I'm asking this question as an investor of stocks in the U.S.
Equity and debt are two different things. Sometimes, a company's stock does very poorly for reasons completely unrelated to its operational excellence (Apple, during 2012, comes to mind -- when its stock crashed despite record revenues and profits).
Still, apparently, if a firm's stock is doing really well, it becomes easier for the company to raise debt. It is able to borrow more, at lower interest rates, whether for the short or long term. And vice versa.
- Is this correct?
- If yes, then why? (i.e., why do debt-issuers care about stock price?)
Update: Apparently, the answer to 1. is "yes":
banks take a company's share price into account when deciding whether to extend credit and at what interest rate.