Monday, October 21, 2019

Shareholders swapping for debt

Buybacks are higher this recession cycle.

Shareholders order buy backs, having the corporations take out debt and trade that for stocks.  Shareholders were locking in the ten year yield which hit 3% for  the period of buybacks. Those shareholders hold debt instruments paying 3%, and the ten year is now 1.75%; good deal for them, bad deal for government.

It robs the corporations o shareholder management and saddles them with high yield debt service.

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