Total Debt for S&P 500 Non-Financial Firms
Financial analysts should be prepared for a corporate debt reckoning.... Information buried deep within corporate filings such as contingencies, debt instruments, interest rates, and maturity dates can help analysts understand which firms might have material impact to profitability.
NEW YORK (PRWEB) January 11, 2023
Calcbench, the leading interactive, financial research platform for data-intensive analysts, today announced the release of its newest report reviewing pressures in corporate debt. The report, examining 22 non-financial S&P 500 firms that filed their annual reports last fall, contemplates the consequences of increasing interest rates on firms’ balance sheets. The report explores which firms have significant debt coming due, which have debt levels that might affect operations, and how greater interest expense payments might affect profit.
From 2016 through 2021, total debt for all non-financial firms in the S&P 500 increased by 36 percent to $5.49 trillion. Total interest expense also rose by 35.3 percent during the same period, to $184.8 billion. The 22 firms we studied carried a total debt of $248.3 billion, a fraction of the debt carried by non-financial firms in the S&P 500. Among the 22 firms, however, 35.3 percent ($95 billion) of their total debt will mature over the next five years, giving us a proxy view of what’s to come as we enter first-quarter 2023 and anticipate the bulk of annual reports to be filed.
For the 22 firms in our study, the weighted average interest rate for the debt maturing in the next five years ranged from 2.38 percent to 3.22 percent. With corporate interest rates hovering around 5 percent, there could be a rude awakening as companies refinance their debt at higher interest rates. The possibility for more corporate debt defaults also looms.
“Financial analysts should be prepared for a corporate debt reckoning over the next few years,” says Pranav Ghai, co-founder and CEO of Calcbench. “Information buried deep within corporate filings such as contingencies, debt instruments, interest rates, and maturity dates can help analysts understand which firms might have material impact to profitability.”
Indeed, in its debt report, Calcbench reviewed several specific firms that may feel the pain of higher interest rates. Calcbench observed that Atmos Energy, Seagate Technology, Fox Corp,, Sysco, and Oracle all already have annual interest expense exceeding 10 percent of net income — and now they face debt refinancing in 2023 and beyond in a world of significantly higher interest rates. Those companies will not be alone.
Download the full Calcbench corporate debt report at: https://www.calcbench.com/home/pdf?name=CB-Note-Debt-Interest-Risk_Jan2023.pdf.
About Calcbench
Calcbench is a financial data platform designed for outperformance. Founded in 2011, the company uses the latest technology to offer instant and systematic access to all the data (numbers and text) in financial statements, including the details hidden within the footnotes. Developed by former analysts and supported by a team of financial experts, Calcbench was built for data analysis looking to go deeper. Visit http://www.calcbench.com to learn more.