Credit Markets Loosen Up For Companies That Don’t Need Money


This story has been kind of under the radar, but it’s a positive: Strong, highly-rated firms are finding it possible to raise cash in the debt markets, once again. And we’re not just talking about Uncle Sam-backed loans. Actual debt, where the lender faces default risk.

WSJ spotlights Cisco, which raised $4 billion on Monday:

The San Jose, Calif., company, which makes routers and other gear that form the backbone of computer networks, said it would use the debt for acquisitions, buying back stock and paying off a previous $500 million loan. Chief Executive John Chambers has said he anticipates using the company’s financial might to expand into areas where it hasn’t historically competed. “People know we are going to be aggressive during a downturn,” Mr. Chambers said in an interview last week.

See, capitalism works. The weak collapse, the strong hang on, shore up their resources and then expand when everyone else is retrenching. Despite headlines about spiraling dowturns, they actually have their own recovery mechanism.

Anyway, the improvement month-over-month is big:

Since the beginning of the year, U.S. companies have sold $78.3 billion of investment-grade corporate bonds that aren’t guaranteed through a government program, according to research firm Dealogic. This is up from the December quarter when companies sold on average $21 billion of nongovernment-backed debt a month.