Liquidity positions weaken for US investment-grade companies in Q4'24

Cash positions for US investment-grade companies declined in the last few months of 2024, according to the latest S&P Global Market Intelligence data.

The median ratio of cash and equivalents as a percentage of total liabilities for companies rated BBB- or higher by S&P Global Ratings dipped to 22.1% in the fourth quarter of 2024 from 23.4% in the third quarter. The ratio is closely monitored as a measure of a company's ability to pay short-term debt using cash and cash equivalents.

While cash positions for investment-grade companies are off their recent peak, the latest value is higher than all but two of the previous 10 quarters. The Federal Reserve's benchmark interest rate has not budged in 2025 after dropping 100 basis points in 2024.

Meanwhile, the median cash ratio for companies rated below BBB- rose to 32.5% in the fourth quarter from 30.4% a quarter earlier.

Sectors

Among investment-grade companies, the median cash ratio rose the most for information technology stocks with a jump of 5.2 percentage points in the fourth quarter to 41.3%.

The median cash ratio for investment-grade real estate companies tumbled more than any other sector, with a drop of 5.6 percentage points to 22.9%.

For non-investment-grade companies, the healthcare sector recorded the highest quarterly gain, with the median cash ratio growing 5.3 percentage points to 43.2%. Six other non-investment-grade sectors recorded gains during the quarter.

Information technology companies again recorded the highest median ratio among non-investment-grade sectors at nearly 60%. The sector also recorded the largest drop among non-investment-grade companies at 2.7 percentage points.