Debt for U.S. corporates is at a record peak and companies are taking on higher borrowing levels than those that preceded the 2008 financial crisis.
Yet this shouldn’t be a major worry, some market experts argue, thanks in large part to currently benign market conditions and accommodative interest rates.
“The red flags are not going up yet because to a large extent the level of interest rate is actually quite benign,” said Francesco Curto, head of cash return on capital invested (CROCI) and co-head of research at DWS, Deutsche Bank’s majority-owned asset management company.
“So I wouldn’t say there are major concerns there — the ratings of these companies to a large extent are still positive, and everybody is in agreement that post these hikes (from the Federal Reserve) we are not going to see significant hikes coming after this,” Curto told CNBC’s “Squawk Box Europe” on Thursday.
The key word there: “yet.” Not everyone is in agreement with analysts like Curto, and the numbers themselves are fairly staggering. U.S. corporate debt has reached a record $6.3 trillion, according to S&P Global.