And whereas previously, mostly high-earning firms with relatively low leverage were taking on additional debt, analysis of detailed balance sheet information indicates that, over the past year, firms with high leverage, high interest expense ratios, and low earnings and  3  In addition to the discussion of vulnerabilities presented in the Board’s Financial Stability Report, the increase in risks associated with nonfinancial corporate borrowing is highlighted in the fall 2018 report Semiannual Risk Perspective, produced by the Office of the Comptroller of the Currency.
See Office of the Comptroller (2018). -6cash holdings have been increasing their debt loads the most. Historically, high leverage has been linked to elevated financial distress and retrenchment by businesses in economic downturns. Regarding corporate bonds outstanding, recent years have witnessed little change in the relative shares of investment-grade bonds and high-yield bonds.