Debt ratios creep upwards

Smaller companies have been borrowing above the pre-crisis peak for several years.

Debt to EBITDA multiples are creeping up for smaller firms and are now higher than they were just before the financial crisis.

Figures from LCD, an offering of S&P Global Market Intelligence, show that average EBITDA multiples for firms with less than $50 million or earnings have been above the 2007 peak for several years.

Loan ratios hit an average of 4.8 in 2007, immediately before the collapse of Lehman Brothers. By 2009 average debt multiples for smaller companies were just 3.4 but have crept upwards and in H1 2018 sit at 5.4, which could elevate risk levels when the next economic downturn hits.