Thanks to the decadeslong decline in interest rates, their effect on corporate finances was transformed from top of mind to a near afterthought. In 1990, Federal Reserve data show that the interest paid by nonfinancial corporate businesses as a share of their outstanding debt, a proxy for the average interest rates they were paying, came to 13.3%. By 2021—the last year with available data—that had fallen to 3.6%, marking the lowest level since the late 1950s. Over the same period, long-term yields on Baa-rated corporate debt fell from 10.4% to 3.4%, according to Moody’s.

With the Fed raising rates sharply in its efforts to combat inflation, corporate-bond yields and rates on other business loans have risen sharply. The Moody’s measure averaged 5.1% last year, for example, and has averaged 5.6% so far this year. Even so, the interest that companies are currently paying on their debt most likely remains very low.

That is because when rates fell sharply after the pandemic struck, many companies took advantage of the environment, simultaneously lowering the rates they were paying and moving into later-maturing debt. In 2020, $2.27 trillion in U.S. corporate bonds were issued, according to the Securities Industry and Financial Markets Association, which compared with $1.42 trillion a year earlier. In 2021, companies issued another $1.96 trillion. Last year, issuance fell to $1.35 trillion.

Though companies delayed the effect of rising rates on their bottom lines, they didn’t negate them. S&P Global Ratings analysts recently calculated there is a manageable-seeming $504 billion in U.S. nonfinancial corporate debt maturing this year. That will be followed by $710 billion in 2024, $862 billion in 2025 and $880 billion in 2026. Since companies usually refinance their debt 12 to 18 months before it matures, the effect of that overhang of maturing debt could come sooner than many investors realize.

Moreover, the amount of debt maturing over the next year isn’t negligible. In a recent examination of 75 nonfinancial firms in the S&P 500 that have filed annual reports since this past fall, financial-data firm Calcbench found that debt maturing this year amounted to $73.6 billion. The weighted average interest rate on that debt was 2.65%, a much lower rate than any company can borrow for any amount of time now. The rates some individual companies are paying on some of their maturing debt are even lower. For example,

Thermo Fisher’s

annual report shows that one of its notes maturing this year carries an interest rate of 1.03%.

Gilead Sciences

has one that carries a 0.75% rate.  

So companies could have some difficult choices to make in the years ahead. Some will likely decide to reduce their debt loads, choosing either to curtail investment and expansion efforts, or to finance those efforts by other means, such as issuing equity. Others will refinance their maturing debt at higher rates, with higher borrowing costs weighing on earnings as a result. Neither of those possibilities seem all that pleasing to stock investors.

Write to Justin Lahart at Justin.Lahart@wsj.com