Can General Electric ease the pain of BBBs?

6 min read 5 Dec 18

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Summary:The positive and negative effects of central bank intervention after the 2007-08 financial crisis have been widely debated and are still – ten years on – not fully understood. For example, keeping borrowing costs artificially low for years has certainly helped spur economic growth (great), but by incentivising companies to take on more debt (not so great). The debt increase also makes me question if financial conditions have been kept loose for too long, as this has allowed businesses to leverage up, increasing credit risk. As seen in the chart, the lowest Investment Grade (IG) segment in the US corporate universe has grown to reach a whopping market capitalization of $3tn, almost half of the entire US IG asset class, and almost three times the size of the US High Yield market.

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