Europe’s debt cost squeeze: Developed EMEA Equity Signals

Research evidence excerpt

Europe’s debt cost squeeze: Developed EMEA Equity Signals

Equity Strategy ● Developed EMEA

24 June 2026

5. Sectors: Total current o/s debt and cost 6. Current debt maturity profile for sectors

of debt current vs 2020

1,000 4 2026 2027 2028 2029

(%) 2030 2031 2032 >2032

100%

750 3 debt

of 80%

60% 500 2 cost EURbn 40%

250 1 20% average

0%

0 0

Estate weighted Disc. Energy Materials Real Technology Health Discretionary Utilities Industrials Staples Care Utilities Industrials Staples Con. Healthcare Telecoms Energy MaterialsB. EstateReal Technology Basic Con. Total debt (EURbn) Consumer Telecommunications Current wtd. av. cost of debt (rhs, %) Cost of debt in 2020 (rhs, %) Consumer

Source: FTSE Russell, FactSet, HSBC; Only includes those corporates where their Source: FTSE Russell, FactSet, HSBC; Only includes those corporates where their

weighted cost of debt data is available weighted cost of debt data is available

Consumer Discretionary and Industrials, while accounting for a sizeable share of the

Discretionary and Industrials

outstanding debt in the region, appear relatively resilient in aggregate due to their strongerhave high share of o/s debt,

but placed comfortably with balance sheets, as reflected in their interest coverage ratios, which are above the regional

strong balance sheets average. Nonetheless, both sectors have a higher proportion of floating-rate debt (as a

percentage of total debt), which could accelerate the pass-through of any further rate increases

into interest expense, potentially pressuring earnings resilience.

7. Dev. EMEA sectors: net leverage vs 8. Proportion of debt in floating vs fixed

interest coverage ratios rates

14 30% Market TEC

IND 12 25% debt MAT

HEC DIS (x) 10

rate 20% RES UTL

8 DIS IND TEC expense ENG floating 15% ENG

Int 6 STP of