A substantial tranche of corporate debt issued during the low-interest period of 2020–2021 reaches maturity over the next 18 months, forcing widespread refinancing at higher prevailing rates.
Interest Coverage Ratios Decline
Mid-market firms face interest coverage ratio declines of up to 250 basis points. Capital allocation strategies are shifting from aggressive expansion toward debt paydown and operational efficiency.
M&A Activity as an Exit Route
Highly leveraged businesses are increasingly pursuing strategic sales or divestitures of non-core assets to satisfy balance sheet obligations without taking on high-yield debt.