viewpoints on corporate leverage

For this week I have pulled two very different viewpoints on corporate leverage. The difference is primarily timing. The WSJ article is from the beginning of the COVID 19 recession, a period of great uncertainty and fear; this article sends warnings, particularly to weaker firms that already have high debt levels. The Bloomberg article is from the optimistic viewpoint of a COVID-vaccine related economic recovery. This article is pointed to investment-grade firms (those that have a lower probability of bankruptcy due to their high credit ratings).

After reading the two very different articles, discuss 1) why (outside of timing), these articles have such disparate opinions. 2) For the next part of your discussion, research a firm that you are interested in (or can easily find info on) and discuss that firm’s approach to debt levels during this year-plus period. The Bloomberg article discusses Home Depot in particular, citing bond sales (taking on more debt) and their original and ultimate plans for the funds. Home Depot, Verizon, and other firms specifically mentioned in either article are not eligible for this discussion, but Home Depot is a great example of what I’m looking for.

Maybe you work for a firm that either took on debt or decided to reduce its debt during the recession. Maybe you are considering an industry that was heavily impacted by the recession (think entertainment, travel, etc.) – see what you can find and discuss the firm’s stated reasons for their actions.

This should be an interesting contrast in firms – have fun with it.

You will of course need at least one credible source (no Investopedia, Nerdwallet, etc.) for your supporting information and arguments.