U.S. corporate cash ratios are falling, with the median ratio for investment-grade companies now lower than it was pre-COVID-19 as pressures from rising interest rates, inflation and a slowing economy eat into cash reserves.

The closely watched liquidity metric for investment-grade companies — calculated by dividing holdings of cash and equivalents by current liabilities — declined to 18.8% in the second quarter, down from 19.5% in 2019's fourth quarter just before the pandemic hit.

Corporations are being squeezed. Companies are no longer able to refinance debt at low costs as rising interest rates increase the price of borrowing. At the same time, earnings are facing headwinds as inflation and higher rates hold back spending and restrain economic growth.

The median non-investment grade ratio remained above the pre-pandemic level at 30.2% but was down from 34.2% in the first quarter.

The arrival of COVID-19 in early 2020 forced the Federal Reserve to loosen monetary policy, slashing rates and hoovering up government bonds to drive liquidity in capital markets. All 11 of the S&P 500 sectors took advantage, with companies issuing record levels of bonds and taking out cheap loans.

As the prospect of default faded, companies have now worked down those cash ratios. The industrials and materials sectors now have lower ratios than they had before the crisis.

Investment-grade healthcare and information technology sectors also have lower ratios than they had pre-COVID-19 at 36.1% and 35.1%, respectively. Those are higher than most other sectors.

Consumer staples, energy, real estate, communication services and utilities still have elevated median ratios.