August 9, 2022

Capital Markets Q2 Update

The 2nd Quarter continued to see volatility in the broader markets which negatively impacted activity for larger issuers. Lenders are taking a more cautious stance heading into the back-half of the year.

For the C&I segment, the broader markets have seen tepid activity with HY bond issuance down 75% in volume year-over-year and the S&P 500 having entered Bear market territory. Middle market volume was also down 49% YTD.

CRE activity for the quarter remained brisk as borrowers anticipate higher rates going forward. Banks, especially smaller ones, are able to garner a larger share of refinance business as 1) GSE’s (Fannie Mae/Freddie Mac) pricing and execution is less competitive and 20 larger banks are having difficulty closing quickly, which is important to borrowers in this volatile rate environment. This market continues to see improving metrics in vacancies and rents as well. However, there is some thought that the market is at peak rents given forecasted economic headwinds.

The Energy sector saw a very busy 1H 2022. Texas A&D deal making achieved continued record levels due to oil and gas prices generally staying at values well above prior years.

The market has seen pricing remain similar to the 1st Q ‘22 in the acquisition-driven C&I space; steady pricing in the Energy sector.

CRE anticipates a slowdown in refi activity in the 2nd half of the year as rates continue to rise and as a significant amount of refinance activity was pulled into 2021 and the 1st half of 2022.

We would be happy to discuss current market conditions and our near-term outlook with clients.

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