Quote:
Originally Posted by jyl
No one is lining up to lend to those companies, and their stock prices certainly are not being propped up. For example, take the US domestic oil industry. Have you looked at the stock prices?. We're seeing bankruptcies, fire sales on assets, dividend cuts, and mass layoffs (about 100,000 so far).
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He was sort of correct in a roundabout way.
The buyback bonanza shown above is of course sponsored by ZIRP. Put simply, when borrowing costs are close to zero and when the market has become completely myopic as it relates to assessing performance, it makes sense to issue debt and plow the proceeds into EPS-inflating share repurchases. Throw in the fact that the FED-induced hunt for yield has forced risk averse investors out of govies and into corporate credit and you have a kind of goldilocks scenario for corporate issuance and buybacks.
"Risky Business": Companies Are Now Funding Share Buybacks By Selling Bonds To Other Companies | Zero Hedge
The more recent update.
Why The Stock Buyback Spree Is Ending | Zero Hedge
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