SPDR S&P 500 (SPY)

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Share buybacks share buybacks how are they being financed and how long can they continue?..
Should interest rates rise and growth slow, companies are bound to see to their financial soundness deteriorate. More than $1 trillion of investment grade corporate bonds could be cut in the next downgrade cycle, according to analysis by Morgan Stanley.

Leverage is near all-time highs, and companies used tax reform proceeds for buybacks instead of paying down debt.
More than triple the debt that came due in 2018 will be due each year from ’19-’21. If yields go up, there’s real concern about companies’ ability to reissue and keep their leverage.

For now, pain in stocks has been limited. The S&P 500 is 1.5 percent from a record reached Sept. 20. Dig a little deeper and there are signs credit concerns are being felt. A basket of companies with stronger balance sheets compiled by Goldman Sachs Group Inc. is up 12 percent since December, compared with 6 percent for the weaker group.

It’s a departure from the early part of this bull market, when financially less stable firms consistently beat their sturdier counterparts. During the eight years from March 2009, the weaker cohort topped the stronger by 10 percentage points annually.