The global corporate credit outlook may be benign for now, but hefty debt loads are foreshadowing future credit stress, says Moody’s Investors Service.

Corporate debt levels (for non-financial companies) are now higher than they were in the run up to the global financial crisis, Moody’s warned in a news release published on Friday.

The large number of highly leveraged companies is setting the stage for “a particularly large wave of defaults when the next period of broad economic stress ultimately arrives,” Moody’s stated in the release.

Moreover, when defaults do eventually spike, credit losses are likely to be elevated.

For investment-grade firms, median debt/EBITDA is now about 30% higher than it was in 2007. For speculative- grade companies, median debt/EBITDA is up by about 10% from 2007.

Strong demand from institutional investors for senior secured loans is fuelling the availability of credit, and the overall increase in leverage for speculative grade companies, Moody’s said.

“The ranks of low rated issuers continue to swell due to easy market access in a stable credit environment where investors have been reaching for yield,” said Mariarosa Verde, senior credit officer at Moody’s, in statement.

“At the same time, the opportunity to borrow at low cost for mergers and acquisitions and to return capital to shareholders via dividends or share repurchases has proved irresistible for some investment-grade firms, leading some to adopt financial policy objectives that have led to lower ratings,” she added.

The already-large population of speculative-grade issuers is likely to continue to increase before the next credit downturn,” Moody’s said.

“Global growth remains below pre-2008-09 levels, constraining the ability of central banks to anytime soon move forcefully away from accommodative monetary policies that favor leverage and leveraging transactions. Investor demand for higher yield continues to allow all but the weakest companies to avoid default by refinancing maturing debt,” Moody’s explained. “Some very weak issuers are living on borrowed time while benign conditions last.”