It was only a year ago when mainstream analysts were chirping about how healthy corporate balance sheets were. They weren’t actually that healthy then, and they’ve deteriorated dramtically since. From Tracy Alloway at bloomberg.news:
One of the biggest post-financial crisis imbalances sits on corporate balance sheets, according to analysts at the bank.
You might choose to whisper it softly, but the balance sheets of U.S. companies are yelling it loudly, while wielding a baseball bat:
Corporate leverage is now at its highest level in a decade, according to a new analysis from Goldman Sachs.
Years of low interest rates and eager investors have encouraged Corporate America to go on a shopping spree. On its list are share buybacks and dividend hikes to reward equity investors, as well as a series of merger and acquisition deals, all funded through a generous bond market. Since cash flow has not kept up with the boom in bond sales, the splurge has left Corporate America with its highest debt load in about 10 years, according to the bank.
To continue reading: Goldman Sachs Says Corporate America Has Quietly Re-levered
