CROSS-SECTORSECTOR COMMENT 8 March 2016ContactsBenjamin S. Garber 1.212.553.4732 Asst Dir-Economist benjamin.garber@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.Market CommentM&A Boom Weathers the Storm Global mergers and acquisitions (M&A) activity has held up well so far this year despite heightened financial market volatility and constricted debt markets. Large corporations, making the assumption that the global economy will stabilize, are still seeking to grow revenues through acquisitions. With borrowing costs for high grade issuers remaining historically low, M&A can stimulate much future debt issuance and greatly influence credit quality in the quarters ahead.But M&A linked bond issues sag Global M&A activity recorded surprising year-over-year gains in the first two months of this year, rising 33% to $721 billion in Bloomberg figures. Though these results lag some of the stronger monthly sums recorded last year, the latest figures point to a healthy pace of dealmaking against the 4.5% year-to-date decline in the MSCI World Equity Index.MOODY'S ANALYTICS CROSS-SECTOR2 8 March 2016 Market Comment: M&A Boom Weathers the StormThe uplift in overall M&A volume appears to be paired with heavy related debt issuance, yet beneath the surface this borrowing trend is less than impressive (Figure 1). The $55 billion of M&A linked bond issuance from corporate issuers with US operations in January and February is up an outsized 91% year-over-year. Yet excluding the $46 billion worth of bonds that Anheuser-Busch InBev issued in part due to its acquisition of SABMiller, this years merger related issues are minimal. For the six months ending February, US M&A linked corporate bond issuance fell to the 11-month low of $138 billion, down sharply from the record of $211 billion in the six months ending July 2015. M&A linked bond issuanc...
