Stanley Druckenmiller: Debt expansion and quality is alarming

In 2006 and 2007, which I think most of us would agree was not a down-period in terms of speculation. Corporations issued $700BN in debt over that two-year period. In 2013 and 2014 they’ve already issued $1.1 Trillion in debt, 50% more than they did in the ‘06-‘7 period. But more disturbing to me if you look at the debt that’s being issued – back in ‘06-’07, 28% of the debt was B-Rated. Today 71% of the debt that’s been issued in the past two years is B-Rated. Back in ’06-’07 20% of the debt was covenant-light, now that number’s 60%. So, not only have we issued a lot more debt, we’re doing so at much less standards. (Excerpt from Stanley Druckenmiller speech at the One Tree Club in Florida, 2015)