Street.Com – It may not be healthy for kids to gorge themselves on McDonald’s Happy Meals, but corporate America is certainly indulging.
The corporate “happy meal” has nothing to do with burgers, fries or movie-themed toys. Rather, companies are financing share repurchases via the convertibles market in sets of transactions nicknamed “happy meals.” These deals provide companies with an efficient, low-cost way to buy back their stock without disrupting the market or dipping into their cash reserves. The only red flag may be the amount of debt some companies are taking on.
“Convertible bond transactions provide low cash/cost financing and the opportunity for issuers to buy back a significant amount of stock quickly,” says Rizvan Dhalla, executive director in convertibles at Morgan Stanley
