Corporates held hostage to proxy bonds

Lower interest rates are forcing companies to become slaves to yield-hungry investors, paralysing investment as risk is shunned in an effort to simulate bonds.

This thematic is slowly creeping up on Australian companies and is much more prevalent internationally. Carl Icahn, a successful corporate raider and investor activist, is also a recent investor in Apple and has been very vocal in demanding Apple borrow $US150 billion to buy back shares from investors in a bid to unlock value. Icahn even wrote a letter to chief executive Tim Cook explaining this.

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