Bond market nervously eyes repatriation

Jan. 17, 2018 10:47 AM ETBy: Stephen Alpher, SA News Editor
  • No one knows exactly what U.S. corporations like Apple and Microsoft might do as they repatriate hundreds of billions of dollars of profits stashed overseas, but it's safe to say their holdings of U.S. Treasurys and investment-grade corporate debt are about to go far lower.
  • It's estimated that $3.1T is held offshore. While the $14.5T Treasury market seemingly has little to worry about, change does come at the margin, and one might wonder how much of the recent surge in long-term U.S. rates is thanks to the new tax law's eased treatment of repatriated earnings.
  • Corporate bonds could be in for an even more acute impact, write Liz McCormick and Molly Smith at Bloomberg. Apple owns more than $150B in corporate paper, making it one of the globe's largest bond funds. Bank of America figures investment-grade spreads to Treasurys could widen 20 basis points thanks to the new tax law.
  • ETFs: LQD, CORP, CSI, CRED, QLTA, FCOR, CBND, VTC, IBD, IGIH, IGEB, MLQD, WFIG, CWAI, IBDS

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