US companies now have the highest debt levels – more than $ 10.5 billion, according to the Federal Reserve and the Securities Industry and Financial Markets Association, or SIFMA.
The coronavirus pandemic is only part of the story.
The corporate debt market is where businesses will borrow cash. And for more than a decade, super-low interest rates left over from the 2008 financial crisis have made lending easier and easier. Since then, U.S. companies have regularly offered bonds for sale by taking advantage of the cheap access to cash.
Sometimes companies can become reckless with debt, and this can lead to bonds being confronted with downgrades and low ratings, which puts the companies on junk bond status. Loans can lead to companies becoming ‘fallen angels’ or ‘zombies’.
Between rising interest rates and inflation problems, Wall Street is keeping a close eye on the bond market and watching the pulse of the US economy.
Watch the video above to learn more about how the corporate bond market has reached these “bubble” levels, what the angels and zombie companies are, and how risky this huge amount of debt can be to the US economy.