Corporate Leverage in the U.S. U.S. corporate debt is high. This chart shows that U.S. corporate leverage is close to its previous peak on a net debt to EBITDA. See also “U.S. Leveraged Loan Index Rating Breakdown: 2008 vs. 2019.” Picture source: Credit Suisse Research
U.S. Leveraged Loan Index Rating Breakdown: 2008 vs. 2019 Since 2008, this chart shows that U.S. leveraged loans are getting lower ratings. Any drop in the credit ratings could also amplify the next recession. Picture source: Standard & Poor’s Leveraged Commentary & Data, UBS
Leveraged loans pose risks as corporate debt increases A leveraged loan is debt issued by a company that has below investment grade credit ratings and a considerable amount of debt with high interest rates. In this video, Brian Cheung of Yahoo Finance, explains why leveraged loans pose risks as corporate debt increases.
Increased Number of Zombie Companies Artificially low interest rates and investor demand for leveraged loans have created zombie firms. Picture source: Jupiter Asset Management
Stock Market Forecasting Models vs. US Stock Market – Growth of $1,000 As an example, the chart shows the growth of $1,000 since 1970, between the stock market forecasting models and the US stock market (compound return before taxes, fees and transactions costs – unleveraged, simulated long & short trades – quarterly basis & logarithmic…
