“After five years of rapid growth in corporate bond issuance, technology companies are expected to issue less debt in 2018 as they start to bring cash parked overseas back to the U.S.” Ciara Linnane reports for MarketWatch. “That’s according to CreditSights analysts in a new report that forecasts that companies, including Apple Inc., Broadcom Ltd. and Microsoft Corp., will stop the practice off issuing bonds to raise the funds for shareholder rewards and repatriate foreign earnings instead.”

“Companies opted to raise debt domestically, rather than pay the 35% tax rate that overseas cash was subjected to under the former tax regime. The tax bill signed into law by President Donald Trump in December has changed the math, even though the repatriation rate is higher than previously expected at 15.5% for cash and 8% for illiquid securities,” Linnane reports. “‘We expect IG tech issuance to be down year-over-year for the first time in about eight years,’ analysts led by Jordan Chalfin wrote in the report.”

“Oracle Corp. and Apple squeezed in bond deals in November, just ahead of the passage of the tax-code redo, in what Chalfin called ‘a last hurrah,'” Linnane reports. “Apple was the biggest tech issuer in 2017, selling $30 billion of dollar-denominated debt, driven entirely by its massive shareholder returns program, which includes dividends and stock buybacks. CreditSights is expecting the iPhone maker to refinance the $6.5 billion of bonds that are maturing this year.”

Read more in the full article here.

MacDailyNews Take: The era of big corporate debt is over.

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