the headlines a little deeper, a little closer to home here in Canada.
Rob, let me start with you. What are you seeing in the equity capital markets?
Rob Magwood
Managing Director, Equity Capital Markets, Investment Banking, CIBC Capital Markets
Yeah. Thanks, Mike. Four key trends that I wanted to talk about. The first is a white hot IPO market on both sides of the border. So we've got record levels in the US. And we're gaining momentum here in Canada driven by the mega IPOs that you referenced. IPOs are up almost 200% in the US over their five year average, even excluding the SpaceX IPO.
We are at a record pace. There's no signs of this slowing. If you look at the calendar that we look forward, we're talking about potential IPOs for Anthropic and OpenAI. Those, with SpaceX altogether, would total in excess of $200 billion. Not to be shamed. The Canadian market is also picking up. It's over 100% beyond its five year average, and we haven't seen volumes like this since 2021.
We are also seeing a broadening in the IPO market. The largest deal so far this year was health care company, Apotex. This was $1.5 billion, the largest IPO since Definity in 2021. Also a very good experience for investors is up 50% in the last three months of trading. We've also seen the mining sector continue to be very active on the IPO side.
Two large deals, Cadillac Mining and Lumina Metals, both raised $420 million. Those are the largest mining IPOs since Franco-Nevada, going all the way back to 2007, when both you and I were not starting our careers, well into it. The second big trend is, as you mentioned, sort of, US mega deals. The narrative is dominated in 2026 by these mega deals.
And our old views in terms of market capacity and maximum deal size have been thrown out the windows. Year-to-date, 60% of all of US deals have been qualified as these mega deals greater than $2 billion. That's versus the long-term average of 15% This trend has been driven by the hyperscalers and AI related companies. They've represented 85% of these mega deals and 50% of total new issuance volumes.
You reference the Alphabet deal, $85 billion across the equity capital structure, equity, ATMs and converts. And Intel announced an upsized $20 billion deal. So I'd say the sticker shock of these very large deals is starting to wane. Not to be out shown, here in Canada, you referenced Celestica, raised $3.5 billion US, real dollars, in an overnight marketed transaction. That is the largest follow on equity deal ever in Canada, surpassing Enbridge. And it was the fourth largest ever follow on for a North American technology company. Third trend, acquisition related financings. They represent about 60% of the deals year to date, which is in line with our historic trends. Investors are enjoying participating in alpha generative financings with the use of proceeds to finance growth and then finally, the mining sector. Sound like a broken record here...
It has been a pervasive trend riding the commodity cycle. Mining issuance has represented approximately 35% of issuance volumes in Canada. That's versus a longer term average of about 10%.
Michael Freeborn:
Right on. Thanks, Rob. So IPOs, big, big ones in the US and coming to Canada and happening in Canada. Mega deals dominating the headlines and the league tables and the stats Celestica, which we were lead on... you didn't mention, you didn’t want to toot your own horn. And acquisition financing still working. Finally, the resource sector being still sort of where it's at in Canada.
So, is that fair?
Rob Magwood:
Well said
Michael Freeborn:
Thank you Robbie. Sean, similar dynamics in the debt capital markets.
Sean Gilbert
Managing Director & Global Co-Head, Debt Capital Markets, CIBC Capital Markets
Yeah, I mean, I'll pick up on some of the themes and maybe just start off by looking at issuance and the composition of issuance, because I think there are a lot of read throughs to that. So there's been a material increase in the Canadian debt capital markets. So I'll remind everybody that last year was a record year beating the prior year, which was a record year.
And total issuance is already up 46% year to date. So we're at about $140 billion. And if no more issuance happened this year, that would already rank as the third largest year in history. But we are hopefully not ending there. I think that if you look back at some of the issuance, you'll see that it was provided from potentially nontraditional sources.
And by that, I think I'll touch on three. Inaugural issuers. This is a theme that we've talked about in the past, but first time issuers in our market were already up to 22 this year. We had 36 last year and 22 all of the prior year. So we're seeing a lot of new issuers enter the market. I think that's extremely healthy.
It's showing that Canadian investors are willing to stretch their brains by product, by credit rating, by sector. Very, very pleased with that. High yield, not a massive part of our market, but it's something that I think for our viewers that if you do have a below investment grade market, we did about $7 billion last year. So not nearly the depth of the US market.
We're already at $4 billion. July was a record month, almost 2.5. And I think it's turned into a very nice, supportable market for Canadian issuers who need Canadian sized deals. And so think of that as you know, 250 to 750 and we're seeing a lot of that. But no conversation on the Canadian debt capital markets is complete without talking about the headline story.
The star of the show, which is Foreign Issuers, which we call the Maple market. It's our moniker, similar to the Yankee market. And these are foreign issuers taking advantage of the depth of the Canadian market. It's been a market that has been fleeting on and off. We've seen it pop up and come down. It hasn't been a core part of our market.
It has been a seismic change this year. So the numbers are a little staggering, at least to bond geeks. We've already done $42 billion of issuance. So to put that into perspective, the biggest year ever that we've had was $19 billion. And so, to your theme on hyperscalers, the two largest issuers in that market, which also happened to be the two largest deals ever in the Canadian market, one was for Amazon, there was a $14 billion deal. And then the second one was for Alphabet, which was an $8.5 billion deal. And I guess sort of a fun fact is, if you look at all the dollars raised in the bond market outside of the US by hyperscalers, Canada accounts for 25% of total dollars raised outside of the US. So that's important.
It represents about 30% of our market, which is an unusual territory. And if you look at the chart that we're going to put up, you'll see that the Canadian market composition is about 30% maples, about 35% traditional corporates and about 36% give or take... I know that adds to 101... financials. It's just a very interesting and different dynamic composition.
Why are foreign issuers looking at our market? I think the Canadian market for years has provided a reliable source of funding. It's a deep market and we've proven that time and time again. It's a repeatable market. You can come more than once and depth isn't eroded. And it is true diversification. These issuers are getting true diversification. The majority of the Canadian books are made up of Canadian investors, not US investors reaching north of the border.
So how is the market absorbing all of this? The second theme I'll touch on is investor liquidity. Investors remain extremely liquid. We are seeing all positive signs with respect to that. Inflows into bond funds have been positive since November 2023. That's in excess of 30 months of positive inflows. And these are anywhere between $3 and $6 billion. And if you multiply the average by 30, it's a lot of money into our market, number one. Number two, higher issuance and frankly higher high yield issuance and higher hybrid issuance. Some more coupons you're seeing now coupon flows in the Canadian market approaching $28 billion a year. So to put that into perspective, three years ago that was below 20. And so now we're well on our way to 30 billion of just coupons that are coming back into the market.
Elevated maturities is another one. And then the last one is, with the hot equity markets, if anybody runs a balanced fund it is actually a buy. It's a buy sign. The last part I guess I'll talk about is the opportunistic trade and the composition of spread borrowers versus coupon borrowers. Rates have gone up this year and they've gone up over the last 12 months.
Underlying rates. If you are a spread borrower, such as financials or autos, where you actually just take the spread and swap everything back to floating, it is still a highly opportunistic market. Spreads remain near all time or multi-decade lows. With rates rising, coupons are still in a very good range. I mean, like no one's going to go to financial jail to print a five year deal at four and a quarter or a ten year deal at 5%.
That's not the issue. If you look at the history of coupons, it's in the range of average. The problem is over the last 12 months, the look back, it's on the higher end of that look back. And so what we've seen with that actually coupled with the bank market, in prior videos, the bank market was actually more expensive than the bond market, that's actually reversed itself.
So issuers aren't in a hurry. And I think you've seen some of the boil come off of the opportunistic corporate all in borrower. So we're seeing that still up but not up nearly as much. I think you're going to see issuers now stick to use of proceeds versus opportunistic trades. So that would be the third. That would be the third thing.
Michael Freeborn:
Right on, thanks Sean. So clearly, massive volumes, new sources supply in the Maple market. It feels like the bond markets become an enduring sort of part of the global funding picture for mega scale companies. Investor liquidity seems to be intact, and it's a bit of a Goldilocks period, perhaps, where coupons work for investors, spreads work for issuers. So probably more to come, it sounds like.
And we'll get to the outlook in a minute. Great. Thank you, Sean. Jordan, in the bank market, what are you seeing?
Jordan Spellman
Managing Director & Head, Canadian Loan Syndications, CIBC Capital Markets
I think everything's very positive and robust for the first half of this year. We saw $200 billion of volumes for the first six months. That's about 5% year over year. Of that, I say new money facility. So think of that as how much the market itself is just fundamentally grown. That was $55 billion of volume. So that's up 34% year to date.
So I think both of those are great to see. And both those speak to strong tone in the market and very robust supportive conditions for borrowers. I think underpinning all of that, is really the pressure of lender funding costs that we've spoken about over the past couple of years has really abated, and we're seeing significantly less transactions that are requiring increased pricing declare market and significantly less lender decline.
So it's in a very good spot at the moment. As it relates to particularly active sectors, the project finance and infrastructure space continues to be one of the most active sectors, and those volumes are up 31% in Canada alone. But we should think about that sort of sector itself as a North American sector, rather than just Canadian centric versus some of the other sectors that we have in Canada.
While renewables represent the vast majority of those volumes thus far, we continue to see great demand for digital infrastructure financing. So think of that as cell towers, fiber, data centres, of course, and anything related to those three, all off the back of the continued AI wave. And then two other sectors we continue to see high levels of activity from are mining and, oil and gas.
And I think the reasons for that are kind of twofold. One, both of those sectors offer lenders strong capital markets revenues to support lending, just like Rob mentioned a second ago. And the second point would be that both of those sectors, I'd say, have increased credit fundamentals versus a couple of years ago off the back of higher gold prices and higher oil prices, of course.
I think I'd be remiss if I didn't mention M&A and M&A financing, which we'll get to in a second. Another strong year for M&A financing in Canada. So excluding all bridges, some temporary pieces of paper that are eventually taken out in capital markets prior to closing the volumes are double what they were last year. And I think that that speaks to the activity that Alex will speak to in a second, and also lender receptivity.
So these pieces of paper are being placed into lenders books supported by reduced lender funding cost, like I just book a second ago, as well as concurrent ancillary offerings. So extra capital markets revenues from ECM and DCM offerings as part of those financings. And I think just generally the desk is seeing more underwriting opportunities across, frankly, all sectors.
Notably, though, we're seeing more in the infrastructure space. And I mentioned that because the infrastructure space is traditionally not used underwriting in Canada, much more so in the US, but not so much in Canada. And I think borrowers in that space are now starting to think about underwriting for a bunch of different reasons. But competitive differentiation, especially when it comes to bid financing.
And so I think overall, the market is functioning very well, is very conducive for borrowers for all types of markets. And I think... for all types of borrowings. And the market has taken down all the paper that has been asked for thus far this year. So it's been great to see.
Michael Freeborn:
That's great. Thanks, Jordan. So, massive increase in new money activity all being well absorbed by the bank market, number one. Number two, project finance still ripping. And that also sort of cascading into oil and gas and mining. So just general strength in the markets. Hopefully some of this has to also do with you know federal government now in Canada that's a little bit more supportive of big capital projects and big spend.
So whether or not we're seeing that in the bank market yet, I don't know. But certainly going forward hopefully that that's a portent of good financing markets for that activity to come into. And then lastly, you know, the segue to Alex’s is part of the conversation. Good support in the bank market for M&A. Alex, we'll let you take it from there.
Alexandre Prunier
Managing Director, Mergers & Acquisitions, Investment Banking, CIBC Capital Markets
Absolutely. Thanks, Mike. And you know, Mike, when you look at M&A globally. The momentum continues. Last year was a very strong year. This year even more. And I'll put up a slide to illustrate actually. When you look at the left hand side of the slide in the first six months of the year, deal values are up 60% globally versus last year. My comments will be about global M&A. Canada follows roughly the same trends.
If you actually look at deal sides. This goes back to Rob's point about, you know, deals getting bigger and bigger. The deals over $1 billion in value are up 76%. The deals over $10 billion in value are up 140%. It's not just about the AI trade. If you look across all sectors, look at the right hand side of the page.
You see green everywhere. Only one sector is in the red. So it's basically better activity across the board. So how is that? If you think about global trade risk, geopolitical risks, So how is that? If you think about global trade risk, geopolitical risks, why is there so much activity? I'd point to three trends. First off would be the desire for scale. There's a race for scale. And it's not only about acquiring new capabilities, it's also about reducing risk.
With the recent shocks that we've seen. There is a case to be made around acquisitions which protect margins, which reduce costs, increase competitivity. Secondly, the funding environment. Jordan talked about it, Sean talked about it. Rob talked about it. There's a risk on attitude across the board. Capital is available, and that's driving the possibilities in mergers and acquisitions. Thirdly, private equity is coming back strong.
If you look at the next slide that I'll put up from the historical lows, recent lows in the last few years of 41% of all deals that were done by private equity. We are now seeing 60% in more of deals in the first half of the year done by private equity. You know, there are several reasons for it.
One of them is going back to financing. The other reason would be a pent up demand for exits, Average hold times now for private equity are up over six years. It used to be about four years, if you looked 10-15 years ago. So that's definitely a driver. And lastly, I'd point to what we often refer to as all the money basically that's been raised in the pent up demand to invest. And according to some industry stats, there's $2 trillion of cash that's lying around to be invested by private equity funds. So all that taken together, there's a lot of momentum. It's a good time to do deals at present.
Michael Freeborn:
Fantastic. Thanks, Alex. And I think I read somewhere, 14,000 private equity companies in inventory just waiting to be sold into that $2 trillion and into public markets. Thank you very much. Maybe we'll stick with you and ask you to pull out the crystal ball and think about the next sort of six, nine months and sort of what are you seeing on the on the books today that's going to take us through the rest of the year?
Alexandre Prunier:
Yeah. Thanks, Mike. And we're not seeing any slowdown in dealmaking for the reasons that I just mentioned. You know, all the conditions that drove all this M&A and all this deal making in the first half and in the back half of last year are still there. Of course, we can't close our eyes to the risks out there. Markets are looking another way.
When you consider a geopolitical risk at this point things can change. But right now, if all things stay as they are, we're looking forward to a continued stretch of very active dealmaking.
Michael Freeborn:
Fantastic. So it feels robust but fraught with risk. As always, we sort of forget there's war in the Middle East, war in Europe and many things in between that for some reason markets seem to kind of skip past. Thank you very much, Alex. Jordan, will the bank market be there to support all the activity Alex is bringing to us?
Jordan Spellman:
Yeah, I kind of have the same thoughts. Like all things being equal, we should look for the same conditions in H2. Two related thoughts to that though. You know, if we do have an escalated war situation, or we do see oil prices continue to increase for any prolonged period of time, we may well see those lender funding costs that I mentioned increase again, and that may result in more challenging market conditions in the bank market.
And so we may, we will likely not see a fundamental market repricing like we saw in COVID, but we may well see more lender declines in that instance and or some of the borrower's terms be adjusted to make sure that the clear market, such as tenor. The flip side of that is, in June, OSFI (Office of the Superintendant of Financial Institutions) which is the regulator here in Canada, reduced the domestic stability buffer from 3.5% to 3% for the large Canadian lenders.
And in essence, what that means is those lenders are required to hold a lower level of capital on their balance sheets. So theoretically, there will be able to deploy more capital to support their clients in the coming months and years. We'll see if that turns out. But we'll be watching both of those both of those points in H2.
Michael Freeborn:
Fair enough. Thanks. So supportive regulation that should help. Barring anything unforeseen bank market should be wide open. Thank you. Sean, how many rate cuts or rises and what's the bond market going to be like for the next six months?
Sean Gilbert
I'll skip the economic forecast for Avery (Shenfeld) and Ian Pollick. They're going to do a much better job than me, for sure. I think I'll pile on to the sentiment, assuming everything stays robust, which I'm hoping and anticipating it will be. Markets are in great shape. I will tell you that one thing that we are keeping an eye on, which is beneficial this year, is we've had all of this issuance.
And if you look at our corporate maturities, they're actually slightly weighted to the back end. So we have more maturities coming up in the second half of the year than we did in the first. And if you look at it, compared to last year, in every month from August till December, there is more coming due compared to 2025. About $53 billion coming to this year in total.
Next year that will jump to 60+. So we are seeing on the maturity side, a potential natural reflow back into the market. As we talked about in the first part, there is access, issuers have access to the market. And so that's very, very fundamental. And investors are liquid but also engaged. And we are seeing a high degree of investor engagement.
They are working with our desk to come up with ideas to show expressions of interest. We're having an investor base that not only has money, but actually wants to see some of their their favourite, favourite, you know, issuers come to the market and we're not picking favourites. Everybody has their own difference of opinion. Having said that, two things I'm keeping an eye on.
Number one is CapEx announcements. And I will talk about this in both the traditional and the nontraditional way. There has been plenty of CapEx in the traditional hard assets which have been telegraphed, and the market's anticipating. One of the things that we did important to the Canadian market with the two hyperscalers is we've imported CapEx risk and could go both ways.
But as we see now, the Canadian investor base are now looking at these quarterly results to see for the Google, and Amazon, and others, even unrelated ones to this market, overall harbinger of supply. And so there is some CapEx risk, as we saw a little while ago when a quarterly report came out and Google upped their CapEx requirements and the market then started to anticipate the scope of supply.
So that's something I'm keeping my eye on, on that front. And then generally speaking, we just look at the vital signs which we've called them in deals. So buyer breadth, book coverage, secondary market performance. Those are three leading indicators as to what the next deal looks like. The primary market feeds off the success of the primary market. Risk for me, we'll go back to one of the comments that I made. The risk here could be oversupply. We've seen that with, we actually did see that a little bit with the Amazon deal in Canada and the Google, but particularly the Amazon and the amount of issuance they had in the 30 year, it took the market a little bit of time to just adjust to absorb that.
I'll call it indigestion, heartburn versus complete shutdown. But I think a risk for us is just generally oversupply in one particular sector.
Michael Freeborn:
On asset class, fair enough. So I like I liked you're saying investors are liquid and engaged, but it sounds like between maturities and watching CapEx and all of these new sources of supply that we're seeing in the market, that the risk is maybe in the market gets a little bit crowded. Is that fair?
Sean Gilbert:
I think for periods of time, I think that if you're an issuer, you need to navigate not only some of the geopolitical headlines and some of the economic headlines. I think there are some CapEx headlines that will slowly bleed in. I'm not sounding an alarm bell, but it's it's a third consideration that if I was sitting here last year wasn't on my mind.
Michael Freeborn:
Something you keep an eye on. Fantastic. Thank you. Robbie, in the equity markets?
Rob Magwood:
I agree with the panel in terms of we've got a very constructive market backdrop when we expect that to continue into the second half of this year, despite the challenged conditions from an economic and political perspective that you highlighted. We've got the VIX near the lows at 15 and we've got a strong Q2 earnings season, which shows the underlying health of the corporate world.
We also have this thing, US midterms coming up. I expect the White House will do everything they can to choose your term, “facilitate” a buoyant market until at least November 3rd. When it comes to the IPO market, we expect that to continue to show strength. The cadence and size of the IPO calendar building out continues to grow with high profile companies across a broad range of sectors.
And as long as those IPOs continue to trade well, we expect that market to be open. In terms of the risks, what keeps me up at night other than deep anxiety is one is AI weakness. We've seen these companies are up over 200% over the last couple of years. There's massive exposure for equity funds. And if we start to see that bloom come off the rose, there could be a wealth effect.
Rob Magwood:
And the second thing is market capacity. You know, with all of these mega deals and equity fund flows not necessarily matching that, there needs to be a funding trade. And the real question is when does this availability of capital start to slow?
Michael Freeborn:
Thanks, Robbie. Yeah. So it sounds like we should be good in markets until November 3rd because magically the administration has been able to facilitate things, as you've said. And we'll see how some of these big offerings go. And if there is truly enough liquidity to continue to absorb this supply on the scale. Well, fantastic. Thank you. And thank you all.
I'll ask you all to leave our audience with one parting comment that hopefully they remember after listening to us today.
Rob Magwood:
Sure. Choose your analogy. I think it's a Carpenter song, “Go while the going’s good.” Or as my old bosses used to tell me, “When the ducks are quacking, feed them”. If you have capital needs. From my perspective, consider accelerating your timing and take advantage of the bouyant equity markets we have right now.
Michael Freeborn:
Fantastic, feed the ducks. Thank you. Sean.
Sean Gilbert:
I do like that saying, by the way, we use it on the bond side as well. I mean for me, I'll use ‘control the controllables’. You highlighted all the things that are outside of issuer's control. I think that if you're ready to hit the market in a reasonable period of time, control what you can control, the process, the rating agencies, the auditors.
Get yourself in a position where your window is not measured in days, it's measured in weeks. And we've seen that become very beneficial if the market comes up a little bit. So, control the controllables.
Michael Freeborn:
Be ready to go.
Jordan Spellman:
I say if anyone thinking about refinancing existing deals, seek incremental capital or look for M&A financing, CIBC's in a great position. And so, let's discuss and capitalize on current market conditions.
Michael Freeborn:
Fantastic. Alex?
Alexandre Prunier:
Thanks, Mike. I would say it's a good time to be ambitious with respect to your M&A targets. If you're one of our clients. There's an old adage in M&A, however, ‘time is the enemy of all deals’. So speaking to the risks out there, let's keep that in mind, would be my advice.
Michael Freeborn:
Well, team, thank you very much for a great conversation and thank you for joining us. If there's anything we can do to help you here at CIBC, please don't hesitate to reach out to any one of us. Thank you.
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