Companies are rushing to the bond market for cheap acquisition financing amid favorable conditions, even before deals are finalized. Data shows global M&A financing this quarter reached $113 billion, marking the largest quarterly volume in four years and one of the highest on record. In just one day last week, Merck and GE Healthcare collectively raised $9.25 billion, both for acquisitions announced only two weeks prior. These issuances highlight robust credit sentiment heading into late 2025, with corporate spreads near historic lows and sustained capital inflows.
As M&A activity rebounds and concerns grow over potential market disruption from next year’s AI-related debt, firms in Europe and the Americas are racing to execute financing plans. A spokesperson for Magnum Ice Cream noted, "The credit market currently offers highly favorable issuance conditions, prompting us to capitalize." The company raised €3 billion ahead of its spin-off from Unilever.
This quarter is the busiest for acquisition financing since 2021. Merck issued an eight-tranche bond following its proposed buyout of biotech firm Cidara Therapeutics Inc., though the deal isn’t expected to close until Q1 2026. Similarly, GE Healthcare’s acquisition of medical imaging software firm Intelerad Medical Systems Inc. is slated for H1 2026. The pharmaceutical sector remains active, with Novo Nordisk raising €4 billion in Europe last month for its Akero Therapeutics Inc. purchase, followed by Pfizer’s $6 billion bond sale for Metsera Inc.
Globally, 2025 is a record year for bond sales. James Conniff, HSBC’s head of European corporate and structured debt capital markets, noted that while low borrowing costs attract issuers, supply aligns well with investor demand. "The euro market has efficiently absorbed significant M&A/capex financing," he said.
Demand is so strong that borrowers face no premium even when including clauses requiring debt repurchase if deals fail by set deadlines. This mitigates risks of stranded debt, though minor penalties may still apply. Christian Schneeberger, UniCredit’s head of investment-grade corporate syndication, added, "Textbook theory suggests premiums for M&A redemption clauses, but with current demand levels, such considerations are overlooked."
Magnum’s bonds include a clause allowing early repayment if its spin-off isn’t finalized by mid-2026. Typically, new entities rely on bank credit lines, but Orange SA’s recent issuance omitted acquisition terms entirely, reflecting market confidence.
M&A Revival After years of anticipation, M&A activity is rebounding sharply in H2 2025, with bankers eyeing broader recovery in 2026. Leveraged finance markets have underwritten ~$65 billion in LBO-related debt for 2026. Netflix’s $72 billion Warner Bros. Discovery acquisition, backed by $59 billion in bank commitments, stands out. Its bridge loan is expected to be replaced by up to $25 billion in bonds and credit facilities.
Mark Lenagan, BNP Paribas’ deputy global capital markets head, noted, "M&A timelines are lengthy, and many deals were delayed this year. With stabilized markets, we’re optimistic about H1 2026 completions."
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