In This Issue: Top 10 Recent Stock-Boosting Initiatives: As Shareholders Gain, Creditors Often Lose: Over the past few years, institutional investors dissatisfied with the stock price or day-to-day management of the companies in which they invest have increasingly sought to bolster shareholder returns. Their voices are being heard. Whether responding to the pressure of private equity groups, dissident shareholder slates of directors, or unhappy money managers with large stakes in the company, many businesses are striving to keep shareholders satisfied. The Dividend Recap Game: Credit Risk Versus The Allure Of Quick Money: Standard & Poor's has seen a sharp rise in deals in which private equity owners declare big dividends at some of their portfolio companies-dividends funded not through operations but from added leverage, in the form of bonds or bank loans. As a result, banks profit from the fees earned on making these loans, institutional investors find themselves rewarded with high-yield notes, and private equity firms receive fat dividends that help them quickly recoup their initial investment in a company. Not All Companies Can Prosper After A Dividend Recapitalization: Dividend recapitalizations have traditionally been popular in sectors such as health care, software, retail, electronics, media, and services. But as institutional investors and bankers have warmed to these plans, they have spread to many sectors of the economy. Standard & Poor's believes that as private equity investors become increasingly enamored with the fast cash that dividend recaps let them pull out, they might start subjecting companies that do not have the traditional characteristics to these plans. The M&A Boom And Share Buybacks Weigh Increasingly On Sector Credit Quality: The current boom in global M&As may be on pace to set a record in 2006, but a new Standard & Poor's analysis anticipates that fevered M&A activity in the balance of the year will be positive for ratings in only a small number of industries. For the majority of sectors, the new deals will bring negative or neutral credit consequences. What's Powering The Sudden Surge In Chinese M&A?: China's M&A activity is in turbo-drive. Outward investment is soaring, as many more Chinese companies need and are able to pursue opportunities overseas. Inward investment is accelerating, as foreign firms seek a foothold in the potentially lucrative Chinese market. And domestic consolidation is heating up among the country's fragmented industries due to overcapacity. Korea's Financial Sector Banking On M&A: The government is fostering the merger trend by encouraging big, traditional banks to form holding companies as a framework to integrate insurance and brokerage subsidiaries. Compared with other financial institutions, the banks are better positioned as acquirers through their large branch networks and decades of stable customer relationships. | 
