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A survey conducted by Duke's Fuqua School of Business, in collaboration with the Federal Reserve Banks of Richmond and Atlanta, found that nearly one-third of finance chiefs are delaying, scaling down, or canceling investments due to uncertainty surrounding the US presidential election. This percentage is lower than in 2016, when about half of CFOs expressed similar concerns. The survey also revealed that CFOs remain moderately optimistic about the economic outlook, with an average growth rate of 1.8% expected for US GDP in the next 12 months. Additionally, finance executives anticipate cost pressures and plan to automate tasks using artificial intelligence. [Extracted from the article]

US companies have seen their cash stockpiles reach a record $4.11 trillion in the first quarter of 2024. This increase is attributed to a strong economy and high interest rates, which have allowed companies to generate returns on their short-term holdings. Despite the Federal Reserve's plans to ease monetary policy, investments in cash equivalents remain attractive as a safeguard against future economic slowdowns. Companies are also diversifying their portfolios by increasing allocations to longer-term investments such as corporate and US government bonds. However, companies with higher debt burdens and slimmer profit margins may face challenges in this higher-for-longer rate environment. [Extracted from the article]

Corporate finance chiefs are finding that high interest rates can lead to increased profits. Around 1-in-10 non-financial companies in the S&P 500 earned more in interest income than they paid in debt expense during the first quarter, with interest income for these companies up about 60%. Companies are benefiting from higher returns on their cash piles by investing in money-market funds, government securities, and certificates of deposit. Nvidia Corp., a chipmaker, reported $359 million in interest income for the first quarter, enough to cover its interest expense and dividend. Money-market fund holdings have grown by almost 20% since 2022, with corporate holdings making up the majority. [Extracted from the article]

QXO Inc., a company led by billionaire Brad Jacobs, has hired Ihsan Essaid, a Wall Street banker, as its first chief financial officer. Essaid, who previously worked at Barclays Plc and Credit Suisse, will oversee QXO's finances as the company prepares to go public. QXO focuses on the distribution of building products and has approximately $1 billion for mergers and acquisitions. The company has identified thousands of potential targets in the US and Western Europe. The hiring of Essaid comes ahead of a shareholder vote to approve a $1 billion investment in SilverSun Technologies Inc., which will be renamed QXO and serve as the platform for Jacobs' new venture. [Extracted from the article]

A new analysis by data provider Calcbench Inc. and Suffolk University reveals that large US companies are increasing their adjusted earnings per share by excluding certain expenses from their net income, such as litigation expenses and amortization of intangible assets. These adjustments were worth almost $182 billion in 2023, with an average value of $110 million per item. While average adjusted net income in 2023 was lower than the previous year, companies reported average non-GAAP income that was 29% higher than the GAAP-figure, resulting in an increase in adjusted EPS. US regulators have expressed concerns about the use of non-GAAP measures, prompting the Financial Accounting Standards Board to consider defining these measures. The report also highlights specific adjustments made by companies, including a $11.6 billion litigation expense at 3M Co. and a $9 billion adjustment for amortization of acquired intangible assets at Bristol Myers Squibb Co. [Extracted from the article]

More companies are turning to the stock market to reduce their debt burdens as borrowing costs increase. Corporates completed $28.5 billion of initial public offerings in the year through April, with debt repayment cited as a motivation. The strength of stock markets and the high demand from investors make equity raises an attractive option for companies looking to cut leverage. However, the level of issuance has not been as high as expected, possibly due to cheap borrowings agreed during the pandemic. Asset managers are being discerning about deals and prefer IPO candidates with growth or M&A-related debt on their balance sheets. Private equity firms may also consider IPOs to address debt payments. Overall, reducing debt through share sales can improve a company's earnings-per-share performance. [Extracted from the article]

US companies have the opportunity to free up $1.76 trillion in cash by improving their working capital performance, according to consulting firm Hackett Group Inc. The analysis found that working capital performance deteriorated at the top 1,000 US companies by revenue, resulting in more money being tied up in operations. Factors such as inventory management, payment terms with suppliers, and collection of receivables all contribute to working capital demands. By implementing strategies to improve efficiencies, companies can unlock cash for other purposes. [Extracted from the article]

Lumen Technologies Inc. is focusing on stabilizing its business after reaching a debt restructuring deal with creditors. The agreement reduces the company's debt due in 2025 and 2026 by approximately $1.5 billion and cuts its obligations due in 2027 by over $8.5 billion. Lumen received a new $1 billion revolving credit facility and $1.325 billion in new senior secured notes as part of the deal. The company plans to continue working on its capital structure and will provide updated financial guidance later in the year. Lumen reported a net loss of $10.3 billion for 2023, driven by writedowns, and generated total revenue of $14.6 billion. [Extracted from the article]

Cisco Systems Inc. has made its largest diversification effort to date with the $28 billion acquisition of Splunk Inc. This move also marks a historic shift for Cisco, as it transitions to a net debt capital position in order to support growth and shareholder returns. The acquisition was funded through a combination of cash, commercial paper, and long-term debt, including $13.5 billion in bonds. Cisco plans to focus on disciplined capital allocation and investments in growth, rather than prioritizing debt reduction. The company has committed to spending $5 billion per year on share buybacks and $6.5 billion per year on dividend payments. Cisco's decision to take on debt is a departure from its previous net cash position, which it held for three decades. The company's CFO, Scott Herren, stated that the decision to reduce debt will depend on factors such as monetary policy and cash holdings. Cisco's integration of Splunk will focus on boosting revenue and the development of combined products. The acquisition will also help Cisco expand its capabilities in artificial intelligence and increase its recurring revenue. [Extracted from the article]

Carvana, an online car retailer, has tightened its lending standards due to higher delinquency rates in the industry. The company is requiring higher down payments and placing limits on maximum payments. Carvana's Chief Financial Officer, Mark Jenkins, stated that delinquencies and losses in the industry have increased since the pandemic, leading the company to become more selective about who it lends to. Despite these challenges, Carvana reported $150 million in net income for 2023 and expects interest rates to decrease this year, which should contribute to profitable growth. The company is also beginning to hire again and expanding its network of vending machines. However, Carvana continues to operate with a significant amount of debt, which remains a concern for some analysts. [Extracted from the article]

Whirlpool Corp., the company known for KitchenAid mixers and Maytag washing machines, is focusing on reducing its debt as US interest rates remain high. The company plans to pay down $1 billion of its $2.5 billion term loans, which were raised for the acquisition of the InSinkErator garbage disposal business. Whirlpool recently raised $300 million in the bond market to refinance a maturity in 2024. The company's leverage is expected to decrease from 3.6 times to 2.0 times by 2026. Whirlpool is also targeting cost savings and simplifying its business to generate additional savings. The company's sales have been affected by the decline in existing home sales, but there is hope for improvement if mortgage rates stabilize. [Extracted from the article]

Options traders are betting on further declines in the yen and potential intervention by Japanese officials, with open interest for near-date CME yen contracts hitting a 17-year high. Japanese authorities have expressed concerns about speculative trading and are prepared to take appropriate steps if necessary. Trading volumes are low, indicating that traders are holding their positions. Yen options suggest excessive dollar bullishness, but longer-dated risk reversals remain yen bullish. [Extracted from the article]

Logistics provider XPO Inc. is focused on reducing its leverage after acquiring assets from Yellow Corp. The company may consider buying back some of its debt at par. XPO's leverage ratio increased to 3 times after the acquisition, and the CFO aims to bring it down to one to two times in the long run. The company also has the ability to use its cash to extinguish debt ahead of its maturity. [Extracted from the article]

Artificial intelligence (AI) and generative AI tools are being increasingly used by deal makers to gather data, screen potential targets, and conduct due diligence in the mergers and acquisitions (M&A) industry, according to a report by Bain & Co. While only 16% of M&A practitioners surveyed have used generative AI in the past, 80% expect to use it in the next three years. Generative AI can help identify M&A targets that traditional tools may miss, detect contract deviations, and focus on problematic areas. However, concerns remain about the reliability and safety of the available AI tools. The report also predicts an increase in M&A activity in 2024 after a decline in 2023, driven by private equity firms looking to divest their portfolio businesses. Strategic deal makers are expected to engage in more M&A, as valuations are relatively low. The potential decline in interest rates may also facilitate more M&A activity. However, regulatory uncertainty remains a challenge, requiring companies to stress test their planned deals and secure financing. [Extracted from the article]

Newell Brands, the owner of Rubbermaid and Sharpie, plans to use cash to pay off $200 million in bonds that are maturing this year. The company has been facing pressure to increase profits, resulting in cost-cutting measures such as layoffs and warehouse closures. Despite these challenges, Newell generated $680 million in cash flow in the first nine months of 2023 and had $400 million in cash and cash equivalents at the end of September. The company also has larger debt maturities in the coming years, with $550 million due in 2025 and $2 billion in 2026. Newell is waiting to determine how to manage its debt beyond 2024 and expects the Federal Reserve to lower interest rates. The company's debt-to-earnings ratio remains high compared to its long-term goal, and credit ratings agencies have downgraded its ratings. Newell has been working to simplify its business and reduce inventory, which should help generate more free cash. The company recently announced further organizational changes that are expected to result in annual savings. [Extracted from the article]

Synopsys Inc. plans to finance its $34 billion acquisition of software maker Ansys Inc. through a combination of a term loan and bond sales. The company aims to pay down the term loan quickly to reduce its borrowing levels. Synopsys will use a portion of the $19 billion cash payment to Ansys shareholders to refinance the short-term bank loans in the bond and loan markets. The company expects to maintain an investment-grade credit rating and intends to bring its debt-to-earnings ratio down to below 2 times within two years of the acquisition. The acquisition is aimed at expanding Synopsys' customer base and product suite. The biggest risk to the deal is obtaining regulatory approval in various jurisdictions. [Extracted from the article]

A growing number of chief financial officers (CFOs) are being promoted to the position of chief executive officer (CEO) in major American companies. This trend is attributed to CFOs taking on more operational responsibilities and becoming well-versed in driving growth. The uncertain economic outlook is expected to further increase the prominence of CFOs as companies tighten their belts. While the role of chief operating officer (COO) remains the clearest path to CEO, the rise of CFOs may also help more women reach top leadership positions. However, the CFO job is becoming more volatile, with increased turnover and shorter tenures. [Extracted from the article]

Wall Street corporate bond desks are experiencing a surge in demand for hedges as companies grapple with increased interest-rate volatility. Six major bond underwriters, including Bank of America, JPMorgan Chase, and Goldman Sachs, are seeing elevated interest from companies seeking pre-issuance hedges to lock in borrowing costs. This growing popularity indicates a desire by corporations to gain visibility into future financing costs and protect themselves against sudden rate shocks. Companies are using various instruments such as T-locks, collars, and derivatives to hedge against future funding costs. [Extracted from the article]

US finance leaders anticipate that they will have to pay slightly more to refinance maturing debt in 2024 and 2025, according to a survey conducted by Duke University and the Federal Reserve Banks for Richmond and Atlanta. Chief financial officers expect that rolling over their debt will cost 120 basis points more in 2024 and 70 basis points more in 2025 compared to their initial financing. However, they believe that funding costs will decline after that. The survey also shows that borrowing costs have decreased over the past two months, and CFOs are more optimistic about the performance of the US economy in the coming year. [Extracted from the article]

A recent analysis by Bloomberg News reveals that many companies that relied on cheap credit to fund large mergers and acquisitions are now struggling to deliver on their promises. Less than half of the companies analyzed have managed to reduce their leverage ratios since their acquisitions, and almost a third of the firms now have a leverage ratio above 3.5. The average net debt to earnings ratio has also increased. The article highlights the challenges faced by companies in servicing large debt loads in an environment of higher interest rates and weakening consumer demand. It also discusses specific examples of companies, such as Walgreens and Bayer, that have experienced difficulties due to their debt-fueled acquisitions. The article concludes by cautioning companies to be cautious about future acquisitions and to focus on cost controls and efficiency. [Extracted from the article]

Honeywell International Inc. plans to acquire Carrier Global Corp.'s security business for $4.95 billion. The acquisition will be funded through a combination of cash and debt, with Honeywell also considering raising funding to refinance upcoming maturities. The transaction is expected to close in the third quarter of 2024, and Honeywell will wait to assess interest rates before tapping into the bond market. Honeywell has a significant amount of cash on its balance sheet that could be used for the acquisition if bond investors are not tapped. The company is also open to further acquisitions in the security industry. [Extracted from the article]

S&P Global Inc. expects to see an increase in revenue from rating private debt financings as investors become more concerned about the risks associated with their investments. The private credit market has grown significantly in recent years, reaching $1.6 trillion. As investors experience losses in their funds, they are likely to demand more information about the risk profiles of their portfolios. S&P Global is already working with major buyout firms to assess the credit quality of their portfolios. The company predicts that its private market business will generate around $600 million in revenue for the full year 2026. [Extracted from the article]

S&P Global Inc. expects to see an increase in revenue from rating private debt financings as investors become more concerned about the risks associated with their investments. The private credit market has grown significantly in recent years, reaching $1.6 trillion. As the market faces a potential downturn, investors are likely to demand more information about the risk profiles of their portfolios. S&P Global is already working with major buyout firms to assess the credit quality of their portfolios. Private credit investors should prepare for a potential decline in returns or even losses as the companies they lend to navigate a slowing economy. The Federal Reserve's tightening of monetary policy has reduced the availability of credit to many borrowers. Private lenders may also change their approach and make their assets more liquid by packaging debt into bonds and selling them to investors through collateralized loan obligations. S&P Global is already rating some private credit deals and expects to generate around $600 million in revenue from its private market division in 2026. [Extracted from the article]

Delta Air Lines is working to regain its blue-chip rating that it lost during the pandemic, according to the company's CFO, Dan Janki. The airline is focused on increasing its cash reserves and using some of it to pay down debt. Delta has already reduced its debt by over $8.5 billion and is aiming to achieve a leverage ratio of three times this year. S&P Global Ratings upgraded Delta to BB+ in August, one notch below investment-grade, and Fitch Ratings holds the company at BB+ with a stable outlook. Delta's rival, American Airlines, is also working to improve its credit rating. [Extracted from the article]

US companies may face significant financial challenges if they choose to refinance their 2024 debt at current interest rates, according to a Calcbench analysis. Non-financial companies in the S&P 500 have a total of $107.7 billion in debt due next year, with an average interest rate of 2.8%. Refinancing at the current rate of 5.44% would result in an additional $3.09 billion in interest expenses. This could reduce the average earnings per share (EPS) of 57 businesses with maturing debt in 2024 by $0.11, or 2.92%. While some companies have enough cash to repay their debt, others will need to refinance or sell assets to raise funds. The analysis was conducted by Calcbench, a financial research firm that focuses on debt disclosures and analysis of financial statements. [Extracted from the article]

Finance chiefs at many companies face a balancing act due to recent increases in financing costs, according to Galanti, one of the longest serving CFOs at an S&P 500 company. (Bloomberg) -- Costco Wholesale Corp.'s Richard Galanti, who has served as Chief Financial Officer of the warehouse club retailer since 1985, says he views the more than decade-long period of low interest rates in the US as an anomaly. [Extracted from the article]

(Bloomberg) -- There's still plenty of reason for companies to sell long-term debt, said Marsh & McLennan Cos. Earlier this month, the New York-based professional services firm sold $1 billion of senior notes due in 30 years at a coupon rate of 5.7% and another $600 million of 10-year debt at 5.4%. Your firm has about $1.6 billion of debt coming due next year. [Extracted from the article]

(Bloomberg) -- Brookfield Corp. sees private credit firms and banks working together in the $1.5 trillion market, even as direct lenders continue to fill the gap left by their counterparts in a high interest-rate environment. Earlier this week, Brookfield Asset Management Ltd. - which spun out of Brookfield Corp. in December - announced its plan to raise as much as €10 billion ($10.7 billion) with French bank Societe Generale SA for a "high-quality" private debt fund. [Extracted from the article]

The company reported interest expenses of $571 million for the quarter, down from $598 million in pro-forma interest expenses during the first quarter of 2022, prior to the combination of Warner Bros. and Discovery. Higher interest expenses also raise the bar for how much companies have to earn from projects to cover financing costs, potentially resulting in less investment. [Extracted from the article]

(Bloomberg) -- Cheniere Energy Inc. plans to refinance more debt held by its project arms with funding procured by the parent company following its first bond deal as a highly rated business this month. Cheniere will be opportunistic and buy back maturing bonds, Davis said. [Extracted from the article]

Companies across the credit spectrum are facing sharply higher financing costs after the Federal Reserve raised its benchmark rate for ten consecutive meetings, bringing it to a range of 5% to 5.25% earlier this month. Already last year, triple-C rated companies reported negative free operating cash flow to debt ratios - a warning sign for other businesses - according to S&P. Some companies are seeking new sources of funding now. Interest costs at US companies rose by nearly 20% on average in the first quarter compared to a year earlier, according to a sample of about 1,700 businesses from data provider Calcbench Inc. Oracle Corp., for example, reported $908 million in interest spending during the quarter ended Feb. 28, compared to $667 million a year earlier. [Extracted from the article]

Bank analysts and ratings firms are forecasting a substantial hit to credit markets, depending on how long the political standoff lasts, and how it ends. Bank of America Corp. analysts expect market stress around the borrowing limit to build in the coming weeks, potentially resulting in risk-off sentiment among investors. (Bloomberg) -- As the regional bank turmoil continues and markets digest the Federal Reserve's latest rate hike, investors and executives are turning to the next big question: What if lawmakers fail to resolve the standoff around the US debt ceiling?. [Extracted from the article]

Marriott will likely extinguish some of these debts with cash from operations, Oberg said. (Bloomberg) -- Marriott International Inc. plans to tap the debt markets again this year to raise funding for upcoming maturities, Chief Financial Officer Leeny Oberg said. [Extracted from the article]

(Bloomberg) -- US companies are turning to derivatives to lock in future borrowing costs, as corporate finance chiefs worry that financing will grow more expensive amid stubborn inflation, even if markets are bracing for rate cuts in 2023. "The goal is to have a better rate to issue at than the market rate", said Joseph Neu, founder and chief executive of NeuGroup Inc., which runs membership groups for treasurers. The Fed has hiked short-term rates over the past year at the fastest pace in decades, and is widely expect to boost them again by a quarter-point on Wednesday. [Extracted from the article]

Chicago-based Conagra, which owns brands including Birds Eye and Healthy Choice frozen foods as well as Slim Jim jerky, could wait until next month before it decides how to manage its maturity, Marberger said in an interview. (Bloomberg) -- Conagra Brands Inc. isn't in a hurry to tap the credit markets - even though the food manufacturer has a $500 million bond coming due in August, less than four months away. [Extracted from the article]

Adobe will "address everything at once", Durn said. (Bloomberg) -- Adobe Inc. is looking to enter the investment-grade bond market later this year to help fund its planned purchase of Figma Inc. and refinance upcoming maturities in one go, Chief Financial Officer Dan Durn said. [Extracted from the article]

(Bloomberg) -- After a decade of gorging on cheap money, indebted companies are looking at selling off chunks of their businesses as they fortify their balance sheets for the new era of higher interest rates. At one point, more than 30% of those purchases in the US were funded by debt, JPMorgan Chase & Co. data show. [Extracted from the article]

(Bloomberg) -- Investors are quickly dividing corporate borrowers into the haves and the have-nots. The company's transaction, which is due March 31, comes after bank underwriters pulled several leveraged loan deals in light of recent market jitters. [Extracted from the article]

(Bloomberg) -- With Credit Suisse Group AG having wobbled this week and a handful of regional US banks collapsing, company executives are getting more concerned about where they can safely keep their cash. Some of them are yanking money from their banks and depositing it at other lenders, moving it to money market funds, or buying Treasury bills directly, according to corporate treasurers and advisers. [Extracted from the article]

The company's net cash holdings, at $5.1 billion at the end of December, are sufficient to cover any funding needs, CFO Oey said. (Bloomberg) -- Grab Holdings Ltd. on Monday said it prepaid $600 million in debt ahead of a 2026 maturity, taking advantage of excess cash on its balance sheet. [Extracted from the article]

In this transaction, the company is essentially buying the option from money managers when it issues debt, while selling the option to Wall Street firms when it enters the cancelable swap. (Bloomberg) -- Companies are taking advantage of price discrepancies in debt and derivatives markets that give them a way to trim their borrowing costs. Last year, of all the companies that issued 3NC1 securities, only one disclosed an interest-rate swap, the research firm said: General Mills Inc. Amgen, AT&T, Eli Lilly and Stanley Black and Decker declined to comment. [Extracted from the article]

Investors in recent days rushed to snap up a leveraged loan from French packaging firm Eviosys that would add to the company's debt pile in order to pay a dividend to its shareholders. (Bloomberg) -- Cutting or pausing dividends is a step that corporate executives usually do everything possible to avoid as it can scare off investors and prompt them to move their capital elsewhere. [Extracted from the article]