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In This List

Credit Trends: The U.S. Distress Ratio Continues To Ease From Its March Peak


Default, Transition, and Recovery: Oil And Gas Defaults Continue To Climb


Economic Research: Asia-Pacific's Recovery: The Hard Work Begins


COVID-19 Impact: Key Takeaways From Our Articles


Down But Not Out: Insurers' Capital Buffers Are Proving Resilient In The Face Of COVID-19

Credit Trends: The U.S. Distress Ratio Continues To Ease From Its March Peak

The steep global recession and sudden and deep market dislocation have taken a heavy toll on speculative-grade issuers' revenues and access to funding sources. Speculative-grade credit spreads have widened as the cost to refinance or raise additional liquidity has risen, and overall access has been restricted. Due to central banks' and governments' rapid and sizable support programs, credit markets have since reopened, but access remains limited for riskier issuers rated 'B-' and below.

The U.S. distress ratio--the proportion of speculative-grade issues with option-adjusted composite spreads of more than 1,000 basis points (bps) relative to U.S. Treasuries--decreased to 12.7% as of June 19 from 22.8% as of May 6, significantly lower than the March 2020 peak of 36%. However, as credit spreads remain elevated, the current distress ratio is still higher than its precrisis levels of 8%.

By sector, oil and gas has seen the most drastic decrease in its distress ratio, falling by 53% from its March highs. Only the telecommunications and financial institutions sectors' distress ratios are lower than their precrisis levels, as both sectors have been largely unaffected by the implications of the global pandemic thus far.

The highest proportions of distressed credits are presently held by oil and gas (86) and media and entertainment (33) issuers.

Chart 1


Energy-Related Sectors' Distress Ratios Have Eased From March But Remain High

As credit spreads have narrowed by almost one-third from March highs, issuance in the U.S. is two times 2019 levels as corporate borrowers incur more debt to handle the demand shock due to COVID-19-related disruptions (see chart 2). Most new issuance has been investment grade. Issuance for higher-rated issuers has soared to all-time highs while issuance at the lowest end of the speculative-grade market has remained on par with previous years (see chart 3).

Although they've recovered from their March peaks, the distress ratios for the energy-related sectors of oil and gas and metals, mining, and steel remain elevated at 40% and 24%, respectively. For oil and gas issuers, producers have been hit hard during the pandemic, with low prices set to persist until demand returns. The same is true for the metals and mining sector as cash flow is weakening across the board, with lower prices for upstream mining companies and slower volumes for downstream metals processors. Since both sectors are largely speculative grade, lack of access to capital markets, coupled with large upcoming debt maturities, could mean an increase in defaults, even as the sectors have already seen their fair share of defaults in 2020 (see "Credit Conditions North America: Rolling Out The Recovery," June 30, 2020).

Chart 2


Chart 3


Chart 4


Chart 5


Chart 6


Table 1

By Sector, Oil And Gas Leads In Both Distress Ratio And Debt-Based Distress Ratio At 40% And 33%, Respectively
Distressed ratio (%)* Debt-based distressed ratio (%) Number of distresssed issues Total debt affected (mil. $)§ Percent change of distressed credits by sector
Aerospace and defense 20.8 13.9 5 2,875.0 (28.6)
Auto 10.0 7.5 7 3,300.0 (50.0)
Banks and brokers 6.7 5.3 1 350.0 0.0
Capital goods 11.5 10.0 7 3,274.7 (58.8)
Chemicals, packaging, and environmental services 4.5 5.2 5 3,040.0 (64.3)
Consumer products 5.5 2.8 9 2,923.9 (60.9)
Financial institutions 2.8 5.4 10 3,685.2 (47.4)
Forest products and building materials 11.7 8.7 7 2,114.1 (30.0)
Health care 10.2 11.3 10 9,446.9 (28.6)
High technology 8.3 4.3 8 2,567.4 (20.0)
Homebuilders/real estate cos. 5.7 4.4 5 1,404.7 (28.6)
Insurance 12.1 8.3 4 1,256.3 (33.3)
Media and entertainment 12.2 10.3 33 18,498.3 (44.1)
Metals, mining, and steel 24.2 16.9 15 5,118.3 (37.5)
Oil and gas 40.2 32.6 86 34,295.7 (35.3)
Retail/restaurants 26.0 17.6 26 8,689.1 (43.5)
Telecommunications 6.2 3.3 7 3,653.7 (30.0)
Transportation 23.3 19.2 10 4,557.9 (63.0)
Midstream and merchant power 10.9 6.6 20 6,628.8 (60.8)
Total 12.7 10.2 275 117,680.0 (43.1)
Data as of May 6, 2020. *S&P Global distress ratio is the number of speculative-grade issues with option-adjusted spreads above 1,000 basis points to the total number of speculative-grade issues. Distribution of distressed credits is defined as the distribution, by sector, within all speculative-grade issues with option-adjusted spreads above 1,000 basis points. §Outstanding debt amount associated with distressed issues divided by the total debt outstanding of speculative-grade issues. The distress ratio indicates the level of risk the market has priced into bonds. A rising distress ratio reflects an increased need for capital and often precedes increased defaults when accompanied by a severe and sustained market disruption. Source: S&P Global Ratings Research.

Table 2

The Negative Bias Of U.S.-Based Oil And Gas And Retail And Restaurants Issuers Widely Surpasses Their Long-Term Averages
(%) Current negative bias* Long-term average of negative bias* Proportion of 'B-' and below new issues (trailing three years)§ Proportion of 'B-' and below outstanding issuer ratings†
Oil and gas 81.4 19.6 15 64.7
Retail/restaurants 58.0 26.6 13 46.5
Metals, mining, and steel 28.6 25.1 12 23.8
Data through June 19, 2020. *Negative bias is calculated as the number of U.S. issuers with either a negative outlook or on CreditWatch negative, divided by the total number of U.S. issuers with either positive, negative, or stable (outlook or CreditWatch) implications. The long-term average is taken from 1995 to the present. §The proportion of 'B-' and lower issues is measured relative to the total number of speculative-grade issues. The statistic is calculated for instruments issued in the U.S. during the trailing three years. †The proportion of 'B-' and lower U.S. issuers is measured relative to the total number of U.S. speculative-grade issuers. Source: S&P Global Ratings Research.

Table 3

List Of Distressed Credits By Issuers
Sector/company Issuer ratings are for a related entity Issue count Outstanding amount (mil. $) Rating Outlook/CreditWatch
Aerospace and defense

Triumph Group Inc.

2 800.0 CCC+ Negative

Wesco Aircraft Holdings Inc.

3 2,075.0 B- Negative

Cooper-Standard Automotive Inc.

Yes 2 650.0 B- Negative

Ford Motor Co.

2 1,550.0 BB+ Watch Negative

Midas Intermediate Holdco II LLC

Yes 1 375.0 CCC Negative

Tenneco Inc.

2 725.0 B Watch Negative
Banks and brokers

Advisor Group Holdings Inc.

1 350.0 B- Stable
Capital goods

Ahern Rentals Inc.

1 550.0 CCC+ Negative

American Trailer World Corp.

1 670.0 B Negative

Aptim Corp.

1 515.0 CCC+ Negative

Cleaver-Brooks Inc.

1 375.0 B- Stable

JPW Industries Holdings Corp.

Yes 1 220.0 B Negative

Maxim Crane Works Holdings Capital LLC

1 545.0 B- Negative

Titan International Inc.

1 399.7 CCC+ Negative
Chemicals, packaging, and environmental services

Foxtrot Escrow Issuer, LLC

Yes 1 775.0 CCC+ Negative

FXI Holdings Inc.

1 525.0 CCC+ Negative

LSB Industries Inc.

1 435.0 CCC+ Stable

TPC Group Inc.

1 930.0 B- Negative

Venator Materials LLC

Yes 1 375.0 B- Stable
Consumer products

American Greetings Corp.

1 282.0 B Negative

Arrow BidCo LLC

Yes 1 340.0 B Stable

Caleres Inc.

1 200.0 B+ Negative

Del Monte Foods Inc.

1 500.0 CCC+ Stable

L Brands Inc.

2 649.5 B+ Negative

Men's Wearhouse Inc. (The)

1 228.2 CCC+ Negative

Revlon Consumer Products Corp.

1 450.0 CCC- Negative

StoneMor Partners L.P.

1 274.2 CCC Negative
Financial institutions

CCF Holdings LLC

1 276.0 CCC Negative

CNG Holdings Inc.

1 277.7 B Negative

Curo Group Holdings Corp.

1 690.0 B- Stable

Enova International Inc.

2 625.0 B Stable

FS Energy and Power Fund

1 500.0 B- Developing

JFIN Co-Issuer Corp.

Yes 1 400.0 BB- Negative

Navient Corp.

1 300.0 BB- Negative

PHH Mortgage Corp.

1 301.5 B- Watch Negative

Populus Financial Group Inc.

1 315.0 B Negative
Forest products and building materials

Apex Tool Group LLC

1 325.0 CCC+ Negative

Northwest Hardwoods Inc.

2 435.0 CCC- Negative

PrimeSource Building Products Inc.

1 275.0 B Negative

Rayonier A.M. Products Inc.

Yes 1 495.6 CCC+ Negative

The New Home Co. Inc.

1 318.5 B- Watch Negative

Werner FinCo LP

1 265.0 B- Negative
Health care

Air Methods Corp.

1 500.0 B- Stable

CHS/Community Health Systems Inc.

Yes 4 5,055.4 CCC+ Negative

Envision Healthcare Corp.

1 1,026.4 CCC Negative

Heartland Dental, LLC

1 310.0 CCC+ Negative

Immucor Inc.

1 390.0 CCC Negative

Polaris Intermediate Corp. (d/b/a Multiplan)

1 1,300.0 B+ Negative

Tennessee Merger Sub Inc.

Yes 1 865.0 B- Negative
High technology

Blackboard Inc.

1 250.0 B- Stable

Diebold Nixdorf Inc.

1 400.0 B- Negative

Endurance International Group Inc.

1 350.0 B Stable

Pitney Bowes Inc.

4 1,175.0 BB+ Negative

Riverbed Technology Inc.

1 392.4 CCC+ Negative
Homebuilders/real estate companies

K. Hovnanian Enterprises Inc.

Yes 3 354.7 CCC+ Stable

Mack-Cali Realty L.P.

1 300.0 B+ Negative

Washington Prime Group L.P.

1 750.0 CCC+ Negative

Genworth Holdings Inc.

1 698.3 B- Watch Negative

One Call Corp.

2 258.0 B- Negative

Unum Group

1 300.0 BBB Stable
Media and entertainment

Allen Media, LLC

1 300.0 B Stable

AMC Entertainment Holdings Inc.

3 1,570.0 CC Negative

AMC Entertainment Inc.

Yes 1 600.0 CC Negative

Buena Vista Gaming Authority

1 205.0 CC Negative

Carlson Travel Inc.

2 665.0 CCC Negative

Castle US Holding Corp.

Yes 1 300.0 B- Stable

Cengage Learning Inc.

Yes 1 620.0 B- Negative

Diamond Resorts International Inc.

1 600.0 CCC+ Negative

Diamond Sports Group LLC

1 1,753.8 BB- Negative

Downstream Development Authority

1 270.0 CCC Negative

Enterprise Development Authority

1 450.0 CCC+ Watch Negative

Exela Intermediate Co. LLC

Yes 1 1,000.0 CCC- Negative

Getty Images Inc.

1 300.0 B- Watch Negative

Jacobs Entertainment Inc.

1 385.0 B- Watch Negative

Life Time Inc.

1 450.0 CCC+ Developing

McGraw-Hill Global Education Holdings LLC

1 400.0 B- Negative

Mohegan Tribal Gaming Authority

1 500.0 CCC+ Negative

National CineMedia LLC

1 230.0 B Negative

Quad/Graphics Inc.

1 243.5 B Stable

Royal Caribbean Cruises Ltd.

1 650.0 BB Watch Negative

Salem Media Group Inc.

1 231.9 CCC Negative

Staples Inc.

2 3,000.0 B Negative

Townsquare Media Inc.

1 280.1 B Negative

Urban One Inc.

1 350.0 CCC Negative

Vericast Corp.

1 800.0 CCC+ Negative

Viking Cruises Ltd.

3 1,675.0 B- Negative

WeWork Cos. LLC

1 669.0 CCC+ Watch Negative
Metals, mining, and steel

AK Steel Corp.

Yes 3 102.6 B- Negative

Alliance Resource Operating Partners L.P.

Yes 1 400.0 BB- Stable

CONSOL Energy Inc.

1 178.5 B+ Stable

Hi- Crush Inc.

1 450.0 CCC+ Negative

International Wire Group Inc.

1 78.2 CCC Negative

Natural Resource Partners L.P.

1 300.0 B Negative

Peabody Energy Corp.

2 959.0 B+ Stable

SunCoke Energy Partners L.P.

1 650.0 BB- Stable

TMS International Corp.

1 250.0 B+ Stable

United States Steel Corp.

3 1,750.0 B- Stable
Oil and gas

AMID Finance Corp.

Yes 1 425.0 B Watch Negative

Anadarko Holding Co.

Yes 1 10.0 BB+ Watch Negative

Anadarko Petroleum Corp.

1 5.0 BB+ Watch Negative

Antero Resources Corp.

3 1,950.0 B- Negative

ARU Finance Corp.

Yes 1 600.0 CCC+ Negative

Ascent Resources Utica Holdings LLC

1 975.0 CCC+ Negative

Basic Energy Services Inc.

1 265.7 CCC+ Negative

Berry Petroleum Co. LLC

1 350.0 B- Negative

Bruin E&P Partners, LLC

1 600.0 CC Negative

California Resources Corp.

2 244.0 CC Negative

Callon Petroleum Co.

4 1,896.0 CCC+ Negative

Centennial Resource Production LLC

2 645.8 CCC+ Negative

Chaparral Energy Inc.

1 300.0 CCC- Negative

Comstock Resources Inc.

2 1,250.0 CCC+ Watch Positive

Denbury Resources Inc.

6 1,249.3 CCC+ Negative

EnVen Energy Corp.

1 325.0 B- Negative

Forum Energy Technologies Inc.

1 329.6 CCC- Negative

FTS International Inc.

2 404.9 CCC- Negative

Global Marine Inc.

Yes 1 300.0 CCC Negative

Gran Tierra Energy Inc.

1 300.0 B- Stable

Gran Tierra Energy International Holdings Ltd.

Yes 1 300.0 B- Stable

Great Western Finance Corp.

Yes 1 300.0 CCC+ Negative

Gulfport Energy Corp.

4 1,859.9 CCC+ Negative

HighPoint Resources Corp.

2 625.0 CCC+ Negative

ION Geophysical Corp.

2 127.1 CCC+ Negative

Jonah Energy LLC

1 600.0 CCC- Negative

Kerr-McGee Corp.

1 27.0 BB+ Watch Negative

KLX Energy Services Holdings Inc.

1 250.0 CCC+ Stable

Laredo Petroleum Inc.

2 1,000.0 B- Negative

Lonestar Resources America Inc.

1 250.0 CCC- Negative

Matador Resources Co.

1 1,049.9 B- Negative

Montage Resources Corp.

1 510.5 B- Stable

Moss Creek Resources Holdings Inc.

2 1,200.0 CCC+ Negative

Nabors Industries Inc.

6 2,470.4 CCC+ Negative

Nine Energy Service Inc.

1 370.3 CCC+ Stable

Northern Oil and Gas Inc.

1 341.0 CCC+ Negative

Oasis Petroleum Inc.

5 1,825.8 CCC+ Negative

Occidental Petroleum Corp.

2 151.0 BB+ Watch Negative

Oceaneering International Inc.

2 800.0 B+ Negative

Par Petroleum Finance Corp.

Yes 2 400.0 B+ Stable

PDC Energy Inc.

1 102.3 BB Negative

QEP Resources Inc.

3 1,565.1 B Negative

SM Energy Co.

5 2,140.2 CCC+ Negative

Vine Oil & Gas LP

2 880.0 CCC- Negative

W&T Offshore Inc.

1 625.0 CCC+ Negative

Weatherford International LLC

Yes 1 2,100.0 CCC Negative

Bed Bath & Beyond Inc.

2 595.4 B+ Negative

Beverages & More Inc.

1 190.0 CCC+ Negative

CEC Entertainment Inc.

1 215.7 CC Negative

Conn's Inc.

1 227.0 B- Negative

Golden Nugget Inc.

2 2,015.0 B- Negative

Guitar Center Inc.

1 635.0 CCC- Negative

Macy's Retail Holdings Inc.

12 2,263.6 B+ Negative

Party City Holdings Inc.

2 850.0 CC Negative

QVC Inc.

2 660.0 BB- Negative

Rite Aid Corp.

1 237.4 CCC+ Stable

The Fresh Market

1 800.0 CCC Negative

Flexential Intermediate Corp.

1 250.0 CCC+ Negative

Gogo Intermediate Holdings LLC

Yes 1 925.0 CCC+ Watch Negative

GTT Communications Inc.

1 575.0 CCC+ Negative

HC2 Holdings Inc.

1 393.1 B- Stable

Intrado Corp.

2 1,160.6 B- Negative

Trilogy International Partners LLC

1 350.0 B- Stable

American Airlines Group Inc.

2 1,250.0 B- Negative

Avis Budget Car Rental LLC

2 450.0 B+ Watch Negative

Azul Investments LLP

Yes 1 400.0 CCC+ Negative

Kenan Advantage Group Inc.

1 405.0 CCC+ Negative

Navios Acquisition Finance (US) Inc.

1 670.0 B- Negative

Navios Logistics Finance (US) Inc.

Yes 1 375.0 B Negative

Voyager Finance Co.

Yes 1 457.9 B Watch Negative

XO Management Holding Inc.

1 550.0 B+ Stable

Calumet Specialty Products Partners L.P.

1 550.0 B- Negative

CSI Compressco LP

2 645.9 B- Stable

Exterran Energy Solutions L.P.

1 375.0 BB- Stable

Ferrellgas Finance Corp.

Yes 2 975.0 CC Negative

NGL Energy Finance Corp.

Yes 3 1,446.5 B+ Negative

Ruby Pipeline LLC

1 562.5 B+ Negative

Summit Midstream Finance Corp.

Yes 2 723.1 CCC Negative

Talen Energy Supply LLC

7 1,344.4 B Negative

Targa Pipeline Partners LP

1 6.5 BB Stable
Data as of June 19, 2020. The list excludes companies with confidential ratings. Source: S&P Global Ratings Research.

Related Research

This report does not constitute a rating action.

Credit Markets Research:Nicole Serino, New York + 1 (212) 438 1396;
Sudeep K Kesh, New York (1) 212-438-7982;
Research Contributor:Sundaram Iyer, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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