US small-cap companies are facing a massive interest burden: Interest expense now accounts for 31% of EBITDA in Russell 2000 firms, the highest in at least 6 years. This percentage has more than doubled since 2020. By comparison, S&P 500 companies now carry interest expense equal to 6.7% of EBITDA, down from 9.5% in 2020. This comes as ~30% of corporate debt in Russell 2000 companies is tied to floating rates, compared to ~7% for the S&P 500. Meanwhile, a near-record ~40% of small-cap companies in the index remain unprofitable. Small-cap firms are in desperate need of lower rates.(The Kobeissi Letter)