Corporate America’s debt load is nearing $10 trillion, a record 47% of the overall economy — and experts around the world are sounding the alarm

Posted on Monday, 2nd December 2019 @ 10:14 PM by Text Size A | A | A

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In a recession half as severe as the 2008 financial crisis corporate debt-at-risk – which is owned by firms that can’t cover interest expenses with their profits – could increased to $19 trillion, or almost 40% of total corporate debt in major economies, the IMF said.

BlackRock, the trillion-dollar asset manager said in a report in October that BBB-rated bonds, the lowest bracket of the investment-grade debt, now accounts for more than 50% of the market compared to 17% in 2001.

As demand for investment-grade debt has grown, the creditworthiness of issuers has fallen. According to BlackRock, leverage levels are creeping toward the highest readings since 1992. The firm measured leverage using a ratio of debt minus cash and cash equivalents to twelve-month EBITDA.

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