Driven by the loose monetary policy of the U.S. Federal Reserve, U.S. companies continue to issue bonds in a big way. According to the latest data from the Federal Reserve and the U.S. Securities Industry and Financial Markets Association (SIFMA), the current size of U.S. corporate bond issuance has reached US$10.5 trillion (about HK$81.9 trillion), a record high.
U.S. media reports, the corporate bond market is a place for companies to borrow money, since the financial crisis in 2008, the past 10 years since the ultra-low interest rate environment, so that borrowing has become increasingly easy, U.S. companies began to make great use of this easy access to cash channels, regular issuance of debt to raise cash.
Sometimes companies issue debt recklessly, resulting in bonds facing downgrades and low ratings, turning them into junk bonds, the report noted. Excessive borrowing can lead to companies falling into the “Fallen Angel” (Fallen Angel) or “zombie companies” (Zombie company). Wall Street is currently concerned about Treasury yields, Inflation and other issues, but also is paying close attention to the bond market, in order to grasp the pulse of the U.S. economy.