Ever since the bull market went south, corporate America has shored up its balance sheets, refinancing debt at lower rates or paying it down.
Trust companies, together with other nonbank financial institutions like brokerage firms, have become a vital source of credit, allowing banks to arrange off-balance-sheet refinancing for maturing loans that riskier borrowers, like local governments, cannot repay from their internal cash flow.
Vicki Bryan, an analyst at Gimme Credit, an independent research service on corporate bonds, said Delta had done a good job of bolstering its balance sheet and refinancing some of its heavy debt load inherited from Northwest.
Firms are taking advantage of the lower rates to clean up their balance sheets by refinancing debt while they continue to whittle away at their inventories and wait for signs that it's time to invest again.
We are not taking profits and running for the hills or refinancing our balance sheet to pay off debts.
"We are not taking profits and running for the hills or refinancing our balance sheet to pay off debts," he said this month.
Despite shoring up its corporate balance sheet with a recent refinancing, Tyco's ongoing internal audit keeps turning up accounting irregularities that give investors a reason to sell.
But it warned the outlook continued to be challenging although it successfully refinanced its balance sheet.
When the private equity deal was struck in 2007, the company envisaged using its tangible assets to refinance the balance sheet.
A company with a strong balance sheet that bought CIT could refinance CIT's debt for a lower interest rate, immediately increasing the profits on CIT's loan portfolio.
There are no serious concerns around the balance sheet given debt facilities were recently refinanced.
