Oct 5, 2021 - Economy

Understanding corporate America’s debt binge

Debt issuance by U.S. companies
Data: LCD, an offering of S&P Global Market Intelligence; Chart: Kavya Beheraj/Axios

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.
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