In a disclosure nestled at the bottom of page 10 in its recent investor presentation, Automatic Data Processing, the human resources software company, made a notable announcement. It plans to accelerate a share buyback programme using $1bn borrowed from debt investors in May.
It’s not the only company looking to use cheap debt to boost its share price. Apple chief financial officer Luca Maestri said on the company’s earnings call at the end of July that the tech group had begun a $5bn accelerated share repurchase programme. Apple had borrowed $14bn in February, earmarked partly for buybacks. A few days later, Apple issued another $6.5bn of bonds, with share repurchases again listed as a reason.
The announcements are emblematic of a shift in corporate America’s approach to investors from last year. Today companies are beginning to favour shareholders over debtholders.