Corporate Credit Market
A Corporate Credit Market is a credit market for corporate debt instruments.
- Context:
- It can range from being a Non-Financial Corporate Credit Market to being a Financial Corporate Credit Market.
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- Example(s):
- U.S. Corporate Credit Market, composed of instruments such as: Netflix Bonds, Verizon Bonds, ...
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- Counter-Example(s):
- See: Financial Corporate Credit Market, U.S. Non-Financial Corporate Credit Market, Debt Instrument.
References
2018
- "Stock Markets Are Wild, but Bond Markets Can Be Dangerous." In: The New York Times, (2018-12-18).
- QUOTE: ... Bond markets dictate the cost of borrowing money, and that can determine actual economic activity. The decision by a C.E.O. to build a plant or take the plunge on a new product is often decided by how much it will cost to borrow the money to pay for it. When that payment climbs too high, corporate activity slows, and so does the economy. Lately, borrowing costs have been rising quickly. Investors worried about corporate debt loads and the impact of a potential slowdown on profits are demanding companies pay them higher interest rates. ...
... The greater the risk that a borrower won’t be able to pay up — known as credit risk — the higher the interest rates. American Treasury bonds almost always have the lowest interest rates. That’s because lending to the United States government — which has a virtually unblemished record of repaying creditors — is considered pretty much the safest investment on earth. Everyone else, even the most powerful, cash-rich corporations, must pay more. For example, Home Depot went to the bond market late last month, raising $1 billion by selling 10-year bonds. At the time, the yield on the 10-year Treasury note — the federal government’s cost to borrow for 10 years — was about 3.06 percent. Home Depot, considered a safe or “investment grade” borrower — paid an interest rate of almost 4 percent to borrow for 10 years. The difference between the low interest rate that the government pays and the higher rate of another borrower is called the credit spread. Riskier borrowers typically have larger spreads. ...
... Netflix has gone from having very little debt in 2010 to having more than $10 billion now. Verizon now has $113 billion of debt, more than double the amount it had six years ago. By one measure, the ratio of corporate debt to G.D.P., the total level of borrowing is at all-time highs.
- QUOTE: ... Bond markets dictate the cost of borrowing money, and that can determine actual economic activity. The decision by a C.E.O. to build a plant or take the plunge on a new product is often decided by how much it will cost to borrow the money to pay for it. When that payment climbs too high, corporate activity slows, and so does the economy. Lately, borrowing costs have been rising quickly. Investors worried about corporate debt loads and the impact of a potential slowdown on profits are demanding companies pay them higher interest rates. ...