Corporate debt may pose risks if economy goes south
AT&T has $169 billion in debt on its balance sheet. That’s high, even for a telecom company, and until it whittles that debt down AT&T won’t be able to focus on priorities like expanding HBO or developing a 5G network. Part of the reason the company wound up with this massive debt — the biggest of any major American company — is that it took advantage of super-low interest rates over the past decade.
Many companies are in the same boat. Corporate debt, overall, has nearly doubled in the past 12 years, to $9 trillion dollars. But not all of those companies are AT&T, whose debt is still investment grade. A larger amount of corporate debt — up to $2 trillion — is somewhat risky. Should a recession hit, some small and midsize companies would facing the prospect of a default that could have far-reaching repercussions on the economy.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
