A surge of new M&A-driven investment-grade debt offerings have crossed the tapes recently, and market participants generally expect the trend to continue.

Walmart (WMT) entered the IG corporate primary market Wednesday with a whopping US$16bn bond in eight parts, which it primarily sold to finance its purchase of Indian eCommerce giant Flipkart.

WMT agreed in early May to acquire a 77% stake in the firm for around US$16bn, with the remainder to be held by some of Flipkart’s existing shareholders, including co-founder Binny Bansal, Tencent Holdings (0700) Tiger Global Management and Microsoft (MSFT).

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The deal underscores WMT’s focus on capturing market share in Asia, as well as capitalizing on trends in emerging new technologies.

WMT expects eCommerce to grow at four times the rate of overall retail, and thinks Flipkart – which has grown rapidly since it was founded in 2007 – will continue to benefit from leveraging artificial intelligence to help expand its business in electronics, large appliances, mobile and fashion and apparel.

WMT had intended to fund its Flipkart investment with a mix of debt and cash, however some analysts pointed out that there was little difference in terms of cost.

Carol Levenson, analyst at corporate bond research service firm Gimme Credit, noted the difference in pro forma rent-adjusted leverage – if it's all borrowed – is “minimal, still healthy in the 2.5x range.” She added that WMT is reshuffling its international businesses, but expects the firm to continue its “traditionally conservative financial policies.”

Moreover, WMT may be also be eyeing a bid for Humana (HUM), as the U.S. health care sector undergoes a massive M&A overhaul. As such, the Arizona-headquartered discount retailer may sell additional debt to finance any deal.

At the close of the Flipkart transaction, the Indian company’s financials will be reported as part of WMT’s international business segment. If the deal were to close at the end of Q2’FY18, WMT expects a negative impact to FY19 EPS of about US$0.25 -$0.30, which includes incremental interest expense related to the investment. 

Against this backdrop, WMT’s new US$16bn, ‘AA’-rated bond received decent demand from investors, with spreads on all tranches – ranging from two to thirty years – having compressed by 10-15bps over the course of pricing.

Targeting more M&A-driven deals?

WMT’s deal follows German pharmaceutical company Bayer’s (BAYRY) massive US$15bn eight-part bond earlier in June to help fund its US$66bn purchase of Monsanto, and many in the market foresee continued M&A-fueled debt issuance on the near-term horizon.

The Walt Disney Company (DIS), for example, could come with a new debt sale to help it pay for its acquisition of 21st Century Fox (FOXA), if it is successful. The media firm recently upped its bid to acquire FOXA’s assets to US$71.3bn from its initial US$52.4bn offering late last year, effectively outdoing Comcast’s (CMCSA) US$65bn offer made June 13.

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CMCSA said that it had presented a new, all-cash proposal in light of the recent federal court approval regarding the AT&T-Time Warner (T-TWX) tie-up, as well as FOXA’s stated concerns with its prior offering.

The telecom conglomerate’s bet that a regulatory rejection of the merger would be “highly unlikely” comes fresh off the heels of the unconditional approval of T’s acquisition of TWX – which market participants have been generally touting as a potential precedent for further M&A deals – and related debt offerings – over the near-term.

In the meantime, FOXA’s stock has risen more than 94.4% since its 52-week low in early November, and ticked-up over 1.6% in late morning trading activity Thursday, while U.S. equity indices suffered mild losses in the face of flaring trade war rhetoric.