Marketplace has an awesome piece up on the issue of corporate debt and how it’s becoming a bigger problem every year, especially with the issues in the high risk, leverage loan market.
Steve Miller, an analyst for Standard & Poors who tracks corporate debt, does an excellent job of summing up the problems with corporations and leveraged debt:
Marketplace: In the mortgage market, you have the prime borrowers who are at the top of the food chain, and then the subprime, that tend to be the riskiest borrowers. That’s where the leveraged-loan market fits in. It’s for the risky-most spectrum of borrowers who are still performing.
To give you an idea of just how big the bill is going to be, Miller says $10 billion of that junk debt comes due next year. And it gets exponentially worse every year after that. There’s $1.5-trillion worth of outstanding leveraged loans and leveraged bonds. One and a half trillion. A very big number.