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Money Advisor Wealth Management

Money Advisor Wealth Management

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Federal Reserve Saves Corporations Billions

An Astounding Number!



I came across this information and thought I would share it with you!



Federal Reserve Saves Corporations Billions


According to Bloomberg, due to the Federal Reserve’s quantitative easing program and the record low interest rates that have resulted, American corporations have saved over $700 billion in interest payments from the stimulus. The article details that corporate bond yields, or the cost a company pays to borrow money through issuing debt, have dropped from an average of 6.14 percent before the Lehman Brothers bankruptcy rocked the global financial markets, to an average of 4.16 percent today. Bloomberg estimates that this translates to savings of $15.4 million annually for every $1 billion that is borrowed. And, considering corporations have issued $5.16 trillion of debt over this time period, it has saved these companies $700 billion. To put that number into perspective, Bloomberg points out the entire annual economic output of Switzerland is $632 billion. These savings have allowed corporations to raise their capital expenditures, or money spent on company projects for future growth, by 8.7 percent in the second quarter of 2013 which is the highest increase in over a decade, according to JPMorgan.

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