But since they are borrowing at historically low rates

canada goose clearance Bulging Debt May Spell Trouble for Energy

Canada Goose online While many companies have shrewdly taken advantage of rock bottom interest rates canada goose coats on sale over the https://www.cheapcanadagoose.net last decade, bulging debt in industries like retail, energy and telecommunications is a burden that investors may need to worry buy canada goose jacket cheap about.

Many retailers, for example, have been struggling with competition from online giants like Amazon and Walmart. The debt of major companies like Neiman Marcus, PetSmart and Sears is already rated as speculative (also known as high yeld or junk). And Diane Vazza, head of global fixed income research at Standard Poor’s, said many debt laden retailers have already suffered credit downgrades this year. These canada goose factory sale include Sears, Payless and Guitar Center Holdings.

Once uk canada goose outlet a company’s debt is downgraded to speculative from investment grade, it may find the footing more canada goose slippery. Canada Goose sale Companies that fall into speculative grade ratings (B or lower canada goose sale in the S. ratings system) tend to accelerate toward even lower ratings, Ms. Vazza said.

canada goose deals The risk to investors and the interest canadian goose jacket the companies must uk canada goose pay for new borrowing rises, adding to cash flow stress. When the stress is great enough, companies can fail.

Canada Goose sale Debt loads aren’t merely a concern for fixed income investors. Equity investors need to be aware of debt loads at troubled companies because, in a severe case, bankruptcy would wipe out the value of any stock holdings.

buy canada goose jacket For equity investors who are bullish about online buy canada goose jacket retail outlets and skeptical about more traditional stores, the ProShares Long Online/Short Stores exchange traded fund may be a useful vehicle: It invests in online purveyors while betting against challenged brick and mortar retailers.

buy canada goose jacket cheap Energy is another industry where debt is worrisome. Oil and gas companies carry large loads of lower rated debt that is due to mature in the next five years, according to S. New fracking technology has helped to canada goose uk black friday expand domestic oil and gas Canada Goose Online output and loosened the Organization Canada Goose online of the Petroleum Exporting Countries’ grip canada goose coats on prices. But as the new supply depresses prices, it also pinches cash flow.

canada goose clearance sale Indeed, 14 of 16 midsize and larger cheap canada goose uk drillers tracked by Gordon Douthat, a director of equity research Canada Goose Jackets at Wells Fargo Securities, had higher capital spending costs than cash flow last year: Anadarko Petroleum, Noble Energy and Pioneer canada goose clearance sale Natural Resources are among them.

Carl Kaufman, who manages the Osterweis Strategic Income fund, said of domestic drillers: “Those companies don’t throw canada goose store off any cash.”

One central problem is the modest level of oil prices which, despite a recent rebound, remain well below highs of over $100 a barrel. Mr. Wildstein said he expects them to remain “around $60” “We don’t believe they’ll go back to the $70s or $80s,” he said. Oil and Gas Exploration Production.

canada goose Telecom debt also is worth watching. Citing increased price competition, Moody’s has a negative canada goose uk shop outlook on the entire sector. Bill Wolfe, Moody’s senior vice president, said the industry was rife with “large companies with a lot of debt,” including Frontier Communications, CenturyLink and Sprint.

Canada Goose Outlet Verizon Communications also carries a large debt load, but it may be something of a special case. “They’re an extremely large issuer,” Mr. Wildstein said.

Canada Goose Jackets One important positive for Verizon, Mr. Wolfe said, is that it has “the premier wireless network.” But the cost of upgrading that network may also be a Verizon vulnerability. The company is canada goose clearance moving aggressively to put in place 5G technology, which uses higher frequencies to speed wireless transmission. But 5G is expensive to install, and it faces widespread opposition in many municipalities and from some scientists, who cheap Canada Goose say it entails health Canada Goose Outlet risks.

canada goose store Mr. Wildstein’s fund holds Verizon debt, and he says the company may be overly dependent on its wireless network. It needs to diversify by acquiring a cable provider or media company, he said.

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Robert Persons, a manager of the MFS Corporate Bond fund, is also concerned about Verizon’s 5G canada goose black friday sale expenditures. “We are monitoring that closely,” he said. With uncertainty and controversy overhanging the 5G rollout, he wonders: “Will it be worth the capital investment?”

Verizon lists its total debt as $117.1 billion. “We want to strengthen the balance sheet,” Matthew D. Ellis, the company’s chief financial officer, said on a Jan. 23 earnings call. “You should expect us to deleverage Canada Goose Coats On Sale from where we are today,” he added.

canada goose coats Outside canada goose uk outlet these industries, debt is high for much of corporate America but probably manageable, several analysts said.

“The leverage is elevated companies are borrowing more,” said Mr. Wolfe of Moody’s. But since they are borrowing at historically low rates, their repayment abilities have not been measurably affected, he noted.

canadian goose jacket Among investment grade companies, the ratio of earnings before interest, tax, depreciation and amortization, or Ebitda, to interest expense has inched up to 9.9 in the 12 months through Sept. 30, 2017, from 9.7 in 2010. Companies with speculative grade also known as high yield debt have also seen their Ebitda to interest expense ratios improve a bit, Moody’s reports.

Canada Goose Parka The broad outlook for corporate bonds isn’t entirely rosy. Interest rates have been rising, and S. estimates that more than $4 trillion in corporate debt will have to be refinanced presumably at Canada Goose Parka even higher interest rates by the end of 2022. But S. P. doesn’t expect this refinancing to cause undue problems.