The coronavirus pandemic has spurred U.S. companies with investment-grade credit ratings to borrow at the fastest pace in history to start a year, with new bond issuance topping $1 trillion in less than five months, supported by Federal Reserve programs to buy corporate bonds.
That is the quickest clip ever for new investment-grade corporate bond supply to kick off a year, according to BofA Global analysts, who pointed out that the $1 trillion threshold was eclipsed on Tuesday.
The borrowing spree is notable not only because it’s about double the pace seen last year over the same period, per BofA data, but also for how easily its been for companies to borrow cheaply, while paying investors so little to bankroll their operations in an uncertain environment.
Why does this matter to you? Just like with personal households...the more a company borrows today...the more they are borrowing from tomorrow. Interest paid may be low...but there is a day when you pay that note off...and that risk matters when you borrow more than you can pay back. Read more here...
https://www.marketwatch.com/story/highly-rated-us-companies-are-borrowing-1-trillion-at-a-record-clip-2020-05-21?siteid=bnbh
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