Deal activity in Latin America plunged to an all-time low in the first half of the year as the arrival of the new coronavirus stunted deal activity.

A total of 199 mergers and acquisitions worth $8.1 billion closed during the first six months of the yeart, down from 316 deals worth $35 billion in the same period the previous year, according to data from Mergermarket. The 77% decline in deal value is the worst since the firm started tracking activity in the region in 2001.

"As the last region to be hit in late February with COVID-19, about a month after the first case in the U.S. was confirmed, Latin America still struggles to control the spread even as countries outside the region begin to reopen their economies," said Viviana Balan, research relationship manager for the Americas at Mergermarket.

As usual, law firms in Brazil, Latin America's largest economy, occupied the top-three spots for legal advisers in the Mergermarket table by number of deals, albeit with fewer deals than last year.

Brazil's Pinheiro Neto Advogados logged 23 deals worth $1 billion, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados worked 16 transactions worth $1.7 billion and Demarest Advogados was involved in 11 deals worth $404 million.

Lex Mundi firm Brigard Urrutia in Colombia and global firm White & Case also made it into the top five by number of deals.

Normally, Brazilian firms would lead rankings by deal value. However, Mergermarket said deal value from Brazil plunged 75% during the first half of 2020.

That sharp drop in deal flow propelled three global firms to the top of rankings by deal value. Debevoise & Plimpton clinched the top spot, working on three deals worth $2.3 billion in the region. That's a steep climb versus the firm's rank of 80 in the region by deal value a year before.

Weil, Gotshal & Manges, which worked two deals worth $2.2 billion, came in second after fanking 128 in Latin America last year.

Gibson, Dunn & Crutcher rose to third from 13 on a single deal worth 2.2 billion.

Mattos Filho and Brazil's Cescon, Barrieu, Flesch & Barreto Advogados rounded out the top five firms by total deal value.

Investment Hold

Mergermarket reported foreign investors largely stayed out of the region, with Chinese investment plummeting 89% in value during the first half while interest from Japanese investors held steady. Domestic M&A nearly froze during the period. The consumer and agricultural sectors have proven most resilient.

Looking ahead, Balan said the recovery of M&A activity in Latin America strongly depends on how countries in the region deal with COVID-19. Approaches to the health emergency have varied, with Chile closing borders and enforcing strict quarantines while the region's two biggest countries by population and economy — Brazil and Mexico— have mostly attempted to maintain business as usual.

Brazilian President Jair Bolsonaro contracted the virus after downplaying the infection risk for months, switching to remote meetings and Facebook briefings after his diagnosis. Dozens of other Latin American leaders have contracted COVID-19, including Bolivian interim President Jeanine Añez and Honduran President Juan Orlando Hernández.

"As Latin America was one of the last geographies to be hit by the pandemic, countries are still experiencing growth in case numbers," Balan said. "M&A activity in the region can be expected to remain low for the coming months."

Transactional Track Record, which tracks a broader base of transactions, reported deals in the region declined 30% by number and 60% by combined value during the first half of the year. Transactional Track Record found 835 deals worth $20.6 billion.

Mauricio Borrero, a partner with Dentons Cardenas & Cardenas in Colombia who heads the firm's corporate practice group for Latin America and the Caribbean, told Transactional Track Record there are signs of a surge in distressed M&A transactions.

"Probably this will be one of the motors of the M&A market over the next 18-24 months," said Borrero, who doesn't foresee a return to normalcy until 2023.