Chevron Makes a Big Bet on Debt

Whenever shareholders see that their company is taking on debt, pitchforks and torches can be seen at the front door of corporate headquarters. Despite our investor aversion to debt, it isn't always a bad idea. Chevron (NYSE: CVX  )  is in a position to show just that. The company just completed a $6 billlion bond issuance that will be used to refinance some of its current debt structure. Chevron isn't alone, either, Rio Tonto (NYSE: RIO  ) just did a similar bond move last week, and several other major American companies have done some big debt issuances in 2013.

Why are they doing it now? Debt is cheap. It's likely that the company wanted to make sure it got one last shot at cheap bonds ahead of the Federal Reserve meeting this week, which could decide the fate of the current quantitative easing program. In this video, Fool.com analysts Tyler Crowe and Aimee Duffy look at some of the reasons why these big debt buys are good for these companies.

Then again, not all debt is good. If there is one company that's learning about that the hard way, it's Chesapeake Energy. Its big debt load has not only kept the company from building out its assets as much as it could, but it was also part of the reason that caused a shareholder revolt. While the debt issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy.


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