2016 Setting Up For Record Debt Issuance Thanks To M&A
October was the busiest month for deal making in the last 12 years, see below. Almost half a trillion in mergers and acquisitions were announced around the world. A major portion of this half billion was megadeals with just eight transactions accounting for over $300 billion. All of these deals have fueled demand for debt due to record low interest rates. Globally bond offerings are up 9% from last year’s total of $5.8 trillion and 2016 is expected to set a new all-time high.
In the following Financial Times article, see here, deputy chief investment officer of Amundi Smith Breeden Jon Duensing notes that, “The expectation that any transaction that gets announced will have a significant debt component built into it, says a lot about where we are right now…It is very analogous to 2005, 2006 and 2007. What happens to the markets when global interest rates start to move higher?”