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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35392  
Subject: Re: Exploring Triple-AAA Corporates Date: 8/13/2006 2:32 PM
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One of the reasons, I think, long and intermediate term interest rates remain low, given the federal deficit and personal debt levels, along with a lot of use of short term borrowing (e.g., mortgages and federal) is that the third big borrower category, corporations, have not been, at least not successful companies borrowing now for profits of tomorrow. There has been some borrowing by financial institutions to loan out for higher rates, but we aren't seeing manufacturers borrowing to build new plants and modernize old ones or stores and other sales outlets borrowing for new locations or updated equipment. Successful corporations, the ones who get high investment grade ratings, are rolling in profits and the extent to which they are expanding and improving, which is far less than in other economic "expansions," they are doing so with ready cash. Even a lot of lower rated companies are trying to issue new shares rather than strict borrowing.

At least if you want to stay short enough in maturities to get the face value back in your lifetime, there just isn't mch out there, and I don't think we'll see anything at the high end under the current economic rules (high profits, huge tax advantages to equities).
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