As interest rates flare, companies with a disproportionate amount of debt on their balance sheets may be due for a reckoning. In recent months, investors have seen Treasury prices fall and yields rise. Just this week, benchmark 10-year Treasury yields skyrocketed to 16-year highs , having climbed above 4.80% from 4.00% less than two months ago. New data from the Labor Department on Thursday showing an enduringly robust labor market did nothing to raise hopes that yields will settle down soon. Stocks have sold off as Wall Street accepted that the Federal Reserve might keep interest rates higher for longer to crush inflation. Now individual companies may also face escalating pressure depending on the state of their balance sheets. Because higher interest rates increase the costs of borrowing corporate debt — eating into a firm’s future earnings and cash flow — companies stuck with large amounts of debt will suffer by paying more to satisfy current obligations, and when it comes time to roll over low-cost capital with suddenly more expensive paper. To find the stocks that could be vulnerable, CNBC screened for companies that meet the following criteria: higher borrowing costs, characterized by a debt-to-equity ratio greater than 150%; falling earnings, characterized by a one-year negative earnings growth outlook; and that are already breaking down, characterized by share prices trading within 5% of a 52-week low. General Motors , which has a debt-to-equity ratio of 165%, has been one of the targets of a continued United Auto Workers strike. Shares of the automaker fell below $30 on Thursday for the first time in three years , bringing their year-to-date slide to more than 10%. GM YTD mountain GM ytd price chart Appliance maker Whirlpool , holding nearly four times more debt than equity, may also be pressured by any weakness in the housing market resulting from 30-year mortgage rates that Bankerate.com pegged at a national 7.88% on Thursday . Whirlpool is also down more than 10% since the start of the year. The average analyst polled by LSEG has a hold rating. Other notable names on the list include two beverage and packaged food behemoths, Coca-Cola and Kellogg .
