The bill is coming due for small-cap companies

Sources: Bloomberg and Wells Fargo Investment Institute. Data as of March 31, 2024. The S&P 500 Index is a market capitalization-weighted index generally considered representative of the U.S. stock market. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Investing in stocks involves risk and their returns and risk levels can vary depending on prevailing market and economic conditions. The prices of small and mid-company stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.

Key Takeaways

  • Large caps have relatively easy access to credit and have over a third of their debt pushed out beyond 10 years.
  • Small caps, on the other hand, have over 75% of their debt coming due in the next five years and 96% that will come due in the next 10 years. If interest rates stay elevated relative to the previous cycle, costs are about to go up significantly.