Investment-Grade Bond Investors Brace for a Rising Tide of M&A
- Deal supply, rising rates have pushed high-grade spreads wider
- Disney, Conagra, Microsoft among names planning acquisitions
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The U.S. corporate bond market is bracing for a flood of supply from mergers and acquisitions in the second half of the year. Borrowers will have to pay up after a first-half deluge helped wreck spreads.
Sales of investment-grade bonds tied to M&A surged by 50 percent to $154 billion in the first half compared with the same period last year, driven by a slew of deals that included CVS Health Corp., Walmart Inc. and Bayer AG, according to data compiled by Bloomberg. That pickup in supply helped push spreads in the secondary market to the highest level in a year and a half.