>That sounds bad, but is it really? Ok, so it's not 100% for retiring
>float, but plenty of it is. Interest rates are at historical lows
>and corporate bond issues are plentiful: why *not* swap locked-in
>low rates in order to fund buybacks? Companies sold equity to
>raise cash, for some companies it's the most expensive financing
>they've ever had access to.
>Isn't it just like an individual who swaps their 21.6% Visa for a
>3.9% no-interest-for-6-months MasterCard?
errrr.... knope? For one thing, equity is expensive at the time when you issue it, but after this, the cash cost is merely the dividend yield (and dividends can be skipped). Second, gearing up increases your cost of equity (or at least, it always used to). Third, your point would make more sense if companies could buy back equity at the same price at which they issued it -- but they actually buy it back at the prevailing market price.
dd
>/jordan
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