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S&P 500 CEOs Lose Interest Advantage for 2013

Companies have cut borrowing expense to lowest level since 2002, making it harder to squeeze costs.

By Whitney Kisling, Bloomberg | Updated on December 10, 2012

Companies in the Standard & Poor’s 500 Index are paying less in interest on debt than any time in at least a decade, leaving investors more dependent on economic growth and corporate spending for equity gains in 2013.

Constituents of the benchmark gauge for American stocks such as Exxon Mobil Corp. and Walt Disney Co. cut interest expenses to 2.39 percent of sales in the 12 months ended Sept. 30 on average, the lowest level since at least 2002, according to data compiled by Bloomberg and Strategas Research Partners. With borrowing expenses at record lows, executives are finding it harder to squeeze costs, causing profit margins to contract for the first time since 2009.

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