With the surge in shareholder activism expected to only gain momentum this year, Moody’s Investors Service is warning that activists’ tactics may create risk for bond investors.

According to Moody’s, activists who seize stakes to effect changes to corporate behavior targeted 26% more North American companies during the first three months of this year than in the same period of 2014.

As those investors target more companies, Moody’s said in a report, that threatens further damage to corporate credit quality since share buybacks and dividends are paid out of cash reserves, reducing the amount available for debt repayment.

“Often these changes are aimed at carving out value for shareholders and this may come at bondholders’ expense,” Chris Plath, vice president and senior analyst at Moody’s, told Reuters in an interview.

Pressure from activists, he noted, can also increase uncertainty about a company’s strategic direction that could affect credit quality. “If Bill Ackman or Dan Loeb get a seat on the board, there is an entirely new board room dynamic,” Plath reportedly said, referring to two highly prominent shareholder activists.

Only days after activist hedge fund Casablanca Capital in July won six seats on the board of iron-ore producer Cliffs Natural Resources, Moody’s cut the company’s debt to speculative from investment grade.

Assets managed by activist hedge funds increased to about $120 billion in 2014 from about $105 billion in 2013, according to Hedge Fund Research data cited by Moody’s.

The hedge funds are attracted to the “huge cash pile” at U.S. non-financial companies, which had $1.65 trillion on their balance sheets in October 2014, according to Moody’s. Technology companies, which as of October carried more than half of the cash held by the largest non-financial U.S. companies, accounted for 20% of shareholder activism last year.

The surge in activism has included high-profile battles at such companies as Darden Restaurants, Allergan, and, more recently, at General Motors and DuPont. Moody’s expects more of the same.

“The bulk of corporate governance is played out between companies [,] and their shareholders and bondholders are, for better or worse, only along for the ride,” Plath said.

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