US corporate debt could amplify economic downturn, Kaplan says
Dallas Fed president warns about “historically high” corporate debt levels in economic letter
“Historically high” US corporate debt levels could amplify the severity of a downturn in the economy, Robert Kaplan, president of the Federal Reserve Bank of Dallas, says in an economic letter.
Kaplan warns that because non-bank investors and loan mutual funds collectively bought 80% of the securitised leveraged loan packages issued in 2018, a disruption to the creation of such packages could increase the likelihood that the leveraged loans remain on banks’ balance sheets.
He says this could
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