Top U.S. companies are using equity and cash, not debt, for acquisitions. Union Pacific’s $85 billion deal with Norfolk Southern sets a record in the sector. Stock funding is up to 11%, cash-and-stock to 15.3%, while debt is less attractive. Corp earnings and cash flow drive equity financing, avoiding debt and potential downgrades. Ratings agencies warn Union Pacific of downgrade risks due to planned acquisition. Less debt reliance may lower year-end investment-grade bond issuance volumes. Investment-grade bond spreads remain low, M&A-related bond supply expected to reach $225 billion in 2025.

Read more at Yahoo Finance: High-grade US firms finance new M&A with more equity and cash, less debt