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Fund Spy

U.S. Equity Funds Enter Uncharted Territory

Average debt/capital ratios have blown past precrisis levels.

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A version of this Fund Spy was originally published on June 12, 2014.

When investors fret about surging corporate-debt issuance and tight credit spreads, most probably think first of their bond holdings. There's good reason for this. The spread between corporate-bond (both investment-grade and high-yield) and Treasury yields is low, although not yet approaching the record levels set in 2007. As interest rates have remained low, companies have rushed to take advantage of cheap financing. Corporate leverage has risen dramatically as a result.

Kevin McDevitt does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.