Tax reform could hurt junk-rated companies and their private-equity suitors

by Ciara Linnane | Mar 20, 2017   ()

Tax reform proposals put forward by President Donald Trump and the Republican party could have a punitive effect on junk-rated companies and the private-equity firms that are pivotal owners of low-rated debt, Moody’s Investors Service said Monday.

The ratings agency reviewed the policies put forward in the House Republican tax-reform plan released last June, as well as the plan revealed by Trump during his presidential campaign, to evaluate their effect on the roughly 2,000 U.S. non-financial companies with about $6 trillion in debt that it rates.

Analysts reviewed five categories: a lower corporate tax rate; the elimination of income tax deductibility of interest expense; the acceleration of income tax deductibility of capital expenditures; the border adjustment tax that would tax imports but exempt exports; and the reduced tax rate to repatriate foreign profits.

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Source: Market Watch
Source: Market Watch

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