Bye Bye, Buybacks - FINANCIAL-24

Bye Bye, Buybacks - FINANCIAL-24 - FINANCIAL-24, we has prepared this article well for you to read and retrieve information in it. Okay, happy reading.

Bye Bye, Buybacks - FINANCIAL-24

The debt to EBITDA ratio for companies in the S&P 500 is at record highs and, yet, the debt to equity levels are not far from the historic norm. This paradox stems from an unprecedented period of buybacks financed with debt in the corporate sector.

Now, given the high debt to EBITDA ratio, it could be expected that in a path of higher interest rates (monetary tightening), some companies will face challenges in paying down debt and a period of equity issuances may ensue as liquidity dries out.  When that occurs investors will in turn gravitate from stocks to bonds – and the bull market will eventually die.



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