Economics
Risky Corporate Debt Is Worrying the Fed
- Leveraged loans cited in inagural financial stabilty report
- Fed says its report is part of effort to boost transparency
This article is for subscribers only.
The U.S. economy is showing some vulnerabilities as investors increasingly buy up risky corporate debt and businesses rely on “historically high” borrowing levels, the Federal Reserve said Wednesday in its first-ever financial stability report.
Should the economy turn, money managers who’ve been chasing returns might be in for a rude awakening, with prices for leveraged loans and junk bonds potentially causing some of the steepest losses, the U.S. central bank warned.