Cost of debt jumps for US companies in Q4'22

Cost of debt jumps for US companies in Q4’22

March 31, 2023 | Peter Brennan & Umer Khan | S&P Global Market Intelligence

Rising interest rates and a slowing economy are reducing US companies’ ability to repay their debts.

The median interest coverage ratio of companies rated investment-grade by S&P Global Ratings sank in the fourth quarter of 2022 to 6.95 from 8.05 in the previous quarter, according to the latest S&P Global Market Intelligence data.

The ratio — calculated by dividing earnings before interest and tax by the cost of a company’s debt-interest payments — is a closely watched measure of solvency and has slumped sharply since a peak of 8.94 in 2022.

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