Junk-rated firms beginning to feel the pinch

Big payback: Boeing aircraft at an assembly plant in the United States. Aerospace firms, housebuilders and those in healthcare and technology are seeing the highest rise in interest payments. — AFP

NEW YORK: Companies are feeling the pinch from a sharp jump in interest payments after global rate hikes, with S&P Global Ratings estimating that junk-rated firms are paying the highest interest on debt since 2010.

Speculative-grade firms are now paying an effective rate of 6.1% on average, up from 5.1% last year, according to a report by S&P. It’s a dynamic that’s likely to spur greater efforts by companies to slash debt and conserve cash.