US corporate bond issuance got off to a sluggish start in 2024, a possible sign that higher-for-longer interest rates are denting companies' willingness to take on new debt.

Nonfinancial companies issued $127.75 billion in new debt from Jan. 1 to Feb. 20, a roughly 16% fall from the same period in 2023, according to the latest S&P Global Market Intelligence data. The latest figure shows companies are less willing to take on new debt or refinance older debt. The year-to-date total is nearly double the comparable amount in 2022, though issuance fell off a cliff that year following a two-year dash for cash during a period of lower borrowing costs in 2020–21.

Debt costs have broadly jumped as the US Federal Reserve raised its benchmark rate by 525 basis points from March 2022 to July 2023. While Fed officials are looking to cut rates as soon as this year, projections show rates remaining above recent troughs.

Debt-to-EBITDA

Relatively subdued issuance has not greatly budged debt stability relative to EBITDA.

The median debt-to-EBITDA ratio for companies rated investment-grade by S&P Global Ratings grew slightly to 2.64 in the 2023 fourth quarter from a revised 2.60 a quarter earlier, according to Market Intelligence.

Non-investment-grade companies recorded a decline in their median debt-to-EBITDA ratio, at 3.58 from 3.64.

Eight of 10 investment-grade sectors tracked by Ratings recorded an uptick in their median debt-to-EBITDA ratio. Meanwhile, the ratio fell for IT companies to 1.69 in the 2023 fourth quarter from 1.91 in the third quarter and held steady for healthcare companies at 2.50. The sharpest increase came in the consumer discretionary sector with the median ratio rising to 2.43 from 1.93.

For non-investment-grade sectors, median debt-to-EBITDA rose in the consumer discretionary, healthcare and industrials sectors while falling in all others. Real estate companies recorded the sharpest decline with the median ratio falling to 5.60 in the fourth quarter of 2023 from 7.10 a quarter earlier.