Bondholders wary of rise in shareholder-friendly corporate activity

Investment grade corporates in the US have issued bonds specifically to fund shareholder-friendly activity in recent months, including share buybacks and special dividend payments. But with the macro picture still uncertain, should bond investors be concerned about the return of event risk?

More event risk on the horizon?

Despite the sluggish nature of the economic recovery in the developed world and the precarious state of public finances in many advanced economies, the balance sheets of many investment grade corporates in the US and Europe are in their healthiest state for several years. This has been warmly welcomed by bond investors, who have enjoyed the fact that the ability of companies to service debt has increased and therefore the security of their investments has been enhanced.

However, with both second