The big net supply

Research evidence excerpt

The big net supply

Exhibit 2: IG index YoY growth rate Exhibit 3: IG index net supply

2026 would be the fastest pace of growth since May 2021 (Covid) and April Our forecast implies net index supply of $776bn in 2026. That’s up +10%

2017 prior to that. from year 2020 and up +84% from year 2025.

18%

YoY IG index growth Expected Net index supply ($bn)

800 YE-2026 (8.1%)

14%

10%

6%

2% 0

Source: BofA Global Research, ICE Data Indices, LLC Source: BofA Global Research, ICE Data Indices, LLC

BofA GLOBAL RESEARCH BofA GLOBAL RESEARCH

Screening for LBO candidates

We provide a screen for IG companies that could be at a higher risk of an LBO. We limit

the issuer universe to issuers whose bonds include the CoC (change of control) covenant.

Investors that own low-dollar price bonds with the covenant could benefit if the bond is

taken out at $101 due to an LBO.

Below summarizes screen methodology. The results of the screen are available in Exhibit

4.

• Size. The EA LBO announced in September 2025 was the largest on record at

$55bn. Hence, in terms of size, we limit our sample to US public IG issuers with

market caps below $50bn.

• Valuation. Companies trading at high equity valuations are harder to take private,

as earnings may not support enough debt to buy out the public equity. The equity

contribution is typically below 50%. Hence issuers trading at EV / EBITDA above 12x

would imply leverage over 6.6x even with the equity contribution of 45%. Such high

leverage will likely prevent the issuer from funding the acquisition in the debt

markets. As a result, we restrict the list to companies with EV / EBITDA multiples

below 12x (based on adjusted LTM EBITDAs). For a similar reason, we exclude

companies with gross leverage exceeding 4.0x, as companies with an already