Reports that Microsoft may be planning a debt sale to pay dividends and buybacks makes perfect sense. Think of it this way: why not add leverage?
1) debt is cheap
2) company thinks its stock is undervalued
3) they are sitting on an enormous pile of cash: $42 billion
4) they can issue a large amount of additional debt — say, $10 billion — at insanely low rates.
Why not add leverage?
And they are just the latest. I mentioned earlier today that trading desks were telling me about corporate bond deals coming soon from:
Deere ,
Royal Bank of Scotland ,
Amgen ,
Comerica ,
Entergy and
Southern .
— And new high-yield offerings from Borg Warner , BE Aerospace , Huntsman, and others.
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