The Bank of England's monetary bazooka has already sparked speculation about which companies will benefit the most from its corporate-bond purchases.
Just like in the case of the European Central Bank's corporate-bond purchases, the fact that the British central bank is a big buyer in the market should encourage companies to issue more debt and either use the money to invest, which would boost earnings, or use it to buy back shares and distribute dividends.
Either way, investors are set to benefit: cheaper money has never hurt a company (well, not so far, and not unless that company is a bank). The Bank of England will start buying corporate bonds in September and will release a list of eligible bonds closer to that time. Before then, analysts at Bank of America Merrill Lynch have drawn up a list of companies whose corporate debt is set to rally following the Bank of England's decision:
- EDF (ECIFY) -- Electricite de France is France's main power distributor and is also an important player on the U.K. electricity market. The company posted net profit excluding items of around 3 billion euros ($3.3 billion) in the first half, beating expectations of 2.22 billion euros. It has 7.4 billion pounds ($9.6 billion) worth of bonds outstanding.
- General Electric (GE) -- This Action Alerts PLUS portfolio holding is a staple for bond buyers and stock investors alike. Its European operations are headquartered in low-tax Ireland and the company has around 6.4 billion pounds ($8.3 billion) of bonds outstanding, according to data by Bank of America Merrill Lynch. GE is rated a "Buy" by TheStreet's Quant Ratings service.
- Orange (ORAN) -- This French mobile telephony giant has operations all over Europe, including in the fast-growing emerging markets. It has 4.5 billion pounds ($5.9 billion) of bonds outstanding.
- GlaxoSmithKline (GSK) -- The U.K. drugmaker announced at the beginning of the month a joint venture with Alphabet (GOOGL) in the pioneering field of what they called "bioelectronic medicines," or treatment involving small implants of electronic devices. GSK has bonds outstanding worth around 4.1 billion pounds ($5.3 billion).
- AT&T (T) -- This Trifecta Stocks holding has 4 billion pounds ($5.2 billion) in bonds outstanding. It will put the windfall it is likely to get from cheaper debt to good use, as this is a company that is always on the lookout for where to innovate next. Medical wearables is one area the mobile telephony company is looking at, judging by a recent partnership with Biotricity, a medical-diagnostic and consumer-health-care tech company.
- RWE (RWEOY) -- This German electric utility is the country's second-largest and has 3.9 billion pounds ($5 billion) worth of bonds outstanding. It has been implementing a restructuring plan that saw more than 1,100 jobs cut since March 2015, with plans to eliminate another 2,000 over the next four years. RWE has also said that it will list its renewable-energy unit separately.
- Western Power Distribution -- This U.K. electricity distribution firm is owned by U.S. company PPL Corp. (PPL) , so it does not have a separate listing. It has around 7 million customers in the U.K. areas it covers (South West England, East and West Midlands and South Wales) and has 3.5 billion pounds ($4.5 billion) in bonds outstanding.
- Wal-Mart (WMT) -- Quant Ratings rates this U.S. retailer a "Buy" due to its revenue growth, good cash flow from operations and "notable return on equity." Wal-Mart announced it would buy online retailer Jet.com in an attempt to take on Growth Seeker portfolio holding Amazon.com (AMZN) . Not everybody thinks it will succeed, however. Chris Versace and Lenore Hawkins, portfolio managers at Growth Seeker, recently pointed out that Jet.com might not help Wal-Mart take off. But Jim Cramer recently wrote that Wal-Mart could still pull it off, if only because "the buying power of Wal-Mart is so strong that it can roll pretty much any supplier." Its outstanding bonds are around 3.5 billion pounds ($4.5 billion).
- E.ON (EONGY) -- This German utility giant's bonds (3.4 billion pounds, or $4.4 billion outstanding) might be lifted by the favorable winds of the Bank of England's purchases -- but its earnings are negative, so investors would do well to stay away. German newspaper Handelsblatt also recently wrote that a planned IPO later this year of EONGY's fossil-fuels unit Uniper could force the firm to write down billions of euros and post another loss. After all, Uniper's value was initially overvalued when the company was split in two units at the beginning of the year.