Tuesday, December 14, 2004

Coming rate hikes - another reason for a M&A surge ?

Read an interesting piece that said that the coming interest rate hikes could also push companies to buy now while the borrowing costs are low. I think this will be less of a factor compared to the junk-bond financed merger days of the 80s. Companies are likely to use their cash instead for purchases. In fact, in one recent merger, the buyer intentionally avoided raising cash through a bond offering, so as to preserve its credit rating.

That said, a new report this week said that this year has been the best year for junk bonds since 1998, though none of that seems to be going to fund acquisitions.


Post a Comment

<< Home