Does corporate America have a debt problem?

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Summary

US corporate debt excluding Financials has risen to levels of GDP previously associated with US recessions, while a number of key leverage ratios paint a similarly negative picture. We assess the risks and their implications. – A 300% rise in outstanding Investment Grade (IG) BBB over the past decade warrants close attention. But in our view, the bigger threat lies in US leveraged loans, where the value of debt to increasingly poor quality borrowers has soared while lender protections have diminished.