A substantial wall of corporate debt is set to mature over the next 18 months, forcing non-financial corporations to refinance under significantly higher borrowing costs. Yield spreads on BBB-rated debt have widened by 45 basis points since January.
Capital Allocation Realignment
To manage interest coverage ratios, executive boards are curtailing stock buybacks and reprioritizing debt retirement. Capital expenditure forecasts among Russell 2000 companies have been revised downward by 8% overall.