CIBC Capital Market’s Roman Dubczak leads a semi-annual discussion with CIBC Investment Banking and Corporate Banking Product Heads on key trends and challenges in the financial markets for the first half of 2025. The panel highlights strong market activity, resilient performance across sectors, and shares insights on opportunities and risks for the remainder of the year.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Hello everyone. I'm Roman Dubczak, Deputy Chair of CIBC Capital Markets. On today's webcast will be hearing from our financing and advisory experts who will help us unpack key trends and challenges affecting the current financial markets. What lies ahead for the second half of the year and how we've done in the first half of the year? With me here today, I have Daniel Parrack, Head of Canadian Debt Syndication. Ed Eighmey, Managing Director of US Debt Capital Markets who's joining us virtually from New York. Joe Kostandoff, Head of Syndication and Equity Capital Markets in Canada. Jacqueline Green, Head of Financial Markets and Senior Client Coverage, Global Corporate Banking. And Mike Boyd, Head of Mergers & Acquisitions. Thanks all for joining. Let's jump right into today's conversation. Dan, global credit markets have appeared to be relatively well functioning despite all the macro events going on. Maybe just give us a little bit of a view on how that came to be in the first half of the year.
Daniel Parrack
Head of Canadian Debt Syndication, Global Investment Banking
Yeah, certainly. So, you know, I'm very encouraged with the activity in the debt capital markets in the first half. And I'm encouraged by the the breadth, the depth, the number of product variety we've seen. And frankly, the competitiveness of our market on a global, on a global stage. So maybe I'll take this in three parts with respect to a mid-year review, issuance, the spread market we're in, and, the condition of our investor base from a liquidity standpoint. So first off, on issuance, we've seen $80.8 billion thus far in the first half of 2025. That's the second highest pace of issuance in our markets history, second only to last year where we saw $83.6 billion. I think it's important to highlight a couple, products and sectors that really made that happen. So I'll highlight maple bonds, corporate hybrids, floating rate notes, and the new borrowers that were welcome to our market. So first off on Maple Bonds. And just for the audience, Maple bonds or those foreign domiciled issuers issuing in the Canadian debt capital markets. And so far in 2025, we've seen 8 billion of issuance or 10% of volumes. And that compares to last year, which saw 8 billion for the entire year. So the pace is pretty high. And I think about the catalyst of why we've seen that on January 1st we saw the Maple Bond Index inclusion take hold. So there's more eyes watching this, this market from an investor perspective. And it's made our market more competitive, more consistently for our issuers against, global markets like euros and US dollars. The second highlight is corporate hybrids. We've seen $5.35 billion in the first half of the year. That's the highest volume in that product that we've seen since its inception in 2017. And worth noting, we've seen $4 billion from the telecommunications sector alone. If we think about what drives this market, there's really two fold. There's one. The spread market's been incredibly favourable. So as preferred shares have come do they've been redeemed and refinanced in the corporate market at tighter reset levels. Secondly, corporate treasuries have used this product as a great new tool to improve leverage metrics. And if you look at the telecom space in particular, they've issued $4 billion. Use those proceeds to go out and and tender for senior unsecured notes to improve those leverage that those leverage metrics and really the the catalysts there is because they get partial equity treatment from the rating agencies. The third product is floating rate notes. We've seen $11.8 billion thus far in 2025. And that's the highest pace we've seen since 2018. And this has been a mutually beneficial product for our market. So on a very tight, credit market, investors have been looking to conservatively deploy cash. And the 1 to 3 year floating rate note market has been just the place to just put those funds. And our issuers have actually been benefiting because they've been being able to issue into that demand at competitive prices versus their bank facilities and term loans. Both of those products obviously against Cora. The last comment I'll mention is, is new borrowers to our market, which is always nice to highlight because it shows our increasing maturity in the Canadian market. We're welcoming, new opportunities for for corporates to finance our market and new diversification opportunities for investors. We've seen 13 new borrowers thus far in 2025. And that compares to 21 all of last year. So really nice to see. The one glaring omission I would say, from our market is that we've only seen $4.5 billion of 30 year issuance this year, and if you take into account that the telecom space has actually tendered for $3 billion as part of their liability management, we've only seen net supply of $1 billion or so, in the long end, which is a very low run rate for 30 year issuance. And really the catalyst there has been, issuers have been really staying in the ten year and under because of the changes in the Government of Canada yield curve. It's been steepening materially over the last 12 or so months. Midsummer in 2024. The difference between the 5 year and the 30 year Government of Canada bond was inverted by ten basis points. Today, as we speak, it's positively sloped by 75 basis points. So those spreads are tighter. And although credit curves are flatter, the coupon shock from a corporate perspective has been material. Coupons are well above the ten year average for for issuers. The second being thematic is the spread market. So and I'm sure Ed will touch on this as well. Global credit markets have been very well behaved and the Canadian context were at 17 year tights. And our market's been very insulated and very resilient in the face of some of the volatility that we've seen. It really spurring both the issuance and the insulated spread market has been the liquidity that our investors see. Our investors have seen 18 consecutive months of inflows into corporate bond funds. So not only has that supported the credit environment that we're in, the issuance, outcomes that we've seen been very positive, both from oversubscription rates, number of buyers participating as well as a minimal new issue concessions that've been paid in, in some, in some instances, we've been seeing the new issue market reprice the secondary markets tighter. So all told, I'm very encouraged for the first half.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Oh, it's a very, very encouraging summary. Thanks for that. And I will say, the conversation on the 30 year bond, maybe for another show, so to speak, but very, very topical here as to what's going on in terms of the fiscal, backdrop for most Western economies. So, very interesting point on that. You know, thanks, Dan. Ed, we'll go over to you, you know, the US, the big market, so to speak, in terms of, the bond market, maybe give us a bit of a recap there and, the dynamics, you know, that investors and issuers, can look to, in the US.
Ed Eighmey
Managing Director of US Debt Capital Markets
Sure. No. Happy to. And some of this and much of this will sound very familiar to what you just heard from Dan. In terms of from a thematic, and tonal, perspective. I think when we think about where we are, we entered 2025 and this is speaking not just within the U.S IG markets, but across risk assets. A lot of optimism built in. I think when we think about more of idiosyncratic to our market, in IG one of the drivers and I think what investors were prepared for was a very active M&A calendar, that was going to be the driver of supply. Yes, we we've seen some of that, you know, Mars transaction back, in March for $26 billion plus. So there have been a handful of larger M&A, event driven exercises that have certainly, driven supply. Having said that, not to the extent that investors, expect it. I think we're taking a step back. We entered the year, the ten year was at 4.60. Here we are in the ten years at 445. So if you walked away from the market, in late March, and came back, end of May, early June, you would think it was a pretty unremarkable year. Obviously the tariff tantrum happened. We saw the ten year. go from 4.60% to sub 4%, all the way, in three short weeks to approaching 4.5%. And again today, we're sitting, just north of 4.40. During that period, of volatility that we did see end of March. And throughout April, we did see investment grade spreads, widen out considerably. Going from high 70 to 80, which again, was touching historical heights all the way to 125 basis points. Here we are now back to 80/81 on the U.S Investment Grade index. Again touching. We're very near, all time tights to going back to the, to the late 90s. And this is in the context of supply that is approaching 1 trillion. In fact, in the first half of the year, we were $940 billion year to date, we're $25 billion shy of the $1 trillion mark, which will mark, the fastest to hit that mark, ever, with the exception of 2020, where you did see the kind of the Covid surge in volumes. What has been driving both issuance and appetite? Obviously, valuations from an investor perspective were a bit stretched, particularly now just given we're back to, basically all time tights, as Dan mentioned, very minimal new issue premium the average concession for the year hovering around 3 to 4 basis points with oversubscription levels, north of four times. So certainly the liquidity of the market, the appetite, is there. And this has to do with really the carry trade. We're still in an environment where you have all in yields, considerably higher than historical averages, certainly over the last 10, 20 years, where, you know, in the in the 2010, 2020 era where, rates were pegged near zero, this is certainly an opportunity for investors to put on risk, and to capture that yield, particularly as it relates to pension, insurance companies, etc. From an issuer perspective, I think there has been, as we heard and we've witnessed, certainly the back half of 2024, some capitulation, with regards to the rate environment we're in. And I think many issuers are taking advantage of the liquidity that exists in the market, coupled with tight spreads, low new issue premiums. And again, access, across the curve. So in short, despite a lot of uncertainty that continues to, remain, the markets are functioning very well, high liquidity. And to some, instances, investors are actually paying up for that liquidity. As Dan mentioned, repricing secondary curves.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Thanks Ed. So, between the two of you fairly a strong market showing, and, actually, I'll head over to, to Joe now on the equity side, but one of the, you know, things, as a takeaway and it just seems maybe permeates to Jacqueline's market as well, is the quality of credit, seems to be holding in over the course of this period, which, frankly, might have been catching everybody a little bit by surprise from where we were, say, six months ago. Joe over to you, equity capital markets, signs of life, activity, and excitement.
Joe Kostandoff
Head of Syndication and Equity Capital Markets Canada
No, I absolutely and I think everyone has touched upon, I think, a big theme here, which is that there's a lot of macro factors that you think would be a challenge for the overall equity markets. We've got ongoing global trade war, heightened geopolitical tensions. But so far the markets seem to have looked through these things. Most major markets are at all time highs or near near all time highs. We've got the Canadian market and broad European markets up almost 10% year to date. In the backdrop of what's going on. And U.S. markets are up about 6%. So it's been a very healthy market. What that's done is it's been a pretty robust market for new issue activity. In Canada, $11.5 billion of issuance year to date, really three sort of sources for that. The first is some very successful acquisition driven financings. Companies that have been, bold and have, pursued large M&A have been rewarded. They traded very well in the secondary market. I think that's catalyzed people to to seek out those sorts of opportunities. The second one is with stocks at near record levels, a number of major shareholders have seeked liquidity through large secondary sales, has been another big source and then an ongoing one for the past couple of years in Canada, as the mining sector continues to be about a third of issuance overall. We've got, commodity prices in particular precious metals at record levels, and that's drawing a lot of, interest from investors and a lot of issuance. So maybe, jumping back to the acquisition driven financings, two largest for the year. Keyera just recently did a $2.1 billion equity financing. That was used to buy Plains. All-American, Canadian and GL business went extremely well. And the second largest is Capital Power. They raised $670 million. They've been a very active acquirer of power plants in the US, building, you know, upon a strategy of data centre loads and attractive, attractive, power prices. They bought two additional facilities for that proceeds. One in Pennsylvania, one in Ohio. The secondaries that I mentioned, GFL environmental and another secondary there, it's the largest of the year, as well as Definity Financial and Pet Valu. All of those again, well received. And I mentioned, you know, the precious metal financing driving that. Another theme we've talked about a lot is the opening of the IPO market. The US market reopened a couple of years ago and is on a steady pace. The Canadian market's been a bit of a laggard. That being said, we just had, the first notable IPO since last November kick off marketing this week. It's Go Residential REIT. That'll be marketing for the next week at week and a half. We look forward in that market. We see a pretty good pipeline for the fall and early in 26. We remain pretty optimistic there that we're going to see the IPO market reopen in Canada. South of the border, very similar themes - $144 billion of issuance in the US. That's the third consecutive year over year increase. So very, very positive momentum there a couple areas that are really driving that. The convertible debenture market's been very, busy this year, over $50 billion of issuance again, third year of increases there for issuance. Really the theme there is, I would say that some higher quality issuers, despite the robustness Dan mentioned in the bond market, still see an opportunity to kind of buy down interest rates by issuing that convert. So accessing fixed income but at a slightly lower coupon than what they'd see in the, in the traditional bond market. And then the IPO market there continues to be healthy $15 billion price year to date. A couple of very large ones. Venture Global, which is an LNG developer, would be the largest IPO of the year. And then CoreWeave another AI focused tech company had a very successful, very successful IPO. So I guess looking forward, provided the markets continue to kind of manage their way through some of these macro headwinds, I think we'll see a very, very busy second half of the year.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Yeah. Thanks, Joe. You know, it's interesting, the secondaries you mentioned all three GFL, Definity, and Pet Valu IPOs conducted during Covid. And now the, the the sponsors are getting out. So, you know, the actual process that does does work well. So good takeaways. Thanks. Jacqueline, I know you're busy. I know your team is super busy. Maybe just give us some highlights of, how busy and where busy your team has been in the last six months and what to look forward to from a corporate banking, appetite perspective.
Jacqueline Green
Head of Financial Markets and Senior Client Coverage, Global Corporate Banking
Yeah. Thanks, Roman. I think you're not going to hear any dissimilar themes from my end. As we've heard from all my colleagues so far, bank market is having a really solid year. And I actually think that's quite notable if you consider all that we've talked about here so far. We've talked about, trade uncertainty as Ed aptly put it the trade tantrum. We've had geopolitical uncertainty. We've had tax reform, including the Big Beautiful Bill in the US. And yet, in spite of all this, the bank market's been fairly insulated. Banks continue to be in growth mode. And we're seeing that in the activity levels that you referred to. They have strong balance sheets. Pricing in tenor have held stable. And that's despite a spring uptick, in funding costs, which are actually a little bit higher than they were at the end of last year. And lastly, we continue to see very borrower friendly deal structures. I talked a bit at our year end update about the emergence of the term loan in lieu of the traditional capital markets bridge as a more cost effective and flexible way to finance M&A. And we continue to see a lot of activity around that, which is always a sign of a healthy market. Just looking specifically at volumes, they are down a modest 9% in North America, but still really strong if you consider that 2024 was a record year and just looking regionally, there are some differences between Canada and the US that are worth mentioning. In Canada, which is predominantly an investment grade market, volumes were down 18%. That sounds kind of negative on the surface, but if you actually look at the data, it is in line with the last five year average. And it's important to remember that 2024 was an absolute record year in the Canadian bank market. We had our risk free rate transition or the transition from CDOR to CORRA, and that caused a surge of activity in the first half of the year. So still a very strong showing, I would say from a volume perspective in Canada. The other thing I want to touch on with respect to Canada is the fact that although M&A financing continues to make up a small percentage of overall volume, it has increased on a year over year basis, and we've seen a number of deals successfully executed in the market. And I would say, you know, as Joe touched upon, you know, a heavy dominance in the resources sector, which is great to see. Again, a very sign of a healthy market where banks are looking to grow their balance sheets. Looking south of the border in the US market, overall volumes were also down 8%, but a very notable divergence between the investment grade market and the sub investment grade market. And interestingly, the complete opposite trend is what we saw last year. So investment grade market volumes were actually up 5%. Very simple trend here. Companies coming to market, looking to take advantage of what I would characterize as stable market conditions and extend their deals. And that was really what was driving the, the uptick in activity in the sub investment grade space, volumes were down 17%. And it's important to highlight that the sub investment grade loan market in the US is is very heavily skewed by what we call the Term Loan B market or the institutional market. That is a volatile market. And that was certainly impacted by a lot of the trade uncertainty that we saw in kind of this spring period. The last thing that's worth noting and touching on is project finance. Project finance is not included in the volumes that I mentioned earlier, and it is having an absolute record breaking year on both sides of the border. Digital infrastructure up 115%. That's predominantly data centres. And that is due to the proliferation of AI. Renewables, up 48%. And what we've actually seen there is that many sponsors are accelerating their deals to safe harbor the tax treatment, from US tax reform, which is going to phase out some of the advantages related to clean energy over the next couple of years. And then lastly, LNG, very important sector to economic growth. And that has seen tremendous growth. And we are actually expecting upwards of $40 billion in activity in the bank market in the second half of this year. All of these sectors have had strong support by lenders. They've all had strong support by international lenders, including those that have been impacted by potential tariffs. And and what I would say is that in project finance in particular, lenders are attracted to the premium pricing and fees that you get relative to the risk compared to normal corporate activity. And that's, helping to support some of the really large deals that we're seeing. So where does all this leave us for the rest of the year? Certainly what we are predicting is that absent anything material, from an economic perspective, that banks will continue to be in growth mode. That's going to support stable pricing and tenor. Term loans, we expect those to continue to remain an attractive option, even when the ultimate take out is expected to be in the bond market. Project finance continue to be a bright spot for all the mention of the reasons that I mentioned earlier. And then lastly, I would say that there is cautious optimism or a hope that we're going to see M&A financing activity continue to pick up, particularly, in a rate, I'll call it a rate normalized environment. And and we do hope that that will gain momentum. That's a very attractive space for, for lenders.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Very good. And I thank you, Jacqueline, for that perfect segue to Mike Boyd, to talk about M&A. Mike, it's, it's been a pretty decent year, given where we were sitting six months ago, I don't know if we would have predicted where we are now, but certainly it's been a relatively active calendar for you and your team, maybe walk us through, you know, what you can in terms of, activity and what to look forward to.
Mike Boyd
Global Head of Mergers & Acquisitions, Global Investment Banking
Yeah, sure. And I think if we were if you had asked me at the start of the year whether we would see, you know, M&A being up this year, I would have predicted that we wouldn't, just given all of the challenges, it felt like we were facing at the start of the year. You know, uncertainty is never good for M&A. And and as we entered 2025, there was a lot of uncertainty. Questions around tariffs, how much, you know, how will they apply etc. The prospect effectively of that turning into a global trade war, you know, rising geopolitical risks, etc., you know, it really did feel like it was going to be a much more challenging year than it's been. And I would have expected that to put a real, you know, a damper on, on M&A at least, at least as we worked our way through it. And it did for a while or earlier in the year. But then M&A, really rebounded, strongly, particularly after the equity market reached its April lows. And just to give you some some stats, for the first half of the year, global M&A in terms of dollar volumes is actually up 29% versus the first half of 2024 and 2024, was a, you know, was a reasonably decent year. And probably most surprisingly, Canadian M&A is up over 90% versus last year. You don't often get to say that, Mike. Yeah. 90%. Yeah, yeah. And, you know, once again, if you'd asked me back in January, I would have said, you know, Canada would be, you know, disproportionately impacted negatively. And in fact, it's kind of been the opposite. And we've actually seen a pretty substantial pickup in Canada in large deals in the first half of 2025, there were 38 deals valued at more than $1 billion US, versus only 11 in the first half of 2024. So it's been, it's certainly been a very strong M&A environment, particularly in Canada. And I think what's happened is that the M&A market, kind of like the equity markets, has formed the view that we should be able to get through these trade issues without a triggering a major economic slowdown. And I think once, you know, we saw it in the equity market, I think when people sort of felt like we were getting through it, we saw equity markets rally. I think we've seen, you know, corporates and private equity firms in the M&A market have kind of formed that view and kind of look through it and decided that when you actually look at it, there are a number of positives here to support, you know, doing M&A, rate cuts, which began in the middle of last year, have reduced costs. We've had a much stronger financing market on the debt side, as you've as you've heard from my colleagues, particularly in terms of, you know, a still a strong leverage finance market, which was important for M&A, inflation has moderated significantly. We spent a lot of time talking about inflation a couple of years ago. We're not talking about inflation anymore. And corporates have been focusing on using M&A to drive growth, in an environment where it's been more difficult to generate organic growth. And finally, in some cases, I think tariffs have actually been, a driver of M&A in, in certain situations, where companies have looked to, acquire manufacturing, in, in countries to mitigate the impact of tariffs. And so overall, it's certainly been a much more positive story in the first half than I would have expected.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Oh, thanks, Mike. So just, in terms of the calendar for the next six months, only because it's we're at the halfway point, you know, when predict the future for the next six months, what advice would we give to our, our clients? I will go. I'll do the round table. Maybe I'll go in reverse order this time. As to, given what we know, far more benign environment than we thought, we would have been facing at the beginning of the year. But then again, those are always the times where you want to be cautious, going forward. So, Mike, what should, you know as we advise clients on their aspirations, you know, what's on the horizon that, you know, you kind of want to keep your eye on?
Mike Boyd
Global Head of Mergers & Acquisitions, Global Investment Banking
First of all, I think we need to keep in mind and as we counsel our clients that, there are still risks out there, you know, there's there's there's still uncertainty around where, where the whole tariff regime is going to end up and how how global trade is going to evolve here. You know, geopolitics continues to be a risk. But, you know, that's been a risk as markets have risen and, you know, over the last number of years, you know, I think it's always important to keep in mind, the key considerations do vary by sector. And so I think really looking at the strategic, you know, merits of a transaction is very, you know, is very important, always important obviously. But I think assuming there is a transaction that makes good sense for a company to do, you know, I think what we would tell them is, you know, from a financing standpoint, markets are very receptive and will support good strategic M&A. And in fact, you know, if you're if you need to raise, you know, debt, certainly the debt markets are there and the equity markets have been very supportive as as Joe was saying, in terms of positively, first of all, supporting M&A in terms of providing equity, but also we've seen companies trade up after doing, you know, good, good M&A deals. And so I think we tell our clients, the markets are open for them. And if there's a deal that makes sense to pursue, the timing is actually quite good. Any yellow flags as relates to cross-border M&A? I think if anything, you could argue that, you know, the, the whole, the whole trade, picture would argue for more cross-border M&A as companies look to increase their, you know, their presence in specific countries to avoid tariffs. But once again, that's very sector specific. There are a lot of sectors. We, we work with clients in where tariffs aren't really that big of an issue. And there are some other, sectors obviously where it's a very big issue. The other thing I would say is that, you know, corporates generally, I think have a, have a leg up in terms of M&A and competing against private equity in sectors where tariffs are an issue because, you know, they tend to, I think, have a better understanding of how they think things will play out going forward. Whereas I think if you're a private equity investor, that's a risk that is is really hard to factor into your, into your calculus.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Okay. Good. Thanks, Mike. And Jacqueline, the bank market, feels like we've got some good momentum. We're in a, you know, relatively happy place, liquidity, etc., but, you know, things to watch out for in the coming months?
Jacqueline Green
Head of Financial Markets and Senior Client Coverage, Global Corporate Banking
I think the overarching theme would not be dissimilar to Mike in that the bank market is open. It's open, it's stable. And in fact, I would say it is hungry for assets. And so that's always, a great thing for our clients as they think about their financing needs. Maybe one thing I will touch on is tariffs. Because that does seem to be the probably one of the most prominent topics that we're, that we're discussing with our clients these days. And a couple of pieces of advice there. One is that, as you are looking to raise financing, information sharing is really important. And Mike actually touched a little bit on that on this. But, it's important for lenders to understand, how you're thinking about various scenario analysis, what alternative markets you may have access to, what alternative supply chains you may have access to. So that's all really valuable as you're pursuing a financing. The second thing is give yourself extra time. Engage your lenders early. This is a concept that I've talked about in this forum before, but I would say in times of uncertainty, it's particularly important. And we are finding that for tariff prone sectors, on occasion, financings are taking longer than they may have at this time last year. Access the market when is available. You know, sounds very simple. Not always done, but I would say, again, in times of uncertainty, this is particularly important. We know that trade uncertainty can create capital markets volatility. We've seen that, over the last six months and in previously in history. And it's, therefore, important to de-risk your transaction at the earliest opportunity. And then the last piece of advice that we would give, is lean on your relationship banks. Again, a very important theme in times of uncertainty. These are the banks that are going to provide you with the most balance sheet support and on the best terms.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Great. Thanks, Jacqueline. And Joe. Rising tide here in the equity markets. But, obviously that's a volatile market. Things to watch out for?
Joe Kostandoff
Head of Syndication and Equity Capital Markets Canada
Yeah, I guess what what I'd say is that, we're right now we're in a position where you kind of have everything aligning, allowing you to do big, bold deals. Right? You've got supportive financing markets, both debt and bank. You've got market, share prices that kind of all time highs. The, the and you have investors that are kind of looking for you to build on that strategy and do that. The big risk here is that one of those things changes. And you have to, I think, take advantage of the opportunity that's in front of you right now. You know, there could be a major, one of these headwinds does get priced into the market. We have a markets price for perfection right now. We see that change. Then suddenly you're back into a position where you're playing a little bit of defense. So I think the the big thing that companies are doing a very good job of right now is they're leaving their balance sheets and their flexibility in a situation where if that does happen, we don't see too many companies that would be vulnerable in that situation. Okay. Which I think is an important thing to keep in the back of their mind, I think while all of these factors are, are allowing you to they should be looking at kind of big bold M&A opportunities. Good green light. Thank you. Joe.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Ed, maybe over to you. In terms of the the, you know, issuing, raising capital in the US market, just, just some things to watch out for, probably, we've heard a really good optimistic tone through the conversation. Give us something to worry about, maybe.
Ed Eighmey
Managing Director of US Debt Capital Markets
Interesting question. I think, you know, and this has been very topical with investors, but certainly with issuers alike. Is that when you again, my crystal ball typically is a little bit fuzzy. But when we think about where we are now and you've heard it from, from the rest of my colleagues talking about their individual markets, we are priced, as Joe just mentioned, to perfection. We're back to historical tights in terms of spreads. We're in a relatively, muted kind of rate vol over the last, say, month or so, and yet much of the same risks. And in fact, I don't think it really entering 2025, the market was prepared for certainly the tariff shock that we expected and certainly, saw in mid-April, we've unwound all of that and recovered that to were all time highs and equities stretched valuations in fixed income. Yes. Are rates still elevated relative to historical precedent? For sure. Having said that, the market is very liquid. My concern, overarching concern is the lack of concern. There's so much optimism built into asset prices. And again, we still have uncertainty over fed policy. Trump President Trump could certainly still tweet on a whim and change tariff and trade policy. Again, day to day, geopolitics again largely ignored. Until it's not ignored. We haven't seen really a material impact from the tariff situation in earnings yet and inflation yet. And again, I think the key word is yet. So I think what we're advising our clients is that given the spread environment, given the liquidity, you're probably supposed to if you do need financing over the next 6 to 12 months or sooner, look at the market very closely because I think there is a first mover advantage. And when we think about the balance of reward and risk, I think it's skewed, longer term towards risk.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Great. Thanks. Thanks, Ed. Very sensible advice. And Dan I'll let you close out here with some... Yeah. Things for watch out for.
Daniel Parrack
Head of Canadian Debt Syndication, Global Investment Banking
So I mean, if I, if I'm thinking about the second half of the year, I can kind of split it into what I think the investors are thinking about, what the issuers are thinking about. But my biggest risk is that we're such we're in such a technically driven market with with respect to how many inflows are coming into to the bond market. To Joe's comment, when do some of those fundamentals crack? And, and kind of take over that technical tailwind? That's what I'm kind of looking for. And it's hard to predict when that will happen, at least from a fixed income angle. To give you a little bit of kind of balanced take here, when we talk to investors, they're very frustrated with this environment. Frankly. They've got all this inflow coming in. They've got to find a way to make return. And spreads are at 17 or 18 year tights. So we think the investor base right now is actually very underweight credit. We think they're, very conservatively positioned. And we think that they're up tiering or high grading their portfolios, in expectation that some catalyst is going to hit where basis, basis between credits is going to decompress. So that's what they're positioned for. So I think what we can expect from a an issuance perspective, how investors are going to face that is actually I think they're going to approach new issuance with a lot of discipline, a conservative order sizes, and a lot of, you know, discipline with respect to not chasing spreads too much, given where we are. From an issuance perspective, the second half just tends to be quiet. So I think more technicals where we're going to be, dealing with a little bit of a dearth of supply. If history is a guide, typically issuers front load their issuance. They don't want to be left with their point, with kind of dealing with their annual issuance targets in the later part of the year. The second half of the year tends to be a lighter refinancing need anyway. We have only $16 billion in maturities front half have a 35. And then we have a technically or seasonally slower part of the year. Anyway, three of our four slowest months of the year are July, August and December. But what I would say is a quiet market is not a closed market when terms and conditions are this good. We've seen some very active August and December's. But what I would say is, there's a difference between a coupon borrower and a spread borrower in this market. So some advice that I'd also provide is well, terms and conditions are this good and spreads are this tight, what we could see is a pull forward of 2026 issuance plans for those borrowers that are, that have an objective to issue on spread. So think about banks, think about automotive companies and think about maple bonds. So those are so those are some, sectors that we could see increased volumes up from. And then maybe some themes on M&A and CapEx we've seen under supply in utilities, power generation, pipelines and infrastructure in the bond market. And those can be some seasonally active issuers in the fall, to take care of that CapEx and M&A. And I think the market would be ready for it. And frankly, we've been undersupplied in 10’s and 30’s. And those are some sectors that, we probably could see, you know, match their liabilities with their assets a little more in the second half.
Roman Dubczak
Deputy Chair of CIBC Capital Markets
Okay. Excellent. Well, great Dan thank you. Ed thank you very much. Joe. Jacqueline. Michael. Very good. This was a very good, comprehensive, update. And, you know, to those of you who who've been watching us, do these updates in prior periods, probably a bit more optimistic than we thought we'd be at this point in the game. So, lots to watch out for going forward. And please feel free to lean on any of us here at CIBC for, any of your needs. We're happy to help. We're keen to engage and look forward to working with you in these markets. Thanks for joining us here today. I hope to see you again soon. Thanks.