US small-cap stocks are as cheap as they’ve been in decades, but with a more than half-trillion dollar mountain of debt looming over the next five years, it’s going to take a significant risk-on signal from the Federal Reserve to entice investors.
Firms in the small-capitalization Russell 2000 Index hold a total of US$832 billion in debt, 75% of which — or US$620 billion — needs to be refinanced through 2029, data compiled by Bloomberg shows. For comparison, companies in the big-cap S&P 500 Index have just 50% of their obligations due by then.
