Oct 5, 2021 - Economy
Understanding corporate America’s debt binge
Add Axios as your preferred source to
see more of our stories on Google.
U.S. companies are still binging on debt, as interest rates remain near record lows.
Driving the news: With the third quarter now in the books, we can see that the dollar amount of year-to-date leveraged loans and high yield bond sales are unmatched in recent history. This debt is the type issued by companies with lower credit ratings.
- Meanwhile, the amount of higher-rated investment-grade bonds issued through the third quarter of the year is eclipsed only by last year's record.
Why it matters: The debt is fuel for the record number of M&A transactions this year. It’s also enabled dividends to shareholders of both public and private companies.
- Debt deals for below-investment-grade companies in which the money was used for dividend payments have already hit a full-year record, the WSJ recently reported.
