M&A mania: deal-contingents re-emerge but risks remain

Price of forex hedges plummets as dealers flock to offer high-risk, high-reward product

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Mergers and acquisitions (M&A) have long been a money-spinning business for investment banks, generating millions of dollars in fee revenue per deal. Now, banks' trading businesses want a slice of the action.

In the past two years, an M&A boom has seen dealers flock to offer so-called deal-contingent foreign exchange hedges to companies making cross-border takeovers. These allow the purchaser to hedge the forex rate on the transaction, but if the deal fails, the forward is extinguished and the

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