Bankers have a message for America’s debt-laden companies: raise money now, because things could get a lot worse.

The gradual reopening of businesses after months-long shutdowns and a pick up in manufacturing activity have given investors reason for optimism in recent weeks. But underwriters who cater to heavily indebted corporations are offering their clients a bleak preview of what may lie ahead.

The long list of worries includes a new wave of coronavirus contagion in the fall, an extended period of double-digit unemployment, a spike in defaults and a slower-than-expected economic recovery as businesses around the globe adapt to the realities of prolonged social distancing.

Of course, pitching bond sales to companies is part of the job description, and corporate treasurers expect nothing less from bankers whose bonuses are tied to how many deals they do. Still, the grim warnings to stockpile cash reflect how the rally that credit markets have enjoyed since the Federal Reserve took action may be obfuscating an economic picture still fraught with risks.

“We are telling virtually every private equity firm and issuer out there they ought to get to market,” said Peter Toal, global co-head of fixed-income syndicate at Barclays Plc, one of the major underwriters of loans and bonds for highly leveraged companies.

‘Tough Winter’

The bankers’ private warnings to clients underscore the publicly visible stampede for cash across corporate America. Debt sales by blue-chip companies are running at a record pace this year, while issuance of junk bonds, which are rated below investment grade, reached almost $44 billion in May, the third-busiest month on record.

The Fed’s support has even allowed many of the companies hardest hit by the coronavirus outbreak to tap markets in recent weeks. Yet borrowers that rely on junk debt are the most exposed to the ebbs and flows of credit markets, as they risk seeing their access to capital cut off when volatility spikes.

Barclays is hardly the only big player in the market encouraging company executives to take advantage of today’s benign credit environment.

Bankers worry that even if businesses reopen and consumers resume spending, the U.S. economy could go through a rough few quarters and underperform investors’ expectations.

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