After tapping the bond market at a record-shattering pace in recent months, corporate America is more indebted today than ever before.

And while much of that fresh cash—more than US$1.6 trillion in total—helped scores of companies stay afloat during the pandemic lockdown, it now threatens to curb an economic recovery that was already showing signs of sputtering. Many companies will have to divert even more cash to repaying these obligations at the same time that their profits sink, leaving them with less to spend on expanding payrolls or upgrading facilities in months ahead.

The over-leveraging of America's corporate sector is not a brand-new development, of course. It's been building for more than a decade, ever since the last crisis—the housing-market meltdown—prompted the Federal Reserve to pump unprecedented amounts of cash into the economy, a policy tool that it has taken to new heights during the pandemic as it has supported corporate credit markets.