Beware borrowing costs: The jump in yields could hit these debt-laden stocks the most
Ten-year Treasury yields are close to a 20-year high. That could hurt stocks that have large amounts of debt coming due, an analyst says.
TL;DR
- Bond yields have reached their highest levels in decades, posing a risk to companies with substantial debt.
- The 10-year Treasury note yield reached 5.22%, and the 30-year Treasury hit 5.50%, a 22-year high.
- Higher debt servicing costs and less receptive credit markets are a major risk for equity markets in 2026 and 2027.
- Companies in the S&P 1500 index with debt over $5 billion and more than 50% due in five years are most vulnerable.
- Potential vulnerable companies include Live Nation Entertainment, Ford Motor, and Keurig Dr. Pepper.
- Strong earnings growth, AI investment, and improving global PMIs could partially offset these pressures.
- However, sustained higher rates will inevitably increase pressure on companies with high leverage or refinancing needs.