Rising interest rates have sent corporate bond yields up significantly in Europe and the United States—with big implications for companies with large amounts of debt. These companies are likely to incur higher costs from the increase in debt. “As interest rates continue to rise, corporate bond yields may be under pressure to increase further, we have,” said analysts from investment bank Bernstein in a note to clients on Jan. I think stocks with lower debt risk and higher debt quality will perform better.” Historical analysis done by analysts shows that when European bond yields rise, low-leverage stocks tend to outperform highly leveraged stocks by larger margins. when interest rates fall or stay the same. Additionally, investors tend to lean toward stocks with lower debt during recessions, as they become less risky due to their ability to cover higher interest payments from their earnings. without the need to borrow additional capital at high interest rates, analysts said. The table below shows six low-debt European stocks with a buy rating from Bernstein and an investment-grade credit rating: The MSCI EMU ex-Financials Index The above stocks are all included in the Bernstein-based display. based on a combination of industry net debt-equity ratio and credit rating. The net debt-to-equity ratio measures a company’s leverage relative to its total equity, indicating the financial health and stability of the business. Typically, a value below one would be considered relatively safe, while a value of two or more could be considered a risky investment. Pan-European aircraft maker Airbus and Norwegian energy company Equinor stand out for having a negative debt-to-equity ratio, meaning companies have a lot of equity, backed by assets. , than debt. Analysts’ consensus on share price targets for both companies also points toward a potential gain of around 20%. Airbus’ share price has risen more than 2% over the past year amid a broader stock market slump. The company seems to have benefited from the difficulties that are engulfing its main competitor, Boeing. Dutch multinational conglomerate Koninklijke has the biggest upside potential of 27% of the stocks on the list. All listed stocks, including Publicis, LVMH and L’Oreal, are accessible to US investors as ADRs on US exchanges and free markets.