Companies prefer equity owners to bondholders as M&A picks up

The merger and acquisition activity sweeping through the equity markets is being seen as a mixed blessing at best by corporate bond managers. Euan McNeil, fixed income investment manager at Aegon, believes corporates have shifted their priority from balance sheet repair, much loved by fixed interest investors, to being more shareholder friendly. He says: "This can manifest itself in a gradual deterioration of balance sheets through increased distributions to shareholders and, in more extreme circumstances, more aggressive M&A activity. Under either of these scenarios, the resultant incr...