UBS strategist Francois Trahan points out U.S. corporate debt has surged by 50% over the past decade and now stands near $10 trillion.
by Fred Imbert
This decade’s surge in corporate debt could pressure stocks in 2020 as corporate earnings slow to a crawl, hurting the ability of companies to timely repay that debt and keep the solid credit ratings that allow them to borrow so cheaply, according to a theory laid out by UBS strategist Francois Trahan.
Many Wall Street strategists share the concern about the ballooning corporate debt load but few sound as worried as Trahan. Most put it as a footnote in their 2020 outlook reports. The issue is, as Trahan points out, is that credit issues usually don’t matter to the equity market unless the economy is in a slowing or contracting phase.