Isn't that the same as is happening today with bonds ? The government is pushing bond prices down. So companies are using short-term loans to pay all their costs, while paying everything out to investors (clouding the issue is that a lot of this is happening through buybacks).
What happens when interest rates go up, even a little ? It seems to me obvious consequences would be:
1) monthly payments go up. Either directly (variable interest) or when you refinance (companies have running debt. Almost always taking out new loan when old one comes due). In that case, interest rates go up slower than the benchmark rate, but they still go up.
2) creditworthiness of all debtors goes down (same as with individuals: you are "approved" for a monthly payment, e.g. 100 dollars/month. At 0% interest that covers 12000 dollars for a 10-year loan. At 1% that covers 11400, or about 5% less. Next time you ask for a loan you're not going to be able to loan 12000, so you can't just roll over the debt. So your ability to get new loans is going to be worse)
Also, can someone explain to me why this doesn't result in moral hazard for management of large companies ? If you can loan at, say, 0.25% why wouldn't you just loan the next 60 year's profits now (investment time horizon "until the investors are expected to be dead"), pay it out to investors, and leave, content that you have done far better than you could have done by managing the firm well ?