WSJ: Companies' Record Cash Levels
The Wall Street Journal Weekend writes that, "Companies Stockpile Record Stack of Cash." They tell us, "U.S. companies are sitting on the largest pile of cash ever. Investors are trying to gauge how they are going to use it. Cash holdings at nonfinancial companies grew to a record $2.1 trillion at the end of June, according to a report from Moody's Investors Service. That is up 30% from that time last year and higher than the previous peak of nearly $2 trillion in 2017. Among the biggest hoarders: AT&T Inc. and Delta Air Lines Inc., which each held more than $15 billion at the end of June. Other measures show some of America's largest companies continued to hang on to record cash stockpiles at the end of the third quarter. The amount held by S&P 500 companies not in the financial, transportation or utility sectors is expected to total around $1.9 trillion, according to data compiled by S&P Dow Jones Indices. That is the most cash ever held by that group in data going back to 1980." The Journal piece comments, "Cash hoards swelled this year after companies issued record-breaking amounts of debt to bolster their balance sheets against the Covid-19 pandemic's disruptions. As of Nov. 30, U.S. companies had sold more than $2 trillion of investment-grade and high-yield bonds -- the most on record in data going back to 2006 -- according to LCD, a unit of S&P Global Market Intelligence.... Wall Street analysts expect companies to start dipping into more of their cash next year. Some investment-grade companies have taken initial steps to lower their debt loads, while continuing to hoard cash in anticipation of a surge in infections this winter, according to a Bank of America Corp. report." It adds, "'Next year, the expectations are for no meaningful corporate bond issuance because companies are sitting on huge cash buffers that are no longer needed,' said Ralf Preusser, rates strategist at BofA."
