That dynamic has helped fuel a buyback boom and corporate earnings per share, which may otherwise have been stagnant in a lackluster economic environment.

The boom has also meant corporate balance sheets are looking even more fragile. Even stripping out oil firms, which have seen their debt to earnings ratio rise thanks to falling crude prices, U.S. companies are looking more leveraged than they used to be.

And with interest rates in the U.S. expected to move up sometime this year, it may be that investors are finally starting to consider fundamentals when they look at investment-grade corporate debt.

Here's what the Deutsche strategists say:

Issuers are embracing the trend toward weaker fundamentals with both arms. Not only are debt loads rising, but EBITDA [earnings before interest, taxes, depreciation and amortization] levels are also falling, and have dropped for two consecutive quarters. Again, as Figure 2 shows, this is not merely a consequence of oil prices. A third measure of deteriorating balance sheets, interest coverage, captures the IG balance sheet deterioration best. While IG issuers have had two years of <3% IG index yields to refinance legacy debt issued in an environment of >5% overall IG yields, issuers have actually lost ground in their ability to cover interest expenses with EBITDA. Interest coverage, as shown in Figure 3, is as weak as it's been since 2009, and lower than pre-crisis levels. Again, the energy sector is not the only culprit.

Weak global growth and a low interest rate environment play an important role in understanding how balance sheets got to where they are. Issuer debt loads, even on a net basis, have been growing at an annual rate of roughly 10 percent as companies take advantage of cheaper borrowing costs to finance acquisitions or repurchase stock to support EPS [earnings per share]. With end demand still tepid globally, company management teams can crank up leverage to boost return on equity. Investors, starved for yield, have been happy, thus far, to earn the greater spread compensation that comes along with greater issuer leverage.

As the Fed prepares the market for the end of the period of zero short-term rates, we may be approaching a reassessment of just how much leverage is appropriate given the overall market compensation.

One to watch.

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