At first glance, it looks like a $9 trillion time bomb is ready to detonate, a corporate debt load that has escalated thanks to easy borrowing terms and a seemingly endless thirst from investors. On Wall Street, though, hopes are fairly high that it’s a manageable problem, at least for the next year or two.
Source: www.cnbc.com
The corporate debt situation has reached upwards of $9 trillion. Easy borrowing terms and greed from investor’s has led to this excessive corporate debt. The situation can unfold in two ways: a good-news case where companies can manage their debt as the economy stabilizes and interest rates stay in check, and the other where the economy decelerates, rates keep heading up and it’s no longer so easy to keep rolling that debt over. On Wall Street however, hopes are fairly high that it’s a manageable problem, at least for the next year or two. The debt situation is critical for the financial markets as stocks are floundering and credit spreads are blowing out.
