Chapter 1: Why are corporations expected to take on record debt in 2026?
On the program today, we'll do the corporate debt market. We'll do some beef and some wine. And we'll go back to Altadena. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Risdell. It is Tuesday today. This one's the 6th of January. Good as always to have you along, everybody.
We're going to note here right at the top the latest market and macroeconomic reaction to the events of this past weekend. Not crickets exactly, but certainly muted. Equities continue to be exuberant. More new records on Wall Street. Gold's at a record high, too. So there is some desire for a safe haven. U.S.
Treasuries, the bond market, basically same, same from yesterday, which is to say unchanged since the Venezuelan news broke in the wee small hours of Saturday morning. Bonds, as it happens, are where we actually begin today, not Treasuries. but debt of the corporate variety, because January is typically a busy month for companies trying to sell bonds.
And this January is shaping up to be one of the busiest yet. Corporate debt issuance is expected to hit a record this year, despite the uncertainty in this economy. And interest rates, while, yes, they've still been falling, are higher than they were just a couple of years ago. Marketplace's Justin Ho then has more on why companies are scrambling to pile on debt. and what they plan to do with it.
The last time that corporations piled on a lot of debt was in the wake of the pandemic. Maureen O'Connor with Wells Fargo says that's because borrowing money was cheap back then.
When you think about it from just the cost of debt capital perspective, 2020 and 2021 were very low interest rate years.
And O'Connor says much of that debt is about to expire this year.
They need to refinance their debt. So that is probably the primary driver of supply.
O'Connor says another reason companies are borrowing so much money is that many of them hope to purchase other firms this year, and companies often use debt to finance mergers and acquisitions.
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Chapter 2: What factors are driving corporate debt issuance this year?
Good to see you. Good morning.
How you been? Doing okay.
Are you?
Yeah.
Yeah. um uh obviously you're not back in i mean we're standing in front of the shell uh have you found a place yet no it's been a year it's been a year had a lot of conversations i have i have one that's kind of like a 50 50 right now it's not an altadena but it's close enough let me stop you right there with the not an altadena but close enough thing yeah does that hurt you a little bit
Yes and no. I mean, it's a possibility that it could become a future location when we come back. Yeah. I'm just having a couple of vendor issues because I'm a little bit too close to other stores.
Oh, yeah, of course.
Which I completely understand from the vendor side. They don't want to oversaturate markets, but... You know, it's just like, OK, finally seen some light at the end of the tunnel. The landlord was willing to work with me. One of the first that like would actually talk and say, OK, I understand where you're coming from.
Thing is, and you can see this looking up and down Lake Avenue from where we're standing. There just aren't a whole lot of suitable commercial spaces left in Altadena. And the asking price for the ones that could fit a hardware store aren't doable, even with insurance.
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Chapter 3: How are small businesses in Altadena recovering from the LA fires?
You know, the margins are actually there.
But this is Texas, and brisket is what the people want. In Taylor, I'm Elizabeth Troval for Marketplace.
Costco is, of course, the king of the $1.50 hot dog. They do a pretty good and cheap pizza, too. But one of its locations up in Napa Valley has become a surprise favorite for the wine aware locals hunting for deals on difficult to find bottles. Georgia Wells had that story in The Wall Street Journal. Welcome to the program.
Thank you for having me.
So this Costco up in Napa is relatively new, a little bit more than a year, yet it rapidly became a favorite of the wine cognoscenti up there. How did that happen?
So there is trouble in the wine industry broadly, and consumers are the ones benefiting from all this. Baby boomers are not drinking the way they used to. In wine industry terms, they're sunsetting, so they're aging out, they're drinking less. And the number of wine cases sold in the U.S. has declined more than 20 percent since 2020.
So you've got an under demand for wine and an oversupply problem.
And prices reflect that. The catch, of course, with these prices is that Costco demands from its wholesalers, if you will, its sources, a discount. So how does this all work?
Yeah, so while this is good news for consumers, this is really tricky for the winemakers. If you buy wine at Costco, you can either buy a wine that comes in its original bottle or you can buy a wine that's relabeled as this Kirkland Signature brand. And for years, many, many winemakers would rebuff Costco.
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