Bangkok--22 Oct--Standard & Poor's
Issuance of speculative- and investment-grade debt, convertible debt, and bank loans has all risen in recent months--even as companies generally have maintained large amounts of cash on their books. The reasons behind this phenomenon are examined in a report released today by Standard & Poor's Ratings Services titled, "Why Do Companies Issue Debt When They Don't Seem To Need The Money?"
One of the most significant reasons, in our opinion, is that many corporations facing debt maturities in coming years are opportunistically seizing low-cost funding alternatives now, while interest rates are historically low. They're making the judgment, in our opinion, that it's better to incur additional debt now for their soon-to-be-maturing corporate credit obligations than to confront uncertain capital markets some months down the road, when interest rates might be higher.
"We think one of the signs of an improving economy will be a greater preference for companies to swap adjustable-rate debt for fixed-rate debt. So far this year, however, we haven't seen any significant replacement of adjustable-rate debt with fixed-rate debt, although we've heard that some issuers may be considering it," said Standard & Poor's credit analyst John Bilardello.
The report is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
John J Bilardello, New York (1) 212-438-7664
Diane Vazza, New York (1) 212-438-2760