[s1artibartfast]

The key piece missing then is corporate valuation.

This is an arbitrage play based on the difference between investor sentiment and debt on the books.

The idea is that their market valuation will go down less than $1B if they issue a $1B bond.

Similar nonlinearities are true for other corporate holdings. Facebook has $40B cash on hand. If they had $0 on hand, That would hurt their valuation by a lot more than $40B because investors like to see some cash in the bank, and see it as a red flag. Similarly, Investors dont care much about a little debt, and facebook is an outlier in that it has very low levels of corporate debt.