Wheat from the Chaff

Resource financings keep Bay Street flush

Here are some telling statistics that help describe the magnitude of the American economic tailspin:

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BOYD ERMAN
From Monday's Globe and Mail
April 6, 2009 at 4:19 AM EDT

Take that, Wall Street.

Bay Street bankers are finding themselves in the unprecedented situation of being just as busy selling stock as New York financiers, with Canadian companies raising almost as much money so far this year as those based in the United States.

Canadian companies raised about $9.2-billion selling stock in the first three months of 2009, according to figures from Thomson Reuters. That's just behind the $9.6-billion raised on U.S. markets - with both figures calculated on the same basis and in Canadian dollars to make them comparable.

Usually, Canadian common stock sales lag far behind U.S. levels, given that the United States is much more populous and has long been the centre of the financial world.

The fact that Canada closed the gap in the first quarter is less a story of this country's stellar performance and more about the dismal state of U.S. markets. Companies in the United States have all but shut down fundraising on stock markets amid the last year's unprecedented volatility.

In Canada, the value of common shares sold was little changed from the first quarter of 2008. Business held up thanks to a spate of gold and energy deals, a sale by resource-hauling Canadian Pacific Railway Ltd. and one big financial stock sale - the unloading of a big stake in ING Canada Inc. by the insurer's parent company in Holland.

Add in $5.2-billion of preferred shares, mostly sold by the country's banks, and it was the best quarter in the past two years, said Roman Dubczak, who heads the department that arranges stocks sales at the securities arm of Canadian Imperial Bank of Commerce.

"On a global basis, outside of financials, the deals that are getting done are resource-based, and because of the heavy resource bias in Canada they're getting done here," Mr. Dubczak said.

In fact, Canada's steady performance counted for a big share of all the global stock sales in the quarter, which totalled $47.3-billion (U.S.)....