Board of Governors of the Federal Reserve System

Business Leverage Historically High

Figure 1. Gross Balance Sheet Leverage of Public Nonfinancial Corporations

Debt Servicing Costs Low Relative to Business Income

Figure 2. Interest Expense Ratio for Public Nonfinancial Corporations

Issuance of Risky Debt Has Seen Sizable Shifts

Figure 3. Net Issuance of Risky Business Debt

CLOs Are the Largest Holders of Leveraged Loans

Figure 4. Leveraged Loans, by Type of Holder

Business Debt Growth Lags Pre-Crisis Run-Up for Households

Figure 5. Business- and Household-Sector Credit-to-GDP Ratios

Capital Levels Much Higher at Bank Holding Companies

Figure 6. Common Equity Tier 1 Ratio of Banks

This is a line chart titled "Common Equity Tier 1 Ratio of Banks." The x-axis measures time and ranges from years 2001 to 2018. The y-axis ranges from 0 to 14 percent. The data are quarterly. There are two variables charted on the plot. The first line, labeled "Other BHCs," is designated by a solid red line and ranges from 8 to just over 12 percent. This variable decreases slightly over 2001 to 2008 from 10 to 8 percent, increases rapidly from 8 percent in 2009 to 12 percent in 2012, and has remained near 12 percent through 2018. The second line, labeled "Large BHCs," is designated by a solid black line and ranges from about 5 to 12 percent. This variable increases slowly from about 6 percent in 2001 to nearly 8 percent in 2006, decreases sharply to 5 percent in 2008, and increases rapidly to just below 12 percent through the end of 2013, where it has remained through 2018.

Bank Liquidity Is Much Higher

Figure 7. Liquid Assets Held by Banks

This is a line chart titled "Liquid Assets Held by Banks." The x-axis measures time and ranges from the years 2001 to 2018. The y-axis represents liquid assets as a percent of total assets, and ranges from 0 to 24 percent. The data are quarterly. There are two variables charted on the plot. The first line, labeled "Large BHCs," is designated by a solid black line and ranges from 4 to about 22 percent. This variable rises from about 4.5 percent in 2001:Q1, remains near that level until mid-2004, decreases to about 25 by 2008:Q2, increases to nearly 18 by 2014:Q1, and remains near that level through 2018:Q4. The second line, labeled "Other BHCs," is designated by a solid blue line and ranges from about 2 to 12 percent. This variable begins at about 7 percent in 2001:Q1, decreases to about 2 by 2006:Q3, remains near that level through 2008:Q4, increases to about 12 by 2010:Q3, and remains near that level through 2013:Q1. It then decreases to about 9 percent in 2016:Q2 and has remained near that through 2018:Q4.