January posted the fastest month in mergers since 2000, according to Dealbook, citing data from Thomson Reuters (publisher of peHUB). Globally, M&A rose 69% to $309.6 billion in January from the same period a year earlier, DealBook reported.
In the United States, strategic M&A surged last month to $167.7 billion, up 299% from January 2010, while PE-backed M&A shot up 218% to $5.7 billion in that same period, the story said.
Refinancings have also surged. So far in first quarter, issuers have opportunistically returned to the debt markets to get better terms on their bank deals, according to Thomson Reuters Loan Pricing Corp. (LPC).
Spectrum Brands, Weather Channel, Interactive Data, Burger King, Reynolds and Phillips-Van Heusen have all come to market this year. For example, Booz Allen Hamilton, which went public In November, was able to flex pricing down on its new $500 million term loan B, LPC says. This resulted in a yield to four years of 4%, much cheaper than the add-on term loan C Booz Allen did in Q4 2009, which yielded 6.3%, LPC says. Booz Allen is majority owned by the Carlyle Group.
“More credit available leads to more borrowing,” says one PE executive, who stopped short of saying there was a bubble.
Leo Tannenbaum, CEO of Fifth Street Finance, says we will likely see more refinancings since interest rates are expected to increase. “The supply of capital in the upper end of the market far exceeds demand and many companies have maturities coming due in the next few years,” he says.