Pending legislation that is expected to spark billions in new corporate bond issuance is now expected to be ratified after the U.S. presidential election, according to bankers following the act. They said as the presidential race has heated up with both camps serving up ample amounts of red meat, it is becoming increasingly clear it is in both parties' best interest to postpone passing the Homeland Investment Act until after the election. The clearer picture on timing comes as legislators are now back at work following their August recess.
The Homeland Investment Act would allow companies to repatriate offshore profits at a reduced tax rate and could cause high-grade companies to sell billions in bonds to finance repatriation (BW, 8/9). "The most likely scenario is that they will handle it during the lame-duck session in the fourth quarter; the earliest it will be tackled is in early December," predicted Krishna Memani, managing director and global group head of credit strategy at Credit Suisse First Boston.
Another banker noted a hastier passage could hurt both political parties. "Senate Democrats are unlikely to let President Bush have a jobs bill before the election and, from the Republicans' perspective, the bill would come at the risk of being viewed for corporate welfare" and would further criticism that Bush favors corporations over individuals, he said.
