As much as people complain about the Fed waiting so long to raise rates, some companies are taking advantage. The Financial Times ran some numbers with the firm Dealogic, which analyzes investment banking trends. It revealed a massive jump in corporate bond offerings this year, especially the so-called “jumbo deals” — bond offerings with more than $10 billion in proceeds.
“It’s not financing real investment — it’s not financing factories, it’s not financing research and development,” he said. Mason said many companies are using the debt to pay for mergers and acquisitions, or to pay better dividends.
“From a shareholder’s point of view, that’s really just as good as the kind of earnings growth you would see in a more robust expansion,” Mason said.
“It might make sense to lock in a good mortgage rate,” she said. “But it doesn’t make sense to take out loans for consumption, unless you are very sure you are going to be able to pay off those loans.”
Because even cheap money eventually has to be paid back.