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By Marine Cole
The big news this week was the $6.3 billion merger between Continental Airlines and UAL Corp., as M&A activity in the transportation and infrastructure sector continued unabated. But the corporate bond market took a beating with the slowest issuance since 1990.
The transaction between the two companies will create the world's largest airline. It is the second largest deal in the sector after the Japanese government's $7 billion investment in bankrupt Japan Airline Corp. in January.
Global M&A in the transportation and infrastructure sector now total $27.5 billion so far this year, already more than triple the volume of mergers announced in the sector last year, according to data from Thomson Reuters.
Private equity showed signs of a return to leveraged deal-making with the buyout this week of financial market data company Interactive Data Corp. by Silver Lake and Warburg Pincus. The deal is valued at more than $3 billion.
Across the pond, Norway's Norsk Hydro ASA also agreed to purchase aluminum company Vale SA for $4.9 billion.
M&A of materials companies top the charts in terms of numbers of deals with 1,910 transactions so far this year. But energy and power still represents the sector with the higher volume of M&A at $153.1 billion.
Investment-grade companies raised $2.5 billion in bonds globally this week, the slowest week of issuance of corporate debt since May 1990, according to Thomson Reuters.
The slowdown mostly reflected worries surrounding the ability of Greece and other heavily indebted European economies to avoid default. Still, Lennox International sold $200 million of bonds to repay debt and for general corporate purposes.
But many companies in the riskier high-yield market postponed bond offerings. Jones Apparel delayed its planned $250 million debt transaction citing unfavorable market conditions.
Some smaller deals were nonetheless able to price. Among them was that of Beazer Homes USA. The homebuilder sold $300 million of debt.
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