Interest costs for companies within the Russell 2000 index have reached their highest level in at least six years, now representing 31% of earnings before interest, taxes, depreciation, and amortization (EBITDA). This figure marks a significant escalation in debt servicing requirements for small-cap firms.
The current interest-to-EBITDA ratio has more than doubled compared to levels recorded in 2020. This spike in financial obligations for Russell 2000 members stands in contrast to the interest expense profiles currently maintained by larger S&P 500 companies.