Capital Markets: Observations & Insights

Degrees of Debt

Solid Ability to Pay

• Corporations are generally in a good position to be able to service their debts

‒ Interest coverage (EBIT/interest expense) is higher than it has been on average over the past 20 years

Interest Coverage

MSCI AC World Ex-U.S.

S&P 500

10x

8x

6x

Global interest coverage is relatively strong

4x

2x

0x

Source: FactSet. Interest coverage is earnings before interest and taxes (EBIT) divided by interest expense.

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