I haven't seen this point raised anywhere in the media other than...
From FT Alphaville, Feb. 1:
B.R.E.A.M. (Bonds Rule Everything Around Me)
Bigtech and pharma companies — Apple, Alphabet and Microsoft among them — might consider borrowing some bond-market manoeuvres from the Federal Reserve.
Corporate treasurers will soon need to decide how to sell hundreds of billions of dollars’ worth of investments held “offshore” for tax reasons, assuming they choose to sell them at all.
Those investments are mostly made up of government and corporate bonds — American multinationals’ favourite place to stockpile foreign profits and thereby avoid US taxation. Under previous tax law, the companies could defer paying tax on profits earned abroad as long as those profits were “reinvested” in foreign subsidiaries. In practice this meant Irish and Caribbean branches of American companies accumulated dollar-denominated assets.
Tax rules have changed, so deferred foreign profits will now be taxed regardless of their location (we’ve covered this and some other fun stuff).
But it’s not yet clear what companies are doing with those offshore assets, which were often used as collateral to borrow and pay shareholders with dividends and buybacks. The chart below, from Zoltan Pozsar, macro strategist with Credit Suisse, shows what this “synthetic cash repatriation” looks like for the biggest companies, based on their public filings:
Word has it, these companies are giving themselves just two years to liquidate their investment portfolios, according to Pozsar’s latest note....MOREWord.
