Lower Oil Prices Do Not Guarantee Lower Rates
READ TIME: 3 MIN | Many investors have linked rising bond yields to energy prices. Our Fixed Income team explores the broader forces that may be keeping rates elevated.
Off the desk | Arbitrage | June 2026
The Case for Arbitrage Strategies in Today's Market Environment
READ TIME: 3 MIN | M&A activity, SPAC issuance, and convertible markets continue to create opportunities. Our Arbitrage team highlights the value of alternative return sources.
In our view, the broader M&A environment remains constructive heading into May, building on a roughly 40% rebound in deal value in 2025 to an estimated USD $4.9 trillion globally. Boards are moving with conviction to secure scale in areas like artificial intelligence, data infrastructure, energy, and building products. Significant structural changes are occurring, and we expect companies will continue to use M&A to respond to them. However, a wholehearted embrace of transformational global dealmaking will likely require tensions in Iran to abate first.
April brought several high-profile announcements that underscore both the scale and breadth of current activity. Shell PLC agreed to acquire ARC Resources in a cash and share transaction valued at approximately CAD $22 billion, representing a 27% premium and marking Shell's largest acquisition in over a decade, establishing Canada's Montney basin as a core strategic heartland. Separately, QXO announced its agreement to acquire TopBuild for approximately USD $17 billion at $505 per share, a 23% premium, positioning QXO as the second largest publicly traded building products distributor in North America. Closed transactions also contributed meaningfully, with the Hologic take-private by Blackstone and TPG delivering up to $79 per share to shareholders, and Sealed Air Corp., Air Lease Corp., and Foran Mining all completing successfully.
SPAC arbitrage continues to offer an attractive complement to merger arbitrage. April saw 17 new initial public offerings and 9 business combinations, with IPO terms beginning to improve, including instances of overfunded trust accounts that enhance the downside protection profile of new deals. The best received transaction of the month, Archimedes Tech SPAC Partners, saw warrants trade from approximately $0.40 to $1.20, illustrating the asymmetric return potential available when deal quality is high. Notably, deal flow is increasingly being driven by disruptive sectors including AI, robotics, quantum computing, and critical minerals, which we view as a positive structural development for the opportunity set going forward.
Convertible bond arbitrage rounds out the strategy by capturing opportunities that arise from earnings volatility and new issuance dynamics. Positioning in high-delta convertible bonds performed well through April, supported by a well bid secondary market following geopolitical de-escalation. New issues continued to price and trade extremely well on day one, reflecting strong investor appetite. While issuance slowed modestly due to blackout periods, activity is expected to accelerate as those windows reopen, replenishing the pipeline of opportunities.
For advisors building resilient portfolios in an environment defined by rate uncertainty and equity volatility, arbitrage strategies offer something increasingly rare: a return stream with low correlation to broad market direction. With three distinct and complementary sub-strategies generating income across merger activity, special purpose acquisition vehicles, and convertible markets, the approach offers diversification within the allocation itself.
All data sourced from Picton Mahoney Asset Management Research and Bloomberg Inc., unless otherwise cited.
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