Record-low interest rates are stoking the biggest increase in U.S. share buybacks ever.
American companies announced $55.9 billion in repurchases since June, data compiled by Birinyi Associates Inc. show. That adds to $93.5 billion in the second quarter and $108.3 billion during the first three months of the year, compared with $125 billion in all of 2009. Corporations are using debt to pay for buybacks after the average yield on U.S. investment grade bonds fell to an all-time low of 3.70 percent last month, data from London-based Barclays Plc show.
...U.S. companies have announced $258 billion in buybacks so far this year, compared with $52 billion in the first three quarters of 2009, according to data compiled by Birinyi. The almost fivefold increase is the largest for any January-to- September period since at least 2000, when the Westport, Connecticut-based research firm started tracking the data.Unlike investors, when companies buy back shares they don't usually sell them. This is a major reason that I am so hesitant to go short. As long as this type of buyback activity continues it is unlikely that the market will fall apart.