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What's happening: Corporate debt is poised to soar to a new record in 2020, Janus Henderson said in a report Monday. The asset manager, which analyzed 900 companies from around the world, said net borrowing could increase by as much as $1 trillion this year over 2019, when it surged to $8.3 trillion.
"As the global recession takes hold, profits and cash flow will be sharply lower," Janus Henderson analysts said in the report. Even as companies slash dividends and share buybacks, "borrowing needs will be very large this year," they continued.
Why it matters: More debt isn't necessarily a bad thing, and companies need access to credit in order to power the economic recovery. The bigger concern is whether they can maintain payments to investors, Janus Henderson noted.
High-profile bankruptcies in recent weeks, from Brooks Brothers to Chesapeake Energy, have resurfaced concerns about debt sustainability.
While large multinational companies like FedEx (FDX), Nike (NKE) and UPS (UPS) quickly tapped credit markets in March to fortify their financial position going into the pandemic, credit issuance has shifted to lower-quality borrowers in recent weeks, according to Janus Henderson portfolio manager Seth Meyer.
See here: High-yield issuance hit an all-time record in June, Meyer told my CNN Business colleague Hanna Ziady.
For now, though, investors aren't worried. They point to unprecedented action by the Federal Reserve, which has been buying corporate bonds to help credit markets keep functioning through a period of unprecedented economic stress. That's helped drive down yields, indicating lower perceptions of risk and higher demand.
On the radar: Corporate debt will be a focal point of earnings season as reporting kicks off in earnest this week.
Citigroup's Hans Lorenzen said in a recent note to clients that he expects to learn that European companies borrowed €450 billion ($510 billion) between March and May, almost three times as much as they borrowed during the same three months in 2019.
Borrowing could be even higher in the United States. Janus Henderson points out that American companies now owe almost half the world's net corporate debts, both because of their global scale and a greater willingness to borrow.
Why Netflix shares remain hot
Netflix (NFLX) has been a clear winner from the pandemic as people spend more time at home. And some on Wall Street think its fortunes could keep improving.
Shares in the streaming company surged more than 8% Friday to a new record, finishing the day at $548.73. Netflix's stock has jumped nearly 70% year-to-date.
Driving the rally: Friday's leap came after Goldman Sachs boosted its price target on Netflix to $670 a share, the highest on Wall Street, my CNN Business colleague Paul R. La Monica reports.
Analyst Heath Terry thinks Netflix will report stronger
