Nearly 40% of total corporate debt in major economies, or $19 trillion, could be at risk from another global recession, exceeding levels seen during the 2008-2009 crisis, the International Monetary Fund warned Wednesday.

In the latest half-yearly update of its Global Financial Stability Report, the IMF identified rising corporate debt burdens and increasing holdings of riskier and more illiquid assets by institutional investors as key vulnerabilities.

While accommodative monetary stimulus has supported the global economy in the near term, it has also encouraged financial risk-taking, leading to “worrisome” levels of debt with poor credit quality and increasing financial vulnerabilities over the medium-term, the fund said.

Assuming a material economic slowdown scenario half as severe as the global financial crisis, the report predicted that “corporate debt-at-risk (debt owed by firms that are unable to cover their interest expenses with their earnings) could rise to $19 trillion — or nearly 40 percent of total corporate debt in major economies—above crisis levels.”

Forbes noted that in the U.S., companies have been taking on debt to finance share buybacks while reducing capital spending.

Amid signs that “we will soon enter a global recession, especially due to trade tensions, investors and financial regulators should worry about how companies’ leveraged loans and CLOs [collateralized loan obligations] will perform in an economic downturn,” Forbes said.

On Tuesday, the IMF cut its 2019 global growth projection to its lowest level since the financial crisis, largely due to ongoing trade feuds. In Wednesday’s report, it also noted that very low interest rates “are prompting investors to search for yield and take on riskier and more illiquid assets to generate targeted returns.”

“Institutional investors’ search for yield could lead to exposures that may amplify shocks during market stress,” the Fund warned.

The U.S. Federal Reserve has cut interest rates twice this year amid concerns that slowing global growth and trade tensions could spill over to the broader economy. To guard against risks, the IMF urged policymakers to maintain “robust and rigorous” financial regulation and supervision.

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