U.S. Profit Recession Means Debt Fuels Most Buybacks Since 2001
- Debt-backed repurchases increased to 30 percent of total
- Reliance underlines vulnerability as Fed mulls raising rates
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As earnings stagnate, U.S. companies looking to charge up their stock returns with repurchases are turning to debt markets like no time since the dot-com bubble.
Led by Apple Inc. and CBS Corp., S&P 500 constituents have rushed to sell bonds to finance the repurchases of their own stock. The proportion of buybacks funded by debt rose above 30 percent in June for the first time since 2001, data compiled by JPMorgan Chase & Co. and Bloomberg show.