Behind The Corporate Bond Market's $10.5 Trillion Debt 'Bubble'

U.S. companies now face the highest levels of debt on record — more than $10.5 trillion, according to the Federal Reserve and the Securities Industry and Financial Markets Association, or SIFMA.

The coronavirus pandemic is only part of the story.

The corporate debt market is where companies go to borrow cash. And for over a decade, super-low interest rates left over from the 2008 financial crisis have made borrowing easier and easier. Since then, U.S. companies have regularly offered up bonds for sale, taking advantage of the cheap access to cash.

Sometimes companies can get reckless with debt, and this can result in bonds facing downgrades and low ratings, putting those companies at junk bond status. Overborrowing can result in companies becoming “fallen angels” or “zombie” companies.

Between rising interest rates and inflation concerns, Wall Street is watching the bond market closely and checking the pulse of the U.S. economy.

Here’s how the corporate bond market got to these “bubble” levels and just how risky this massive amount of debt may be to the U.S. economy.

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Behind The Corporate Bond Market’s $10.5 Trillion Debt ‘Bubble’

50 Comments

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  4. Barry Maskell on March 21, 2021 at 10:22 pm

    Will next crisis be over-leveraged tech companies ?

  5. D.B. on March 21, 2021 at 10:23 pm

    Essentially the global/US corporates who’ll win at the end of this are the ones who were prudent with their debt requirements.
    Generate cash and don’t have to pay others capital + interest back = winner.

  6. daniel nunez on March 21, 2021 at 10:27 pm

    Don’t see nothing wrong with corp debt…this something that has always been done,and now with interest rate so low,the cost to borrow are really low…it’s not like every corp in every sector in every state accros the US is about to go bankrupt.

  7. Justin Kirschenman on March 21, 2021 at 10:31 pm

    This was not a pandemic induced recession.
    This recession was building since before 2008 and government via lockdowns, not any "pandemic", triggered it.

    Shifting the blame to a virus, real or make believe, does nothing to help fix the problem.
    Obviously you have no intentions of pointing out our problems.

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  11. D.B. on March 21, 2021 at 10:34 pm

    6;20. Love how he says “pandemic era”… this isn’t over yet seeing as I am still not free to travel and live my life.

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    Meanwhile people "flesh and blood" are unable to get loans to keep them housed…become homeless…and a failed zombie corporate entity buys it…since they are too big to fail… socialism for corporate entities…who want to own you…and do..they own the system…once the world ditches the dollar…the game is over… actually…it already is a foretold failure…

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    nah they are just getting debt on those who love giza pyramid with an eye on top of it

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    i like pp so i watch this!

  25. Markus Harr on March 21, 2021 at 10:42 pm

    1 Minute in and first mistake. 10T is a number without any relation. Is 5, 50 or 500% of … e.g. GDP

  26. aries prince on March 21, 2021 at 10:44 pm

    What most people don’t understand is that ..as long as money could be printed & injected into the bond market the bubble stays intact. So when it bursts , that’s because it was allowed to happen by . Guess who? The FED reserve !!

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    10.5trillion… 2021 HAHA HOLD MY BEER!

  33. D.B. on March 21, 2021 at 10:59 pm

    “In 2018 we couldn’t predict a global pandemic”…
    Bill Gates; “what am I to you”?

  34. Just Call Me Bookworm on March 21, 2021 at 10:59 pm

    3:50 "The bond market is bigger than the stock market by multiples."

    This statement needs some fact checking:

    "Total Market Value of U.S. Stock Market"
    https://siblisresearch.com/data/us-stock-market-value/#:~:text=The%20total%20market%20capitalization%20of%20the%20U.S.%20stock,total%20market%20value%20of%20American%20companies%20increased%2025.2%25.

    Total market cap of the US stock market is ~$50 trillion. According to this vid, the corporate bond market is ~$10 trillion. Actually, the stock market is larger than the corporate bond market by several multiples.

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  36. Wojtek on March 21, 2021 at 11:00 pm

    We need to start raising interest rates, even a quarter of a percent. Start forcing debt reduction. We are in a recovery and things are getting better. Now is not the time to provide more aid, but to prepare for the next downturn. GE has the right idea, 35 billion debt reduction in 3 years.Remember debt is risk, you can wait anything out if you don’t carry debt.

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  38. Crazy Stuff on March 21, 2021 at 11:01 pm

    what happens if a company defaults on its obligations, dont the bond owners get anything?

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  41. Towelie Towel on March 21, 2021 at 11:05 pm

    Corporate bonds??? What about Treasury bonds?

  42. Reza Fabian on March 21, 2021 at 11:05 pm

    I’m afraid for an economic collapse, its like the company have too much debt then a lot of company will close cause they can’t pay their dues. Soon this is going to cause unemployment rate rise an etc. Watch out for the interest rate guys, if it goes higher then the debt is getting to expensive. Rip my english, sorry im from Indonesia.

  43. david rynberk on March 21, 2021 at 11:06 pm

    10.5 trillion ! will it end ?

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    The pandemic didn’t cause the recession, the pandemic was a cure for the recession which allowed central banks to pump gargantuan amounts of stimulus.

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    To get rich in life, you need to spend less and invest huge, you don’t expect to spend 90%, invest 10% and sit to make more wealth.

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  50. Vyker on March 21, 2021 at 11:14 pm

    How do I short corporate bonds?

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