Bernanke’s Blessing: Stimulus Saves Corporate America $700 Billion (Bloomberg)
Along with juicing the market and fattening investor portfolios, the U.S. government’s most recent stimulus plan has been a boon for corporate America, saving it some $700 billion in interest payments on loans. That’s because, during the past four years, corporate bond yields have fallen from an average of paying 6.14 percent to now paying 4.6 percent. The reduction was due to companies locking into low rates, extending maturities and selling more bonds at lower yields. In fact, according to J. Michael Schlotman, CFO at Kroger Co., “It probably kept some businesses from failing because they were able to refinance their debt at lower interest payment.” Does that mean that when the Fed eases up on stimulus that interest payments will only go up? Investors hope so.