Total debt hits new record for rated US companies in Q1 2024

Total US corporate debt levels for companies rated by S&P Global Ratings climbed to a new high in the first quarter of 2024, according to the latest S&P Global Market Intelligence data.

Investment-grade debt reached nearly $6.648 trillion in the quarter, up less than 1% from $6.595 trillion a quarter earlier. For companies rated below BBB- by Ratings, total debt grew by about 1.9% to nearly $1.840 trillion from $1.805 trillion.

The increase comes as benchmark interest rates remain at a decadeslong high. The US Federal Reserve is holding rates at their recent peak to combat inflation that remains above policymakers' target level, though central bankers have offered hints of reduced rates to come.

Among investment-grade rated sectors, total debt climbed the most in healthcare, which reported a 5.0% rise to $915.78 billion, while the largest drop was the 4.8% decline in communication services to $742.62 billion. For speculative-grade rated companies, communication services reported a higher increase than the other sectors, with total debt climbing 13.9% to $302.44 billion, while the greatest drop was in energy, where total debt fell by 4.6% to $124.30 billion.

Debt-to-EBITDA

Debt as a share of EBITDA climbed for the median investment grade and speculative grade companies alike, according to Market Intelligence data. Both categories recorded a third straight quarter of rising median debt-to-equity ratios, with investment-grade companies' median total debt 2.78x EBITDA, while the comparable figure for lower-rated companies grew to 4.01x.

Median debt-to-EBITDA ratios rose for eight of 10 investment-grade sectors. Communication services and utilities companies reported the only improvements, with median ratios falling to 2.39x and 5.10x, respectively.

Non-investment-grade-rated companies reported a similar trend. Ratios rose for all but the consumer staples and utilities sectors.

Issuance

As of June 20, non-convertible debt issuance for US nonfinancial companies reached $454.61 billion in 2024.