Equity risk premia are significantly higher than bond risk premia: Why?

In OECD countries at present, the risk premia in equities or i n the return on capital for shareholders are significantly higher than bond risk premia. This could be expected to lead to significant debt leverage and to significant share buybacks, which, over time, would see debt replace equity in corporate finance. What may account for this divergence between the two types of risk premia? Probably: The low level of default risk , thanks to low interest rates and high corporate profitability , has driven down bond risk premia; The high variability of share prices and therefore of companies’ valuation has given rise to a high equity premium.