Maiya Keidan and Shariq Khan

(Reuters) – Low interest rates, and strong debt and equity markets that propelled Canadian mergers and acquisitions (M&A) to an all-time high in 2021 would underpin robust dealmaking this year too, M&A bankers said, though another record was unlikely.

The record year was helped by the pent-up demand to make deals from 2020 when the pandemic coronavirus ravaged global markets. However, with rising inflation and supply chains bottlenecks that could slow down economic recovery, the experts warned.

Global M&A also hit a record last year, comfortably erasing the high-water mark that was set nearly 15 years ago, as an abundance of capital and sky-high valuations fuelled frenetic levels of dealmaking.

In Canada, over $349 billion worth of M&A deals were announced in 2021, making it the busiest year on record, compared with $148.2 billion in 2020, data from Refinitiv showed.

“Looking ahead to 2022, I expect the M&A market to continue to be strong as the fundamental drivers remain in place – low interest rates, and strong debt and equity markets that are rewarding growth,” said Mike Boyd, head of Global M&A at CIBC.

Boyd predicts that activity will resume its resurgence within the commodity sectors.

Operator of railroad Canadian Pacific (NYSE:). The controversial $27 billion acquisition of U.S. railroad Kansas City Southern by (NYSE:), topped the list for biggest deals last year.

The year ended with transportation and industry leading the charge, and energy sectors seeing a solid rebound thanks to recent oil price recovery.

The global focus of central banks on controlling runaway inflation means that interest rates will likely rise from their record lows this year, which could be a concern for equity markets.

“Inflation may be a drag on the M&A market to the extent that it drives up interest rates and/or negatively impacts equity markets,” said Bill Quinn, a director at TD Securities.

Quinn indicated that the Omicron coronavirus variant, which is fast spreading, may create some temporary economic uncertainty, however,

Canadian companies have raised $52.4 billion through share sales. This is the largest amount since 2016. Shopify (NYSE): Canada’s top-ranked company in equity issuance, has been the most valuable.

BofA Securities Inc. BMO Capital Markets Morgan Stanley (NYSE:) were the top three financial advisors on announced M&A, according to the Refinitiv data.