To survive the crisis, Disney borrowed $11 billion by selling bonds, joining a growing list of investment-grade companies that have issued over $1 trillion in the first five months of the year.  The amount, equivalent to the worth of bonds sold in 2019, adds to the $10 trillion of the US corporate debt and worries economists, who say some of the debt will blow up and make the economic recovery tough.

 “Corporate debt issuance is crazy at the moment,” said Anthony Karydakis who teaches financial markets at New York University’s Stern School of Business.

Of the $1.038 trillion, debt worth $706 billion was issued by the investment-grade companies between late March and May. The frenzy triggered by Federal Reserve chief Jerome Powell’s announcement that the bank will buy corporate bonds to prop up companies hit hard by the economic shutdown induced by the coronavirus outbreak.

A total of  724 businesses filed for bankruptcy in May, up 48 % as compared to the same month in 2019, said a report by legal-services firm Epiq Global. Among them were major companies like J.C. Penney Co., Neiman Marcus Group Inc., J. Crew Group Inc. and Hertz.

Karydakis said Fed’s “unprecedented” decision to buy corporate bonds was like a “lifeline” to the troubled companies who went on a borrowing binge.

Embattled aircraft maker, Boeing, raised $25 billion in its April offering while oil giant, Exxon Mobil sold $18 billion in bonds after oil prices tanked. General Motors, Ford, General Electrics and others have issued debt in enormous proportions.

Jim O Sullivan, Chief US Macro Strategist at TD Securities, said more corporate debt is “adding to the financial instability down the road.”

“The companies know the Fed is going to keep the interest rate zero for years and years. This helps the borrow at low interest,” said Sullivan. “Already the level of corporate debt was a record high and more borrowing would add to the vulnerability.”

Karydakis and Sullivan agree that Fed’s decision was much needed to salvage the corporations, but they say risk down the road is that some of the debt will blow up.

“You don’t have only GM and other investment-grade companies, but also less-than-stellar rated companies. If they are not outright junk but borderline junk. Some of that debt at some point will not make it,” Karydakis said.

The bonds of many investment- grade companies, like Royal Caribbean, were downgraded to junk status after the pandemic wrought havoc with their business. After raising $3.3 billion, the cruising line has announced to borrow more.

Investment grade is a rating assigned to a company’s bond, which means it involves a low risk of default. Junk bonds are a high-risk debt issued by a financially troubled firm or a start-up. They are also called high-yield bonds.

The Fed has said it will buy investment-grade as well as junk bonds.

Issuance in the US junk bond market through June 12 was a 15-year record high. It was tracking at its busiest pace for any June on record, with $23.88 billion priced through June 12, accordingto S&P Global.  It’s not the only beleaguered business but healthy companies that are scooping up low-interest loans.

Netflix, which benefited from the growing subscribers due to the lockdown, issued $1 billion in bonds to finance more shows and movies. The streaming giant has been issuing bonds before to boost its liquidity. Oracle also raised $20 billion by issuing investment-grade bonds.

Karydakis said if debt issuance stops now, the chances of the US economy to survive will be grim.“Jerome Powell (the Fed chief) has identified this as a risk but didn’t make it as an argument that he would like the debt issuance to stop,” he added.

“It’s a little bit of a trap situation. He is in the middle of throwing the kitchen sink at the whole thing to keep the economy floating,” he said.

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The Occupy Wall Street Direct Action march poster.

With a crackdown of Occupy Wall Street protestors in other cities across the country, the group in the epicenter of it all in Zuccotti Park is scheduling a massive day of “direct action” on Thursday with aims to have protestors occupying every block of New York City.

Dubbed the National Day of Action or N17 it includes a march from City Hall to the Brooklyn Bridge, the site of 700 arrests on October 1.

Bold flyers are being spread through social media via Twitter, urging followers to “Occupy Every Block,” and use the hashtag, #N17. A Facebook event is also in the works. Protests are expected to begin at 7 a.m. in front of the New York Stock Exchange where demonstrators will use “mass non-violent direct action” to “Shut Down Wall Street.”

The plan is for the protest to spread across the five boroughs simultaneously at 3 p.m. as protesters take over 16 central subway stations and ride into the city as one unit.

A presence of unity is one that the protestors have worked to develop. Bret Rothstein, 24, a member of the OWS press working group, explains that embracing togetherness has already occurred at Zuccotti Park.

“The goal is getting everybody together, all the occupations,” Rothstein said. “We are all obviously on the same page, we are all here for the same common goal.”

Michael Frock, wears red paint from a morning meditation session in Zuccotti Park. Frock believes Thursday's Day of Action will be huge for the movement. Photo by Joann Pan

Michael Frock, 24, from the Upper East Side, has been occupying Zuccotti Park for approximately a month and believes the Day of Action will be big for the movement.

“I would love to see all the 99 percent go home, not go to work, not go to school and occupy with their families,” he said.

The movement is about letting the government know that citizens are upset and giving those living in frustration an arena to speak, according to Frock.

“If enough people do that on one day it will make the message loud and clear,” he said. “The message is that, ‘You can’t live without us.’ [The 1 percent] treats us like we are invisible, so now we are going to act as if we were, and see how they do on that day.”

Chris Carter, 28, believes the Day of Action, will bring the various groups in different cities. Photo by Joann Pan

Chris Carter, 28, from Bethlehem, Pa., said the Day of Action will be a step towards making the various occupations and their corresponding communities cohesive parts of the global movement.

“It shows that it’s not just city to city, but that we are all connected,” Carter said. “Hopefully it will show the solidarity we have, not just with the people in occupations, but all together. We are all a part of the 99 percent.”

Molly Smith, 35, of Prospect Heights, Brooklyn, who was crocheting hats for those in Zuccotti Park on Sunday, is unsure of whether she will partake in the Day of Action. Still, she said she fully supports the idea.

“I like that idea. I really wonder if I would be gutsy enough to walk out of my school,” said Smith, a teacher in the West Village. “But I talk about it at lunch all the time and I can’t believe how little people know of it in terms of how it would affect them.”

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