Bond Investors Irked By Shareholder Activism

Where activist shareholders see rising stock prices, bond investors see companies making poor long-term decisions for the sake of shareholder returns. In particular, taking on debt that could erode credit quality and bring losses to bondholders in the long term, possibly through debt-financed buyouts. Through September of 2013, 21 percent of corporate bond deals referenced “share repurchases” in the “use of proceeds” section, Deutsche Bank reported, which is twice the number as the previous year.