When oil prices dropped two years ago, it took a while for the severity and durability of the new oil-price environment to sink in. The response came in 2016: governments focused on cutting expenditure, sending a cascade of caution through the entire economy. The impact on deal flow was huge and mostly negative. The upside of an unprecedented boost in sovereign borrowing, as Saudi Arabia and others moved urgently to secure external financing, was compensated by a steep drop in most other areas of activity, with particularly weak years for IPOs and M&A activity.
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