2025 witnessed rapid AI advancement and shifting trade policies, leading companies across the globe to lean into M&A as a tool to reposition and accelerate growth. As a result, deal activity increased meaningfully and is on track to become the second-highest on record, with deal value up 36% year-over-year. 

Heavier M&A activity typically drives greater divergence in corporate fundamentals across sectors. Some acquirers will execute transactions that amplify earnings, while others stretch balance sheets and drift toward downgrades. We believe this rising dispersion, combined with a healthy pipeline of acquisition-driven new issuance, should keep 2026 a credit picker’s market with attractive opportunities in catalyst-driven, idiosyncratic situations.