Why the US Corporate Debt Bubble Could Spark the Next Recession

By CCN.com: In November 2018, the Securities Industry and Financial Markets Association revealed that the US corporate debt has increased from $4.9 trillion to $9.1 trillion, by 86 percent in just over a decade. The troubling trend has created a serious problem for both financial authorities and investors in US markets. Since the 2008 financial crisis, the leveraged loan market has grown to $1.2 trillion according to a report by LCD cited by FT, accounting for 13 percent of the total corporate debt. Why Leveraged Loans are Troubling for the US In most markets, leveraged loans are provided by financial institutions to companies or individuals that are already equipped with large amounts of debt or poor credit history. Although the risk is substantially higher for the lender, the borrower typically obtains leveraged loans with extremely high costs considering the high probability of the occurrence of a bankruptcy or a default.…

Read the original article here