In March France Telecom, with nearly euro70 billion in debts, launched a huge bond issue which helped to take euro10 billion of loans off the books of its banks and refinance euro6 billion of maturing bonds.
Yet those investors, such as Skandia, a big Swedish insurance company, which sensed impending crisis and refused to buy the government's debt, missed out on a big bond-market rally as deficits and debts were brought under control.
ECONOMIST: Just how bad are the Japanese government��s finances?
Late in the 1980s an American junk-bond borrower could shout its incapacity to service its debts from the rooftops.
They will bear around 95% of the cost of reducing Greece's current debts, reckons Gabriel Sterne of Exotix, a bond broker.
Debtor companies also face bond covenants restricting their activities to ensure that they can continue to service their debts.
Investors may be fretting about the Irish or Spanish governments' ability to pay their debts, but elsewhere, especially in America, the rise in bond yields from extraordinarily low to merely very low is a reflection of better growth prospects rather than worsening government finances.
ECONOMIST: Get ready for more volatility in government bonds
Investment bankers say that some Japanese companies are so worried about rising public debt leading to a bond-market crash or to inflation (how else to get rid of debts of this size except by printing money?) that they are trying to shrink their domestic operations and expand their foreign ones.
But however faithful its bond-buyers, the government will soon have to rein in the growth of its debts.
ECONOMIST: Just how bad are the Japanese government��s finances?
Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets.
For one thing, it is hard to know how much companies have in fact lengthened the maturity of their debts because the interest-rate swap market allows them to swap those fixed bond payments into cheaper floating debt, a popular strategy in the investment-grade market.
The bond market, as of now, judges the U.S. government good for its debts.
The corporate-bond market has virtually ceased to function since July 1999, when Daewoo collapsed under the weight of huge debts.
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