[Hong Jang-won’s Bull & Bear] A hidden ‘masterstroke’ that could lift stocks

An independent exercise, not a statement by the video creator or verification of every claim in the video.

Corporate borrowing costs can rise even when Treasury yields fall

This is a simplified assumption, not actual company data. Approximate the rate on new borrowing as a benchmark Treasury yield plus a credit spread. Initially, a Treasury yield of 5% and a spread of 3% imply a financing rate of 8%. If the Treasury yield falls to 4.5% but the spread widens to 4%, the financing rate rises to 8.5%. Assuming a borrowing amount of 100 is financed entirely anew on these terms, annual interest increases from 8 to 8.5. When assessing benefits from cheaper oil, examine credit spreads and actual refinancing or new borrowing alongside Treasury yields.

Check for yourself

1. In which direction did the Treasury yield and corporate credit spread each move?
2. Does the changed rate apply to new or refinanced borrowing, or has existing fixed-rate debt incorrectly been included?
3. Even if financing costs fall, have investment returns or cash flow deteriorated?

Limits of application

This simplified example excludes fees, hedging, maturity structure and bond terms. It does not equate CDS premiums with corporate bond spreads or predict a particular AI company’s financing rate or equity return.