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For companies with enough cash on their books, there’s a silver lining to the stormy credit markets: They can buy back their bonds on the cheap.

European companies including Anglo American Plc, Deutsche Bank AG, and Banco Comercial Portugues SA have agreed to buy back bonds at below their face value in recent weeks, generating instant profit and often reducing their indebtedness in the bargain. The transactions can be a way to show strength, an important statement to make in a market where investors are increasingly skeptical about the credit quality of many borrowers.

"It's a sign from companies that they feel Europe is in a deflationary situation and that it's not a great time to take on more debt or expand." --Barnaby Martin, Bank of AmericaSo far this year, European companies bought back or announced tenders for 57 billion euros (US$62 billion), according to David Leeming, head of liability management for Royal Bank of Scotland Group Plc in London. That’s more than five times the amount for the same period last year, said Leeming, who monitors buybacks from companies in Western Europe and Nordic nations in sterling, euros, and dollars. 

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