- Investment-grade bond investors are expecting a slew of bond issues as corporations borrow to pay for a wave of mergers and acquisitions, Bloomberg reports.
- Sales of investment-grade bonds used for M&A rose by 50% to $154B in the first half of the year compared with the same period last year, according to data compiled by the news organization. Such deals include CVS Health (NYSE:CVS), Walmart (NYSE:WMT), and Bayer (DE:BAYGN) (OTCPK:BAYZF).
- The increase in supply helped push spreads in the secondary market to the highest level in 18 months. With more than $1T in pending M&A deals, that trend could continue for the rest of the year.
- Even if more M&A adds to supply in H2, it might not exceed H1 and add as much upward pressure on spreads. Furthermore, benefits of tax reform and the possibility that Fed tightening may fade could offset pressure on higher spreads.
- ETFs: LQD, CORP, CSI, CRED, QLTA, FCOR, CBND, VTC, IBD, IGIH, IGEB, MLQD, WFIG, CWAI, FLDR, IBDS
- Now read: Trade Mistake 3: CVS Boredom Trade
Original article