Corporate appetite for large-scale mergers and acquisition has exploded over the past week, driven by an unlikely combination of historically low interest rates and maturing product lines, said several M&A analysts. Moreover, these observers said yesterday’s announcements by both MetLife and SBC Corp. – of the purchase of Citigroup’s Travelers unit and AT&T Corp., respectively – are more than likely to be followed by dozens of others as the ranks of global industries are realigned sector-by-sector.

Joining Procter & Gamble Co.’s groundbreaking $57 billion acquisition of Gillette last Friday, yesterday saw SBC Corp. buy AT&T for $16 billion. MetLife offered $11.5 billion for Citigroup’s Travelers insurance and annuity unit.

The prime mover of these transactions is the historically low cost of money, according to the president of Rhodes Capital Management, Richard Rhodes. The barometer of what it costs corporations to raise money – corporate bond spreads – is at its cheapest since the end of World War II, he said, and corporations will be racing to lock in as much cheap cash as they can for the next several months. “Once the financing cycle turns the other way, you will see M&A dry up immediately unless you have a company sitting on a multi-billion-dollar cash pile,” he said.

This cycle of merger activity will be more “democratic” than previous cycles in the 1980s and ’90s since there is so much capital available for corporations big and small, said Mr. Rhodes. As an example, Mr. Rhodes, who directed corporate planning and strategy at WorldCom before becoming an investment manager, said junk bonds are trading 350 basis points, or 3.5% in yield terms, over U.S. Treasuries.

The next phase will be the “catchup” phase of the cycle, said Mr. Rhodes, as insurance, consumer products, and telecom-industry competitors will seek to counter MetLife, P&G, and SBC. “This is where it gets frothy, where the seventh-ranked player buys the ninth and 11th-ranked players to maintain market-share,” he said. “We will soon see deals that make no economic sense whatsoever.”

The only surefire winners in this M&A bonanza remain Wall Street’s investment banks and advisory boutiques. While calculating advisory fees is never easy-they are a closely guarded secret at each dealer- the industry standard is about 40 basis points per deal, said CreditSights financial sector analyst David Hendler. For example, in the $57 billion P&G-Gillette deal, the fee is 0.004 multiplied by the size of the transaction, or $22.8 million. Thus, Merrill Lynch will pocket about $11.4 million for advising P&G; UBS and Goldman Sachs will split roughly the same amount for counseling Gillette.