Markets: special focus

Markets

Out of the frying pan... Into the freezer?

The M&A market has caught fire with a series of jumbo corporate deals. Bidders claim that these are compelling strategic transactions that will create long-term value. But the real reason may be fear that shareholders are now focused on weak revenue prospects. Buying earnings is a way for companies to prevent share prices that low policy rates have inflated from falling back to earth. But confidence is still surprisingly fragile. A couple more big deal failures could slam the M&A market back into the freezer and take the equity markets with it.

Stock and Awe

The M&A business is the most compulsive spectacle of how booming financial markets have collided with the real economy.

Debt capital markets

Bonds set to take centre stage in M&A financing

Debt capital markets bankers have so far watched the boom in M&A activity with a mixture of envy and anticipation. But they’re increasingly confident that a buyer-led bond boom is on the way.

Liquidity

Swimming not drowning

Regulators have been strident, if rather late, in their concern over the risk that short-term retail money now represents in today’s high yield corporate bond market. So when retail funds began to sell off in late July many braced for the worst. But by the end of August it was as if nothing had happened. The bond market’s ability to adapt may be greater than Federal Reserve chair Janet Yellen believes.

It's the credit, stupid

As retail money accounts for an ever-larger percentage of leveraged finance, investors must not lose sight of what this asset class is all about