(Bloomberg) -- The world’s dealmakers are enduring their worst start to a year in two decades, as economic and financing headwinds continue to prevent a bounceback in mergers and acquisitions. 

Global deal values ended January at about $124 billion, according to data compiled by Bloomberg. That was down roughly two thirds year-on-year and the worst tally for an opening month since 2003, the data show.

While all major regions and sectors ended January lower compared with the same point in 2022, there were less severe falls in areas such as industrials. That was thanks to the largest deal of the month—water company Xylem Inc.’s agreement to buy Evoqua Water Technologies Corp. in a $7.5 billion all-stock deal.

The Xylem-Evoqua transaction was one of just three valued at more than $3 billion announced during January, the Bloomberg data show, as both strategic buyers and private equity firms kept their powder dry.

Higher interest rates and a more risk-averse stance from traditional lenders have combined to put a squeeze on financing markets, making it harder for the buyout firms that fueled dealmaking during the boom years to buy new assets. 

Read more: Dealmaking Drops by a Third as Choppy Markets Chill Merger Fever

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