What's the Big Idea? Companies Are on a Debt Diet

The video discusses the significant drop in corporate tax revenues to the U.S. Treasury, which was larger than expected. Barclays introduces the 'debt diet' concept, where companies use tax savings to reduce debt. This has led to increased earnings per share and a shift in investor preferences towards companies reducing debt. The video explores how markets reward these companies and the concerns over corporate leverage. It questions whether the debt diet can address criticisms of U.S. tax reform being a handout to corporations.

What was the reported percentage drop in corporate tax revenues paid to the U.S. Treasury last year?

• 20%

• 10%

• 30%

• 40%

What term did Barclays use to describe the trend of U.S. companies using extra tax cash to pay down debt?

• Debt Strategy

• Debt Management

• Debt Diet

• Debt Reduction

Between 2017 and 2018, what percentage of large issuers in the U.S. corporate bond market reduced their debt by more than 5%?

• 40%

• 30%

• 20%

• 10%

How have equity investors' attitudes changed regarding companies that reduce debt?

• They prefer companies with higher leverage.

• They are indifferent to debt levels.

• They now favor companies that reduce debt.

• They only care about dividend increases.

What is a major concern for investors across asset classes regarding corporate leverage?

• Increased competition

• High interest rates

• Low stock prices

• Triple B rated market leverage