That torrent of cheap cash has benefited all forms of companies. It helped cruise operators, airways and film theaters climate the pandemic by changing some misplaced income with money raised from bond gross sales. It allowed thriving companies to top off on money and to economize by refinancing older debt. And it permitted corporations that had been struggling earlier than the pandemic to ease the specter of chapter by issuing new long-term debt.

“It’s been shocking that the price of debt has come down as a lot because it has,” stated

Dan Schlanger,

chief monetary officer of

Crown Fort Worldwide Corp.

, a cell tower proprietor that has been issuing bonds with progressively decrease rates of interest to fund capital tasks and repay debt. “We’ve loved the time frame we’re in.”

The query now could be whether or not corporations have merely delayed a reckoning. Debt-laden corporations withstood final yr’s recession much better than many had feared. Nevertheless it was in some ways a singular shock to the financial system, extra akin to a pure catastrophe than a typical recession. For all their present enthusiasm, many CFOs and traders acknowledge that companies may nonetheless be punished in a standard downturn that raises borrowing prices for an extended interval and does extra severe injury to family funds.

In a Might report, the Federal Reserve famous that, by one measure, traders had hardly ever been compensated any much less for the chance of holding company bonds, at the same time as inventory valuations had been according to historic averages. The report concluded that “vulnerabilities arising from enterprise debt stay elevated.”

A number of the greatest debtors in the course of the pandemic, in keeping with figures from financial-data supplier FactSet, have been these damage most by it.

Carnival Corp.

CCL -3.94%

, the world’s largest cruise operator, had round $33 billion of whole debt as of Feb. 28, nearly triple what it had close to the top of 2019.

Boeing Co.

BA -0.87%

’s whole debt greater than doubled in the course of the pandemic, to $64 billion, whereas

Delta Air Strains Inc.’s

doubled to round $35 billion.

With cruises canceled world wide, elevating cash early final yr wasn’t straightforward for Carnival. Chief Monetary Officer

David Bernstein

stated he spent two weeks in March 2020 to attempt to put collectively a bond sale, just for debt traders to balk as a result of the corporate wasn’t additionally planning to problem extra inventory.

It took him one other 10 days working almost across the clock to place collectively a deal that included a inventory providing. In early April final yr, Carnival issued $4 billion of secured bonds with an 11.5% rate of interest—a stage usually related to companies with rock-bottom credit score rankings—together with $500 million of inventory and about $2 billion of convertible bonds.

“By some means I managed to lift $6.5 billion,” Mr. Bernstein stated. “I used to be amazed.”

From then on, although, as investor demand for company debt rebounded, borrowing cash obtained simpler. Carnival bought bonds or obtained loans from traders 5 extra occasions over the subsequent 10 months, lastly issuing $3.5 billion of unsecured bonds in February at a 5.75% fee. In April, Mr. Bernstein stated Carnival had raised sufficient cash to final till it resumes full operations.

Company Debt Growth

U.S. company bond issuance has surged to report ranges in the course of the pandemic, aided by low borrowing prices, pushing whole company debt to the equal of half the scale of the financial system.

U.S. nonfinancial company bond issuance*

Common U.S. investment-grade company bond yield, month-to-month

U.S. company debt as share of GDP, quarterly

U.S. nonfinancial company bond issuance*

Common U.S. investment-grade company bond yield, month-to-month

U.S. company debt as share of GDP, quarterly

U.S. nonfinancial company bond issuance*

Common U.S. investment-grade company bond yield, month-to-month

U.S. company debt as share of GDP, quarterly

Rates of interest on company debt have declined in matches and begins for the reason that Nineteen Eighties, typically monitoring short-term charges set by the Fed and U.S. authorities bond yields.

A number of components account for the decline. Low inflation is one. Additionally, financial development has trended decrease over the many years, limiting how excessive the Fed can increase charges with out tipping the financial system right into a recession.

Throughout the 2008-09 monetary disaster, the Fed reduce its benchmark federal-funds fee to close zero for the primary time and began shopping for giant portions of U.S. Treasurys and mortgage-backed securities in an effort to spice up the financial system.

Buyers in search of greater yields subsequently piled into riskier property, ushering in an period of supersize debt gross sales.

The pandemic pushed the prevailing developments to extremes. The Fed once more reduce the federal-funds fee to zero and resumed buying Treasurys. It additionally broke new floor by shopping for company bonds, bolstering investor confidence.

After setting a report final yr, general company bond issuance stays strong this yr, and higher-risk, speculative-grade bonds at the moment are on tempo to set their very own report.

For a lot of corporations that weren’t thrown into disaster by the pandemic, the booming bond market has offered a chance to slash curiosity bills.

At the beginning of 2020, the typical investment-grade company bond yielded 2.84%, a tough indication of the rate of interest corporations with stable credit score rankings must pay on new bonds. On the peak of pandemic fears, it rose to about 4.6%, however by the top of final yr it had fallen to an all-time low of 1.74%. Firms rushed to attempt to lock in these low borrowing prices.

AT&T Inc.,

T -0.78%

which as of March 31 had extra excellent debt than another nonfinancial firm, is one such firm. In current months, it introduced offers to shed media and pay-TV property that it stated would scale back web debt by greater than $50 billion.

It spent a lot of final yr attempting to benefit from the bond increase to cut back curiosity bills and push out debt maturities. In a single deal, it issued $11 billion of bonds with maturities starting from 7.5 years to 40.5 years to pay again bonds maturing over the subsequent 5 years. In April, it stated it had decreased its first-quarter curiosity expense by $150 million from the year-earlier interval.

In June of 2020, Crown Fort, the cell tower operator, issued $2.5 billion of recent bonds with maturities so long as 30 years, which enabled it to pay down bonds due on this yr and subsequent. And this yr, it issued extra bonds at its lowest ever rates of interest.

Mr. Schlanger, the CFO, stated the corporate can use curiosity financial savings to extend its revenue margin, or it might cross them on to prospects, which embody the main U.S. wi-fi carriers. “Anytime we will benefit from a market like this to both earn more money or decrease the price to our prospects, we’re more than pleased to take action,” he stated.

By the top of final yr, traders had labored up such an urge for food for company bonds that they had been keen to lend giant sums to corporations with close to rock-bottom triple-C credit score rankings. This yr, triple-C bond issuance is operating 35% above the earlier report, in keeping with LCD, a unit of S&P International Market Intelligence.

Group Well being Methods Inc.,

CYH -3.59%

one of many nation’s largest for-profit hospital operators, has been scuffling with the challenges of serving sufferers exterior main cities, and with the fallout from a problematic acquisition. On the finish of final yr, it was poised to burn by means of greater than $600 million of money in 2021, in keeping with

Moody’s Buyers Service.

Undeterred, traders have snapped up a collection of secured bond choices from the hospital chain since December, enabling it to each scale back its curiosity expense and lengthen its debt maturities.

Chief Monetary Officer

Kevin Hammons

stated general market situations had been an enormous assist, enabling the corporate to take “a extra aggressive method in doing issues faster than we in any other case could have completed.” He additionally attributed the profitable choices to improved earnings within the second half of final yr and progress executing new methods, which have concerned promoting underperforming hospitals.

Final month, Moody’s upgraded Group Well being’s credit standing to only above its equal of a triple-C score, citing the impression of its current refinancing offers and improved working efficiency.

Not everybody thinks it’s good for the financial system over the long run for struggling corporations to have such a straightforward time refinancing debt.

Torsten Slok,

the previous chief economist for Deutsche Financial institution Securities who’s now chief economist on the asset-management agency

Apollo International Administration,

wrote final yr that one consequence of persistent low rates of interest is that it “retains extra unproductive companies alive, which finally lowers the long-run development fee of the financial system.”

Some analysts say traders are keen to simply accept such low rates of interest on company bonds not solely due to the brightening financial outlook however due to the Fed’s aggressive response to the pandemic, which they assume may to be repeated in future recessions.

Others are uncertain that even when the Fed introduced that it will purchase company bonds once more, it will present the identical jolt to the promote it did final yr. They are saying that the traditional dangers of debt nonetheless apply, and that company bond traders may face important losses within the subsequent financial downturn.

Scott Kimball, a portfolio supervisor and co-head of U.S. fastened revenue at BMO International Asset Administration, stated he doesn’t anticipate debt to be an issue within the close to time period, however that it may begin inflicting complications for companies and traders in a couple of years when corporations have to begin enthusiastic about refinancing among the bonds they lately issued. Then, he stated, “within the subsequent recession, it’s going to be a significant problem.”

One encouraging reality for traders is that many corporations didn’t add debt over the previous yr to purchase again inventory, enhance dividends or in any other case juice returns for shareholders. They borrowed cash on an emergency foundation, and might be in place to pay down debt as soon as that emergency is over.

Mr. Bernstein, Carnival’s CFO, stated the corporate will scale back its debt in coming years by paying off bonds and loans as they arrive due, utilizing money generated from operations. The aim, he stated, is to reclaim the identical investment-grade rankings that the corporate had earlier than the pandemic.

Boeing has stated it should make debt discount a precedence as soon as its money circulation turns into extra regular.

Some corporations that borrowed cash within the pandemic have already began to pay it again.

Delta has stated it expects to return to its investment-grade profile inside two years. It paid down a $1.5 billion mortgage in March and stated in April that it will repay $850 million of further debt by the top of this quarter.

The retailer

Goal Corp.

TGT 0.06%

issued $2.5 billion of bonds in March 2020 when state and native governments had been issuing lockdown orders. Its earnings, although, really improved in the course of the pandemic, and in October, the corporate paid down roughly $1.8 billion of its bonds earlier than their maturity dates.

Equally, meals distributor

Sysco Corp.

SYY -0.59%

issued $4 billion of bonds in March of final yr to bolster its money holdings. Since final September, it has decreased its debt by roughly $3 billion, together with the early reimbursement of roughly $700 million of its bonds.

“What we’re seeing is firms make an lively try to enhance their steadiness sheets,” stated

Matt Brill,

senior portfolio supervisor and head of North American funding grade on the asset supervisor

Invesco Ltd.

“And so long as we’re seeing that, we’re not going to be involved.”

Nonetheless, he added, “there’s definitely an elevated stage of debt that must be repaid.”

—Kristin Broughton and Mark Maurer contributed to this text.

Write to Sam Goldfarb at sam.goldfarb@wsj.com