40% Of Listed Firms Effectively Debt-Free (behind subscription wall)T'is the top story of this morning's Nihon Keizai Shimbun -- that in an era of negative or near-negative interest rates over 40% of Japan's listed companies are debt-free.
TOKYO --Publicly traded companies continue to improve their financial health, as seen by 654, or 41%, of them boasting more cash than interest-bearing debt as of March 31, according to a survey by Nikkei Inc.
Let me repeat that - at a time when the cost of borrowing money is so cheap that inflation will zero out one's interest payment, leaving one responsible only for paying back the principal of the loan, 4 out of every 10 companies cannot think of a way of taking free money from lenders in order to expand their business in any meaningful sense.
Talk about continuing shell-shock from the collapse of the bubble (18 years ago it happened!) - the paper describes not using leverage as being symptomatic of healthy corporate behavior (zaimu kaizen - "improving financial position" in the Japanese language original report). The article is not complimenting firms for holding down debt to a level where it is balanced out against book value, mind you. It is complimenting debt balanced out versus cash-on-hand!
Please forgive me-- but given this report, the idea that cutting corporate taxes will spur economic growth is simply not credible.