For the first time since the financial crisis, corporate leverage is the chief concern for the professional investors who handle Wall Street's largest funds.
A survey of institutional investors show that half of all managers prefer corporations use any extra cash to improve balance sheets instead of spending the money on capital expenditures or buying back shares, according to the January Bank of America Merrill Lynch Fund Managers Survey.
The preference marks a sharp turn in sentiment as respondents for the past couple of years have been pushing companies to put cash to work through capex. That has even taken preference over buybacks, which have been less effective at boosting the broader market as valuations have gotten more expensive.
Debt has emerged as a bigger concern with corporate bonds outstanding now eclipsing the $9 trillion mark. Investors have gotten more concerned over leverage, or the amount of debt companies hold compared to the value of their equity.
A net 48 percent of the market pros surveyed believe corporate balance sheets are overlevered.