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Corporate Animal Spirits Are Back and That’s Bad News for Bondholders

  • Leverage to rise as companies borrow to fund M&A and buybacks
  • Heightened chance of ’corporate event risk’ for debt investors

What do you get the shareholder that has almost everything? A fresh burst of corporate action aimed at boosting the value of their stock holdings even further, of course.

European companies may be gearing up for a spending spree to rival that of their U.S. counterparts in recent years, as they seek to justify increasingly lofty stock valuations -- at the expense of bondholders, according to Bank of America Merrill Lynch. On the menu: buybacks, acquisitions and spinoffs of existing units as pressure from activists intensifies, analysts led by European Credit Strategist Barnaby Martin said.