Debt Disquiet

Due to a prolonged period of super-low interest rates, US corporations have gorged on debt, with total non-financial corporate debt rising from a trough of $6 trillion in 2010 to $10 trillion today. Worse, the lowest quality investment-grade debt (BBB rated) has ballooned to $3.7 trillion, or 50% of investment-grade, up from 38% a decade ago. Should rates rise, or more likely earnings stumble, many lower-quality firms will likely default.

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