From the Wall Street Journal: Banks, Financial Firms Load Up on Cheap Debt

Gated article, in brief:

  • Banks and other financial companies world-wide are issuing bonds in the U.S. at a record pace, taking advantage of this year’s surprising slump in interest rates and a brightening outlook for the sector.
  • The focus on bank debt comes as investors seek ways to bet on a rising U.S. economy
  • Banks are lending more and relaxing standards, reflecting greater confidence in borrowers’ ability to repay
  • “Some strategists even view bank debt as a way to protect against the impact of any rise in benchmark interest rates. Many investors are worried that any rate increase by the Federal Reserve will push bond prices down broadly. But higher benchmark interest rates would likely boost banks’ profits, Barclays analysts said in a research note last month.“