Bloomberg.com published an interesting article recently, titled, Merger Boom Tarnishes Ratings as Borrowing Soars: Credit Markets. We have summarized some of the interesting points made in this post.
Per the Bloomberg article, the same corporate deals that aided in the increase of the Standard & Poor’s 500 stocks index have had the opposite impact on debt investors. There are many factors that could be in play, including the fact that interest rates are at an all-time low, while at the same time borrowing to fund mergers and acquisitions is growing exponentially. Borrowers have been able to obtain financing that wouldn’t have been available in “normal times.”
In an April 22 report, Bank of America Merrill Lynch strategists predicted that mergers and acquisitions will reach the peak levels of 2006 and 2007. Last quarter alone, 3,594 deals were announced by companies in the U.S. The number hasn’t been this high since 2007. However, many credit ratings have dropped.
According to the chief financial markets economist at the Moody’s unit in New York, John Lonski, “We might be shocked to find out that by 2016, we have more problems on the credit front than we currently anticipate in part because companies are now and over the near-term using leverage a little bit too aggressively.”
Mergers & Acquisitions
At Ferguson, Braswell, Fraser & Kubasta, we focus on business law and helping companies complete successful transactions. If you are looking at acquiring another company, you need to ensure that you are fully protected. Our Dallas business attorneys understand the nuances of these deals and can assist you with the process. The lawyers at our firm are known for not only their legal expertise, but also their experience in business.
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Read our recent article about mergers and acquisitions:
Microsoft’s Acquisition of Nokia Devices Set to Close Today http://www.dallasbusinesslaw.com/microsofts-acquisition-of-nokia-devices-set-to-close-today/