The cash ratios of non-investment grade-rated companies were squeezed further in the first three months of 2023.

The median measure of cash and equivalents as a share of total liabilities of companies rated lower than BBB- by S&P Global Ratings fell to 36.3% in the first quarter, from 40.1% at the end of 2022, with declines in seven of the 11 sectors, according to the latest S&P Global Market Intelligence data.

The median cash ratio of higher-rated investment-grade companies rose to 19.8% in the first quarter, up from 18.5% in the fourth quarter of 2020.

The cash ratio measures the ability of companies to cover the short-term obligations on their debt using cash and cash equivalents. The median ratio for companies covered by Ratings has been steadily declining since the second quarter of 2020, when companies undertook a dash for cash to bolster balance sheets during a global pandemic.

Sector breakdown

Among non-investment grade companies, the steepest decline was in the real estate sector to 67.1% from 78.4% at the end of 2022. Yet that remains significantly higher than in other sectors that saw declines, such as consumer discretionary and financials.

For investment-grade companies, the ratio rose in seven of the 11 S&P 500 sectors, with a particularly strong rebound in investment technology to 44.4% from 39.1% and utilities, up to an eight-quarter high of 5.1% from 3.4%.

By contrast, the median ratio for companies rated BBB- and higher in the communication services sector fell to 22.9% from 28.5%.