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Leveraged finance: Firms fend off pressure to releverage – for now

Few companies are pursuing leveraged share buybacks, but pressure from activist investors is putting the issue back on the agenda and there could be a lot more deals in the next 12 months.

The owners of Phelps Dodge copper mining company are under pressure to return money to investors

At a time when hedge funds are putting increasing pressure on companies to accelerate share buybacks, and private equity firms are using cheap debt to go after bigger corporate buyout targets than ever before, it’s tempting to conclude that companies are being forced to increase leverage in order to return cash to shareholders before someone else decides to do it for them. However, while leveraged share buybacks could become a lot more common in 12 months’ time, commentators say there’s little evidence to suggest that the technique is taking off yet.

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