Sterling corporate bond yields have fallen to record lows, providing UK plc with an attractive opportunity to increase leverage or refinance existing borrowings at a lower rate.
The number of corporate bonds being issued by UK companies has fallen in the past couple of years after a splurge of borrowing to lock in lower rates. But that quickly changed in August when the Bank of England announced it would be entering the fray by purchasing UK corporate bonds as part of its wider quantitative easing programme. That week, UK corporates issued £1.78bn of bonds, according to Dealogic, which was the largest week of issuance since 2014.
So with the cost of borrowing becoming broadly less punitive and a new major purchaser in the market, it's increasingly important for investors to understand the debt profile of a company. It's not only worth considering why the money is being raised, but which metrics can best help you understand how strenuous a company is finding servicing its debt pile and whether certain types of businesses are always better able to weather high levels of borrowing.