Among my investment notes, I keep a copy of a printout from the 1990 edition of the Moody’s Investment Manual that described the prevailing interest rates at the time. In March 19990, the Treasury bond rate was 9%.
The interest rate on debt was further broken down based on the following rates: AAA bonds paid 9.30% interest on its debt, AA 9.7%, A+ 10%, A 10.25%, A- 10.5%, BBB 11%, BB 11.5%, B+ 12%, B 13%, B- 14%, CCC 15%, CC 16.50%, C 18%, D 21%. We have all gotten so used to low borrowing costs that it requires historical reminders of what the world can look like in the event that credit is not cheap.
If you like at real estate investment trusts, telecom companies, oil drillers, and even some food companies, there are huge debt burdens that have not been fully felt because the borrowing rate has been … Read the rest of this article!
The post Higher Interest Rates Would Change Everything first appeared on The Conservative Income Investor.