Beware the $500 Billion Bond Exodus
Farewell, Ireland: It looks like corporate America will finally bring that cash home.
For years, the likes of Apple Inc. and Microsoft Corp. have stashed billions of dollars offshore to slash their U.S. tax bills. Now, the tax-code rewrite could throw that into reverse.
The implications for the financial markets are huge. The great on-shoring could prompt multinationals -- which have parked much of their overseas profits in Treasuries and U.S. investment-grade corporate debt -- to lighten up on bonds and use the money to goose their stock prices. Think buybacks and dividends.
It’s hard to say how much money the companies might repatriate, but the size of their overseas stash is staggering. An estimated $3.1 trillion of corporate cash is now held offshore. Led by the tech giants, a handful of the biggest companies sit on over a half-trillion dollars in U.S. securities. In other words, they dwarf most mutual funds and hedge funds.
“There is going to be a significant unloading,” particularly of Treasuries, said Reuven Avi-Yonah, a professor who specializes in corporate and international taxation at the University of Michigan Law School. “The general consensus is that the best use of the funds is to distribute it out to shareholders.”
https://www.bloomberg.com/news/articles/2018-01-17/beware-the-500-billion-bond-exodus-as-offshore-cash-comes-home
Just a reminder that December led tax scam by the republicans, is still a tax scam
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and all tax free.
All that inflation makes their dollars worth a lot less.
