Is a Debt Bomb Ticking?

If debt lights the fire of every financial crisis, as author Andrew Ross Sorkin once observed, then we may have a problem brewing. Companies have loaded up on a record amount of debt in recent years, thanks in part to rock-bottom interest rates. Most market watchers don't expect the buildup to trigger an imminent credit disaster. Still, investors should be aware of risks that are building and choose carefully as they invest in bonds or stocks.

Years of low interest rates have fueled a decade-long economic expansion and a bull market in stocks and bonds, and such ideal economic and market conditions have been perfect for borrowing. The value of outstanding IOUs issued to investors and other institutions by large, non-financial U.S. companies--$10 trillion, reports the St. Louis Federal Reserve--has nearly doubled over the past decade. That's equivalent to half the country's gross domestic product.

Many firms have used the borrowed money to fund acquisitions. For example, CVS Health borrowed $45 billion