Does Big Borrowing Maximize Value?
Published Thu, 23 Sep 2010 on The Motley Fool

When sources reported that Microsoft (Nasdaq: MSFT) was mulling a debt offering to launch a massive share buyback program and possible dividend increase, tongues started wagging that this was a smart, strategic move. It wouldn't borrow so much that it would jeopardize its AAA credit rating. But that got me thinking: Does borrowing money to fund share repurchases and dividend payments really make sense? Robbing Peter to pay Paul?With interest rates as low as they are, debt is a pretty attractive investment right now. Home Depot (NYSE: HD) and Dell (Nasdaq: DELL) just finished issuing bonds this month, and according to an analysis by Thomson Reuters, corporations issued $33.7 billion in investment grade debt for the week ending Sept. 10 -- a two-year high -- with Hewlett-Packard (NYSE: HPQ) the biggest issuer at $3 billion. American Express (NYSE: AXP) doubled the size of its planned offering to $2 billion.... Read more