Rick Rieder: 'Heavy Year' of Investment-Grade Issuance

The video discusses the current trend of companies issuing bonds to leverage their balance sheets, driven by low interest rates and the search for yield. It highlights the strategies companies adopt post-financial crisis, the attractiveness of debt over equity, and the potential risks of excessive leverage. The discussion also covers the impact of central bank policies on corporate capital structures.

Why are companies like Dell issuing bonds in the current market environment?

• To reduce their overall debt levels

• To increase their cash reserves

• To diversify their investment portfolios

• To leverage their balance sheets and maintain return on equity

What change in corporate strategy is observed post-financial crisis?

• Companies are leveraging more, considering industry and company type

• Companies are investing heavily in new technologies

• Companies are reducing leverage and focusing on equity

• Companies are maintaining high cash reserves and avoiding debt

What is a potential risk of the current low interest rate environment?

• Companies may not be able to issue any debt

• Companies will face higher interest costs

• Companies might take on excessive debt, increasing risk

• Companies will have to increase their equity issuance

How do low interest rates influence corporate capital structure decisions?

• They lead to higher dividend payouts

• They make debt issuance more attractive than equity

• They result in reduced investment in capital projects

• They encourage companies to issue more equity

What is the main reason companies find debt issuance attractive in the current market?

• Rising inflation rates

• Increased government subsidies

• Low interest rates and stable debt costs

• High equity market valuations