USA TODAY: …
•Taking advantage of low interest rates. Savvy companies have been refinancing debt at lower rates and pushed back the due dates in many cases, says Bonnie Baha, bond manager at DoubleLine. Many companies exchanged for debt with rates at the lowest they’ve been in decades, she says.
•Hoarding cash. Companies are amassing huge chests of cash, giving them a cushion to keep up with their lower debt payments, says Marilyn Cohen of Envision Capital Management. Large U.S. companies are sitting on a record $976 billion in cash, up 8.2% from the same time last year, according to S&P’s analysis of the non-financial members of the S&P 500 index. Dividends, which use cash, are up 12.7% over the past 12 months, yet that’s still outpaced by 18.9% profit growth during that time.
•Postponing investment in new ventures. Companies remain in hunker-down mode and are conservative with spending, says Bill Larkin of Cabot Money Management. That’s good for bondholders, and lowering defaults, but it also contributes to unemployment, he says. “No one is taking on risk,” he says. … (more)
