The great deleveraging that was supposed to sweep over corporate America is dead.

Or, at least, on hold.

Blue-chip companies have begun to ramp up borrowing again as central banks globally flood economies with money. Liabilities have reached their highest level relative to income since 2009, according to Morgan Stanley’s analysis of second-quarter data. The number of companies selling investment-grade debt this month through Thursday has surged 63% from the same period last year.

It wasn’t supposed to be this way. Last year and at the beginning of 2019 corporations ranging from Verizon Communications Inc. to Tupperware Brands Corp. talked about their goals to cut debt levels. Companies were under pressure from both stock and bond investors who worried about borrowers’ liabilities. Around 40% of investment-grade companies now have obligations that are more consistent with junk ratings, according to Morgan Stanley.

For many companies, debt levels are now creeping higher, either by choice or involuntarily. Revenues are under pressure, and money is easy to raise. That tempts corporations to borrow to fund share buybacks and other moves that can boost earnings measures.

The rising debt burdens that have resulted could make it harder for corporations to navigate any downturn that may be coming. Companies could find themselves with less cash to pay their obligations, and refinancing maturing bonds could be more difficult and expensive.

“You would expect companies, as they sense the economy slowing, to start to prepare themselves to absorb what would likely be an impact to revenue,” said Jim Schaeffer, deputy chief investment officer at Aegon Asset Management in Chicago, which manages $380 billion of assets. “Instead, they’re looking at the incredibly inexpensive cost of debt and taking advantage of that to enhance returns for shareholders.”

Debt levels were growing even before the Federal Reserve started cutting rates in July. The ratio of a key income measure to net debt levels rose to 1.9 times at the end of the second quarter, a record high, according to Morgan Stanley research. The figure was closer to 1.76 times in the same quarter last year. That ratio was hurt by falling earnings and rising debt loads, as well as declining cash levels, Morgan Stanley strategists led by Vishwas Patkar wrote last week.

The falling levels for the key income measure, earnings before interest, tax, depreciation and amortization, are also hurting companies’ ability to pay interest on their borrowings. The ratio of Ebitda to companies’ interest expense, known as the debt service coverage ratio, has fallen to 10.14 times, the lowest level since 2010, according to Morgan Stanley.

The growing leverage levels can be seen in individual companies’ results. Tupperware’s total debt has climbed above $1 billion at the end of June from $889 billion at the end of 2018, while its sales and earnings have been falling. The shift was enough for S&P Global Ratings to cut the company in August to junk from BBB-, the lowest investment-grade rating.

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