You won’t have time to read all 1,071 of the stimulus bill but that’s ok. Neither will any of the members of congress and they will still vote on it. Trust us, the provision allowing for a 5 year deferral of taxes associated with buying back discounted debt is in there. We’ve spoken extensively on the deleveraging aspects of a discounted bond buyback strategy even with the tax implications. This will only make the strategy even more deleveraging.

The trick of course is to balance the benefits of buying back bonds with potentially damaging the bank relationships. Buying back discounted bonds generally transfers value away from the senior bank debt holders. We’ll leave that up to the companies to decide but it’s nice to have the lower cost option.