Capital Markets & Governance Insights – January 2025 | Insights

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Capital Markets & Governance Insights – January 2025 | Insights

IN THIS EDITION

SEC Developments

SEC Settles Misleading Cyber Disclosures Charges Against Four Companies

Key Insights

  • Companies should not minimize the extent of a material cybersecurity incident by omitting material facts regarding the scope and potential impact of the incident.
  • Cybersecurity risk factor disclosures should be tailored to a company’s particular cybersecurity risks and incidents, including by being updated to reflect material cybersecurity incidents as those increase a company’s cybersecurity risk profile.
  • Cybersecurity risk factors should not be framed hypothetically or generically when the warned-of risks have already materialized.
  • Information technology companies should be particularly focused on providing materially accurate and complete cybersecurity disclosures given the reputational importance of cybersecurity to their businesses.
  • Incident response policies should require cybersecurity personnel to report information to a company’s disclosure decisionmakers and include criteria for determining which incidents or information should be reported outside the information security organization.
  • The Securities and Exchange Commission (SEC) may regard the following as material to a cybersecurity incident disclosure:
    • The incident having impacted a large number of customers;
    • A large percentage of code having been exfiltrated by the threat actor;
    • Attribution of the incident to a nation-state threat actor; and
    • Long-term unmonitored presence of a threat actor on a company’s systems.

In October 2024, the SEC settled enforcement actions against four companies charged with misleading cybersecurity disclosures related to compromises to their systems and networks resulting from the 2020 cybersecurity attack on SolarWinds’ Orion software, which was used by those companies. All four companies were information technology companies separately operating in the digital communications and software, information technology security, cloud security and risk management services, and technical and enterprise information technology sectors. The actions, which were based on negligence claims and settled for an aggregate of approximately $6 million in civil penalties, alleged violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (Securities Act), Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 13a-1, 13a-11, 13a-13, 13a-15(a), and 12b-20.

In two of the actions, the SEC found that cybersecurity risk disclosures were described hypothetically or generically even after the companies were aware that their systems had been compromised by the SolarWinds incident. Relatedly, in one of those actions, the SEC found that the risk disclosures were so described partly because of deficient disclosure controls—specifically, that the company’s incident response policies did not reasonably require cybersecurity personnel to report information to the company’s disclosure decisionmakers and contained no criteria for determining which incidents or information should be reported outside the information security organization, and, as a result, the company’s senior cybersecurity personnel repeatedly failed to report cybersecurity incidents to executive management and the legal department in a timely manner.

The other two actions were based on the companies’ failures to disclose additional material information on the scope and impact of the incident. For example, in one of them, the SEC found that the company “failed to report that the threat actor had accessed a database containing encrypted credentials for approximately 31,000 customers and server and configuration information for approximately 17,000 customers. The disclosures further omitted the material information that the threat actor gained access to tens of thousands of customers’ credentials as part of the Compromise, representing the majority of its customers.”

Of note, in all the enforcement actions, the SEC’s order emphasized that given the nature of the companies’ businesses, their ability to protect information and data stored on and transmitted over their systems was critically important to their reputation and ability to attract customers.

Third Circuit Coinbase Decision Pressures SEC on Crypto Rulemaking

On January 13, 2025, the U.S. Court of Appeals for the Third Circuit issued an opinion requiring the SEC to provide a more complete explanation for its refusal to engage in formal notice-and-comment rulemaking regarding the application of securities laws to digital assets, finding that the agency’s one-paragraph denial of Coinbase’s request for such rulemaking was insufficiently reasoned, and thus arbitrary and capricious, under the Administrative Procedure Act. The decision was at least a partial win for Coinbase, which had requested that the Third Circuit require the SEC to engage in such rulemaking, and highlights the most recent example of judicial pressure on the agency to move away from what many have called the “regulation-by-enforcement” approach to crypto that defined Chair Gensler’s tenure atop the SEC. We discuss the court’s opinion in greater detail here.

EDGAR Next: SEC Adopts Improvements to EDGAR Filer Access and Account Management

On September 27, 2024, the SEC adopted rule and form amendments to enhance the security and account management of its electronic filing system called EDGAR (i.e., Electronic Data Gathering, Analysis, and Retrieval system).

The amendments require filers to authorize EDGAR access to their accounts for only individuals with individual account credentials from Login. gov, authorize administrators for their accounts, and confirm their account information annually, all through a new EDGAR dashboard function (the “dashboard”). Filers who choose to use optional application programming interfaces (APIs) for machine-to-machine communication with EDGAR will also need to authorize technical administrators, subject to certain exceptions, and use security tokens to communicate with EDGAR. The amendments also amend Form ID, the application form for EDGAR access, to require additional information, including about initial account administrators.

The amendments, collectively referred to as “EDGAR Next,” aim to address current security flaws in EDGAR access, especially the inability to trace filings by electronic filers (filers) to specific individuals and the lack of multifactor authentication, and to provide filers with more efficient and automated filing options through APIs.

Transition Timeline

On March 24, 2025, the amendments will be effective, the dashboard will become active, prospective new filers will be required to comply with the amended Form ID, and existing filers may begin enrolling in EDGAR Next using the dashboard.

Filing through the EDGAR Next process will, however, not be required until September 15, 2025, when individual account credentials will be required to access all EDGAR websites, current EDGAR access codes will no longer be used for access, and the current EDGAR access process will cease.

Filers will have from March 24, 2025, through December 19, 2025 (three months after EDGAR Next compliance takes effect), to enroll in EDGAR Next. Although existing filers who have not enrolled by September 15, 2025 may continue to enroll during that three-month period, they will not be able to file until they enroll. After December 19, 2025, unenrolled existing filers will need to submit the amended Form ID to obtain filing access.

To help filers prepare for the transition, the SEC has opened a beta filing testing platform that will be available until at least December 19, 2025. The SEC also maintains this webpage to provide filers with a variety of EDGAR Next resources, including links to videos on some EDGAR Next topics. We discuss EDGAR Next in more detail here.

SEC Issues Fall 2024 Regulatory Flexibility Agenda

On October 17, 2024, the SEC issued the SEC Chair’s agenda of rulemaking actions. The agenda, which is generally as of September 25, 2024, reflects the targeted timelines for the SEC Chair’s rulemaking priorities. As we highlight below, most of the rulemaking actions that we believe may be of interest to you are scheduled for October 2025. These priorities and timelines are, however, likely to change with the transition to the Trump administration and a new SEC Chair.

Expected Final Rule

Expected Proposed Rules

NYSE Developments

SEC Approves NYSE Rule Limiting Use of Reverse Stock Splits to Regain Price Criteria Compliance

On January 15, 2025, the SEC approved a New York Stock Exchange (NYSE) rule change aimed at limiting the use of reverse stock splits to regain compliance with the NYSE’s price criteria continued listing standard, which requires that the average closing price of a company’s listed capital stock over any consecutive 30 trading-day period should be at least $1.00 per share. The rule prohibits companies from effecting reverse stock splits that would result in noncompliance with the exchange’s continued listing standard with respect to the minimum number of holders of securities and publicly held shares, with companies violating this prohibition immediately facing the exchange’s suspension and delisting procedures (i.e., being ineligible for the NYSE’s six-month compliance period). Also, under the rule, if, to regain compliance with the price criteria, a company has conducted a reverse stock split within the prior year or multiple reverse stock splits within the past two years with a cumulative ratio of 200 shares or more to one, it will similarly be ineligible for a compliance period and will face immediate suspension and delisting procedures.

NYSE Withdraws Proposal to Expand the Circumstances for the Listing of Rights

On December 17, 2024, the NYSE withdrew a proposal that, if approved, would have allowed the listing of rights exercisable for securities that are not already listed on the exchange and will not be concurrently listed with those rights. The proposal would have updated the NYSE rules to permit the listing of rights whose underlying security will be listed on the exchange only when the rights are exercised and whose exercise will be pursuant to an effective Securities Act registration statement in place at the time the rights are listed. The withdrawal follows proceedings instituted by the SEC in August 2024 to determine whether to approve or disapprove the proposal.

Nasdaq Developments

En Banc Fifth Circuit Vacates SEC’s Approval of Nasdaq’s Board Diversity Rules

In December 2024, the Fifth Circuit Court of Appeals, in a 9-8 en banc ruling, vacated the SEC’s approval of Nasdaq’s board diversity rules holding that the approval was arbitrary, capricious, and not in accordance with the law because the SEC failed to justify its finding that the rules are related to the purposes of the Exchange Act. The case, Alliance for Fair Board Recruitment v. SEC, involved Nasdaq rules requiring listed companies to annually disclose statistical information in a prescribed matrix form about the racial, gender, and LBGTQ+ characteristics of their directors, and, subject to certain qualifications, to have (or explain why they do not have) at least two “diverse” directors, including one who self-identifies as female and one who self-identifies as an underrepresented minority or LGBTQ+.

  • The court held that a securities exchange rule is not related to the purposes of the Exchange Act simply because it is a disclosure rule; for it to be related to the purposes of the Exchange Act, it must have some connection with those purposes.
  • The SEC contended that the rules were connected to three of the Exchange Act’s purposes: (i) the promotion of just and equitable principles of trade, (ii) the removal of impediments to and the perfection of the mechanism of a free and open market and a national market system, and (iii) the protection of the investors and the public interest. The court concluded, however, that the SEC did not explain how the rules are connected to those purposes. Notably, the court held that the rules were not designed to protect investors or the public from speculation, manipulation, fraud, or anticompetitive exchange behavior, which are the kind of harms the Exchange Act targets.
  • The court also held that its interpretation of the relevant provisions of the Exchange Act is reinforced by the major questions doctrine, which requires clear congressional authorization for significant regulatory actions, holding that “no part of the Exchange Act even hints at SEC’s purported power to remake corporate boards using diversity factors.”

Although Nasdaq has indicated that it will not appeal the ruling, the SEC is yet to announce if it will appeal the ruling. An SEC appeal is, however, unlikely under a Trump administration. Whether the ruling will have any near-term practical impact on the board diversity disclosures (especially board diversity matrix disclosures) of Nasdaq companies remains doubtful given that most institutional investors, and ISS and Glass Lewis continue to focus on board diversity in their proxy voting policies.

SEC Approves Extension of Nasdaq’s Notice Requirements for Reverse Stock Splits

On November 21, 2024, the SEC approved an amendment to Nasdaq rules that extends the deadline for listed companies to notify Nasdaq of a reverse stock split from five business days to 10 calendar days. The SEC had only recently (in November 2023) approved Nasdaq rules for the notification and disclosure of reverse stock splits that established a five business day notice period. The change in the notice period is intended to align Nasdaq’s requirements with Rule 10b-17 under the Exchange Act, which requires issuers to provide notice to the Financial Regulatory Authority, Inc. (FINRA) no later than 10 calendar days prior to the record date for a stock split or reverse stock split, unless the related security trades on a national securities exchange with substantially comparable notice requirements. Nasdaq-listed companies will, therefore, no longer need to provide FINRA with a similar notice. The rule change, which will become operative on January 30, 2025, does not, however, change Nasdaq’s rules on the timing of public disclosure of a reverse stock split. Nasdaq-listed companies are still required to publicly disclose a reverse stock split at least two business days before the split’s anticipated market effective date.

Nasdaq Proposes Modification to Initial Listing Liquidity Requirements for IPO and OTC-Uplisting Companies

In December 2024, Nasdaq proposed a rule change to modify the initial listing liquidity requirements for companies that list on the Nasdaq Global Market or Nasdaq Capital Market in connection with an initial public offering (IPO) or a public offering for an uplisting from the over-the-counter (OTC) market. The proposed rule would require those companies to meet Nasdaq’s minimum market value of unrestricted publicly held shares (MVUPHS) requirement solely from the proceeds of the offering, excluding any previously issued shares that are registered for resale in the offering (“resale shares”). The minimum market value requirement is in respect of shares that are not held by an officer, director, or 10%-or-more shareholder of the company and which are not subject to resale restrictions of any kind. The proposed change is intended to reduce volatility upon listing, as Nasdaq has observed that companies meeting the MVUPHS requirement by including resale shares experience higher volatility compared to those meeting the requirement with only the proceeds from the offering.

For companies uplisting from the OTC market in conjunction with a public offering, the proposed rule would also increase the minimum size of the required public offering from $4 million to $5 million for Nasdaq Capital Market and from $4 million to $8 million for Nasdaq Global Market to align with the minimum MVUHPS requirement for each market.

Other Developments

In Shareholder Proposal Case, Fifth Circuit Rules that SEC No-Action Letter Is Not Reviewable

In November 2024, in National Center for Public Policy Research v. SEC, the Fifth Circuit Court of Appeals ruled that an SEC no-action letter—a letter in which SEC staff indicates that it will not recommend enforcement action to the SEC for a particular course of action—is not subject to judicial review as it is neither an order of the SEC under the Exchange Act nor is it a final agency action under the Administrative Procedure Act since an ultimate enforcement decision lies with the SEC. The court concluded that an SEC no-action letter simply constituted informal, nonbinding staff advice.

In the case, the National Center for Public Policy Research, a shareholder of The Kroger Co., sought to challenge an SEC no-action letter in which the SEC staff agreed with Kroger that it may exclude from its 2023 annual stockholders’ meeting proxy materials the Center’s shareholder proposal that Kroger issue a public report detailing the potential risks associated with omitting “viewpoint” and “ideology” from its equal employment opportunity (EEO) policy. Notwithstanding the no-action letter, Kroger subsequently included the Center’s proposal in its 2023 proxy materials. Kroger’s eventual inclusion of the proposal in the proxy materials served as an alternative basis for the court’s dismissal of the Center’s petition as the court held that the inclusion rendered the case moot.

ISS and Glass Lewis Issue Updated Proxy Voting Policies for the 2025 Proxy Season

Institutional Shareholder Services (ISS) and Glass Lewis have issued their updated U.S. proxy voting policies for the 2025 proxy season. While ISS’s policies are effective for shareholder meetings held on or after February 1, 2025, Glass Lewis’s policies apply to shareholder meetings held after January 1, 2025. We summarize their key policy updates below.

ISS Key Policy Updates

  • Short-term Poison Pills. ISS’s updated policy specifies additional factors it will consider in evaluating a vote on directors where a board adopts an initial short-term poison pill (i.e., one with a term of one year or less) without shareholder approval. The additional factors are:
    • The context in which the pill was adopted (e.g., factors such as the company’s size and stage of development, sudden changes in its market capitalization, and extraordinary industry-wide or macroeconomic events);
    • The company’s overall track record on corporate governance and responsiveness to shareholders; and
    • The terms of the pill—with respect to the pill’s terms, ISS’s prior voting policy only referred to the pill’s trigger.
  • SPACs – Proposals for Extensions. ISS notes that it will generally support requests to extend the termination date for a special purpose acquisition company (SPAC) by up to one year from the SPAC’s original termination date (inclusive of any built-in extension options, and accounting for prior extension requests). It also notes that other factors it may consider for SPAC extension proposals include: any added incentives, the SPAC’s business combination status, other amendment terms, and, if applicable, use of money in the trust fund to pay excise taxes on redeemed shares. ISS’s prior policy provided for a case-by-case vote on SPAC extension requests considering the length of the requested extension, the status of any pending transactions or progression of the acquisition, any added incentive for non-redeeming shareholders and any prior extension requests.
  • Social and Environmental Shareholder Proposals. In its updated policy, ISS clarifies that, in considering whether to support a shareholder proposal requesting for reports on policies and/or the potential (community) social or environmental impact of company operations, it will consider, among other factors, how a company’s existing policies, metrics, and risk management procedures align with relevant, broadly accepted reporting frameworks.

Glass Lewis Key Policy Updates

  • Board Oversight of Artificial Intelligence. Glass Lewis addressed artificial intelligence (AI) in its policy for the first time, noting its belief that AI-related issues should be overseen at the board level and that companies that develop or use AI in their operations should provide clear disclosure about their board’s role in the oversight of AI, including how they ensure their directors keep current on their knowledge of AI. Glass Lewis also notes that it may recommend against the directors charged with oversight of AI-related risks where insufficient oversight and/or management of AI technologies has resulted in material harm to shareholders and Glass Lewis finds that the board’s AI oversight, or response or disclosure about the issue is insufficient.
  • Reincorporation. Glass Lewis will review proposals to reincorporate to a different state or country on a case-by-case basis, a shift from its 2024 policy, which only stated that it would recommend voting against reincorporation where it would result in de minimis financial benefits and a decrease in shareholder rights. Glass Lewis’s case-by-case analysis will consider, among other factors:
    • changes in corporate governance provisions, especially those relating to shareholder rights (particularly regarding the right to call special meetings, the right to act by written consent, the ability to remove directors, director and officer exculpation, exclusive forum provisions, and fiduciary duties);
    • material differences in corporate statutes, case law, and judicial systems; and
    • relevant financial benefits.

Where a company has a significant shareholder or is otherwise a controlled company, Glass Lewis will consider the circumstances surrounding the board recommendation (including any influence by the controlling shareholder) and if the proposal is also put to a vote of disinterested shareholders.

  • Board Responsiveness to Shareholder Proposals. Glass Lewis expresses its belief that, when shareholder proposals receive significant support (i.e., at least 30% but less than majority of votes cast), boards should engage shareholders on the issue and provide disclosure addressing shareholder concerns and outreach initiatives.
  • Change in Control Provisions. Glass Lewis updated its policy on compensation in change in control situations to provide that companies that allow for committee discretion over the treatment of unvested awards should commit to providing clear rationale for how such awards are treated in the event of a change in control.
  • Approach to Executive Pay Program. In its updated policy, Glass Lewis underscores that it evaluates compensation programs on a case-by-case and holistic basis. Unfavorable factors in a pay program are reviewed in the context of rationale, structure, disclosure quality, alignment with performance and the shareholder experience, and the trajectory of the pay program resulting from changes introduced by the compensation committee.

FINRA Proposes Amendments to Corporate Financing and Conflicts of Interest Rules

On December 20, 2024, the Financial Industry Regulatory Authority, Inc. (FINRA) proposed amendments to FINRA Rules 5110, governing underwriting arrangements in connection with the public offering of securities, 5121, governing public offerings in which an underwriter or its associated persons or affiliates has a conflict of interest, and 5123, which requires underwriters to file offering documents and related communications for private filings with FINRA. In addition to substantive changes to the rules (including codifications of FINRA positions), the proposed amendments include organizational and terminology changes to the rules. The comment period for the proposed amendments is scheduled to expire on March 20, 2025.

We discuss FINRA’s proposed substantive changes below.

Proposed Amendments to Rule 5110

The proposed amendments to Rule 5110 would:

  • simplify the valuation of securities that trade on a U.S. registered national securities exchange (or a designated offshore securities market) and constitute underwriting compensation by basing their value on their closing market price on the date acquired.
    • Under current rules, a security that is deemed underwriting compensation may only be valued at its market price if a “bona fide public market” exists for the security, a term that has presented challenges in determining as it depends on certain thresholds of “average daily trading volume” and “public float,” terms defined under the SEC’s Regulation M.
  • exclude the securities acquired in the following transactions from being deemed underwriting compensation when certain conditions are satisfied—on the basis that such acquisitions are in connection with bona fide financing that would benefit the issuer and investors:
    • securities acquired in connection with the investment of cash to capitalize a direct participation program or a real estate investment trust (seed capital investments); and
    • securities acquired by a lender affiliated with a participating underwriter through a debt-for-equity exchange that is sold by its affiliated underwriter (debt-for-equity exchanges).
  • treat non-convertible/exchangeable preferred securities the same way non-convertible/exchangeable debt securities are treated under the rule. For example, this would allow such preferred securities acquired in a transaction related to a public offering at a fair price to be treated as underwriting compensation with no compensation value as such debt securities similarly acquired are currently treated. That change would also result in the lock-up restriction that applies to securities deemed underwriting compensation being inapplicable to non-convertible/exchangeable preferred securities.
  • clarify that, similar to termination fees, “tail fees” in engagement letters that meet specific requirements that protect the issuer will not be deemed to be prohibited unreasonable terms or arrangements.

Proposed Amendments to Rule 5121

Under Rule 5121(a), where an underwriter that has a conflict of interestin respect of a public offering, the underwriter may only participate in the offering if a “qualified independent underwriter” (QIU) participates in the offering, or one of three conditions are met. One of the conditions is that the securities offered have a “bona fide public market.” Given the complexities of determining the existence of a bona fide public market in a security (as mentioned above), FINRA is proposing replacing that condition with a condition that the securities are offered by an issuer that has been a reporting company for at least one, is current in its reporting requirements and has an aggregate market value of common equity of at least $300 million.

The proposal would also require that, when a QIU is required, the QIU and the conflicted underwriter enter into a written agreement that details the services to be provided by the QIU and reflects the QIU’s compensation.

The proposal also includes guidance:

  • regarding QIUs’ participation in the preparation of an offering’s registration statement and their conduct of due diligence.
  • regarding conflict of interest situations where there are at least two underwriters that are primarily responsible for due diligence and where there is no underwriter primarily responsible for managing the offering.
  • clarifying that a conflict of interest that arises when at least five percent of the net offering proceeds are directed to an underwriter, its affiliates and associated persons only applies if the underwriter, affiliate or associated person has an economic interest in the proceeds (e.g., it does not apply to proceeds held in brokerage accounts on behalf of a member’s customer).

Proposed Amendments to Rule 5123

Rule 5123 mandates the filing of offering documents and retail communications used in private placements with FINRA and exempts certain private placements from the filing requirement, including private placements of securities to “institutional” accredited investors under Securities Act Rule 501(a)(1), (2), (3) or (7). FINRA proposes to conform this institutional accredited investor exemption to the current list of institutional accredited investors under Rule 501 by adding these two additional categories of institutional accredited investors introduced by the SEC’s August 2020 amendments to Rule 501(a)’s definition of accredited investors: (i) entities owning investments in excess of $5 million and (ii) “family offices” with assets under management in excess of $5 million and that meet certain other conditions.

U.S. Equity & Debt Markets Activity – 2024

(Data sourced from Dealogic)

Traditional IPOs

The market for traditional initial public offerings (IPOs) improved in 2024 with increased activity both in terms of deal count and deal value, with 2024 continuing the streak of increasing activity since 2022’s historically low point of 86 IPOs. 164 IPOs with $31.4 million in aggregate deal value priced in 2024, compared with 117 IPOs with $20.1 million in aggregate deal value in 2023. While the number of IPOs in 2024 are still a far stretch from the record highs of 275, 209, and 394 IPOs in 2014, 2020, and 2021, respectively, they surpass the numbers in every other year except 2018, which had 185 IPOs.

Capital Markets & Governance Insights – January 2025 | Insights

As in 2023, healthcare and technology IPOs led the pack in 2024, with healthcare IPOs having the edge this year with 39 IPOs (vs. 24 in 2023) compared with 30 tech IPOs (vs. 32 in 2023). IPOs by biotechnology companies again predominated healthcare IPOs with 26 biotech IPOs in 2024. The real estate, leisure, and aerospace industries also made a strong showing with the IPO by Lineage, Inc., a temperature-controlled warehouse real estate investment trust (REIT), being 2024’s largest IPO, followed by the IPOs by Viking Holdings Ltd, a cruise ships company, and Standard Aero, Inc, a provider of aerospace engine aftermarket services, ranking second and third, respectively, in deal value.

SPAC IPOs

Although IPOs by special purpose acquisition companies (SPACs) continue to significantly trail 2020 and 2021’s record highs, there was a significant increase in SPAC IPO activity in 2024, as compared to 2023, with 57 SPAC IPOs in 2024, versus 31 in 2023. This uptick in numbers was equally matched by an uptick in deal value, with deal value in 2024 up 150% (vs. 2023). Notwithstanding that compliance with most of the SEC’s recently adopted rules on SPAC IPOs (and their business combinations with target companies (de-SPACs)), which we discuss here, kicked in on July 1, 2024, most (41) of the SPAC IPOs in 2024 priced in the second half of 2024. This may be an early indication that the rules may not have the outsized impact on SPAC IPOs anticipated.

BDC IPOs

2024 was a record year for IPOs by business development companies (BDCs), with four BDC IPOs during the year, all occurring in the first half of the year. Since 2017, there have been no more than one BDC IPO per year, except for 2021’s three BDC IPOs. In 2024, Morgan Stanley Direct Lending Fund led the pack, raising $103.4 million in gross proceeds in its IPO.

Follow-Ons

There was a modest improvement in the market for follow-on offerings (FOs) in 2024. While the number of FOs in 2024 was almost the same as in 2023 (576 in 2024 vs. 571 in 2023), deal value was up 60% in 2024, compared to 2023. Like in 2023, however, FO activity in 2024 significantly outperformed that in 2022, up 37% in deal count and 114% in deal value. Yet, the record numbers for FOs in 2020 and 2021 remain unmatched.

Convertible Bonds

Convertible bond offerings continued their upward trend in 2024, with 102 convertible bond offerings. As compared to 2023, deal count was up 36%, while deal value was up 40%. Consistent with 2023, there were more convertible bond offerings in the first half of 2024 (57) than in the year’s second half (45).

Investment-Grade Debt

2024 has been the best year for investment-grade corporate bonds1 market since 2021 and only 17 deals shy of 2020’s numbers. Deal count and deal value were up 15% and 32%, respectively, as compared to 2023, and up 31% and 30%, respectively, as compared to 2022 levels.

High-Yield Debt

With 325 high-yield debt offerings, 2024 continued the renewed momentum in the high-yield debt offerings market that began in 2023, although at a more modest pace than in 2023. While high-yield debt offerings in 2024 increased 58% by deal count and 50% by deal value, as compared to 2023, those increases were lower than 2023’s 76% deal count and 70% deal value increases over 2022 numbers.

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