But against the backdrop of cheap debt are possible warning signs. Morgan Stanley said in a report that given companies’ softening earnings, these extra debt loads were causing company leverage to grind upward, putting stress on gross leverage and interest coverage ratios. What’s more, the firm said (in a report penned by Vishwas Patkar and his team), that almost 40% of U.S. investment grade non-financial debt was leveraged the way junk bonds usually are. Earnings excitement in the wake of tax reform slightly obscured the leverage problem, but that’s going to be more difficult as those earnings soften in a sluggish economy.

“IG companies have not de-levered significantly and are still getting credit for assumed earnings growth, integration of acquisitions, and other ‘plans’ to de-lever,” the Morgan Stanley authors wrote.

In perhaps a nod to investor worry, companies like CVS, AT&T and Anheuser-Busch, all ‘BBB’ companies, freed up cash to pay down their borrowings, according to an August 18 Wall Street Journal story.

George Young, a partner and portfolio manager with Villere & Co., says there’s a wide spread between high quality single ‘A’ corporate bonds and Treasurys. The inverted yield curve you’ve seen in the last nine months, he says, doesn’t exist in the single ‘A’ corporate world, “and that’s generally where we buy. … Everything keys off of governments, but we don’t buy governments because the yields just aren’t quite there.” He says his firm buys bonds from two years to eight years out and is buy-and-hold oriented. “In the seven-year range you’re getting something like 80 basis points [in yield] better than you’d get with Treasurys.” Further out, at 20 years, it’s 150 basis points but you would have to commit capital longer and accept the risk. Right now, the seven-year bond is 1.60%, so with another 80 basis points you get up to 2.4% if you are willing to take a slight risk by buying a single-A bond as opposed to a government bond.

According to McAlinden, certain specific companies have fed the concern about credit: Those include General Electric, whose stock has plummeted and whose bonds are staving off junk status, as well as the utilities affected by the California wildfire crisis that could follow PG&E into junk world. “Because those specific companies are ‘BBB,’ it kind of fed the narrative about the growth of the ‘BBB’ section of the investment-grade market and the potential for more of those companies to get downgraded when you have a turn. That was more of a pressing concern in the fourth quarter [of 2018],” McAlinden says.

Lyle Minton, the CIO at Huntsville, Ala., advisory firm Keel Point, says the fourth quarter of 2018 caught some people “wrong-footed” as they anticipated further bond rate increases. If rates are going to drop, it makes more sense to be long duration in bond maturities, but given the uncertain environment with interest rates, the geopolitical situation and inflation risk, he says his firm stays near the middle of the bond duration average, close to the Bloomberg Barclays Aggregate, which is around six years.

“We’re taking agency and Treasury risk and we are diversified across the curve,” Minton says. “We’re not weighted all on the long end and not weighted all on the short end.”

One potential problem, he says, is that the oversupply of ‘BBB’-rated debt, the lowest investment grade category, could cause liquidity issues down the road since dealers cannot support the same trading they could in the past with new post-crisis capital rules. If people reduce their positions for liquidity worries, it could impact the price, Minton says.

(Bonds, like houses, tend to change in price when people ask for them, adds Young.)

Minton says that generally balance sheets are in better shape to support bond payouts, though it depends on the company and sector.