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Corporate Debt Is Reaching Record Levels - ABI

U.S. corporate debt has climbed to roughly 46 percent of gross domestic product, the highest on record, according to data from the Federal Reserve and Commerce Department, the Wall Street Journal reported. Businesses in emerging markets, such as China, have gone on an even bigger borrowing binge, taking advantage of ultra-low interest rates and, in some cases, state-driven policies designed to propel economies forward. So far, businesses have been able to service their debt without too much difficulty. Among midsize businesses, there is has been an uptick in so-called direct lending in which business obtain loans from nonbanks, many of them private-equity firms, with traditional banks playing little part in the process. Nonbanks held more than half a trillion dollars worth of loans to midsize companies at the end of 2017, up from roughly $300 billion in 2012, according to estimates by private-equity firm Ares Management LP.

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