U.S. broadly syndicated collateralized loan obligations (CLOs) are backed primarily by broadly syndicated loans (BSLs) issued by U.S. companies. The CLO group within S&P Global Ratings' U.S. Structured Finance department believes that a review of the recent rating action reports published by U.S. Corporate Ratings can provide insights on developing sector trends. Accordingly, we have compiled a list of key quotes/paraphrases from recently published Corporate Ratings reports on issuers with loans held in BSL CLOs (see table 1). We note that the quotes highlighted below are company specific and, therefore, may not apply to every issuer within a given sector. Nonetheless, it is our view that this at-a-glance snapshot view of the landscape will add value to CLO market participants.
|From rating reports on corporate issuers with loans held in BSL CLOs|
|Issuer||GIC sector||Quotes from rating actions this past week|
|WestJet Airlines Ltd.||Airlines||"We do not foresee a recovery in air travel demand to pre-pandemic levels until 2024, due, in part, to current international travel restrictions and a resurgence of COVID-19 cases, particularly in the U.S."|
|Specialty Building Products Holdings LLC||Building Products||"Over the last few quarters, we have seen strong demand trends… new construction and repair, and remodeling." "Increased demand for suburban living and low mortgage rates have sparked a surge in homebuilding activity."|
|GCI LLC||Diversified telecommunication services||"Strong consumer broadband demand… remote learning and work-from-home conditions should contribute to customers taking faster data speeds… as more people migrate to over-the-top video platform."|
|Penn National Gaming Inc.||Hotels, restaurants, and leisure||"The company has reopened the majority of its casinos… We believe regional gaming markets will recover faster than destination markets, such as the Las Vegas Strip, because most customers drive to these properties rather than fly."|
|Epic Crude Services L.P.||Oil, gas, and consumable fuels||"Lower volume flows as a result of reduced drilling activity in the Permian basin…" "…exposed to volumetric fluctuations, as approximately 40% (225,000 bbl/day) of Permian capacity is backstopped by minimum volume commitments…"|
|SuperMoose Newco Inc.||Software||"Revenue has seen a sharp decline due to the impact of COVID-19 on license bookings from new customers." "Government customers remain willing to pay for existing services, but are not looking to add new ones…" "A decline in tax revenue from COVID-19 could hurt government budgets."|
|Calceus Acquisition Inc.||Textiles, apparel, and luxury goods||"We expect sequential sales growth to return in the latter half of fiscal 2021...we believe the retail environment will be highly promotional, with the company working to clear-through its dress inventory; the shift to more casual footwear having been accelerated by the higher adoption of remote work."|
|The Pasha Group||Air freight and logistics||"...lower demand for cargo between the U.S. mainland and Hawaii. Demand for auto processing and shipments also decreased due to COVID-19..." "The relocation business was impaired by the government's 90-day stop order issued in March...we expect revenue to recover in the second half of 2020, as cargo and auto volumes rebound and some administrative orders expire."|
|UFC Holdings LLC||Entertainment||"While UFC's revenue and EBITDA declined in the second quarter due to the postponement of live events amid the COVID-19 pandemic, the impact was mitigated by a transition to events without live audiences." "We believe the company will host approximately the same number of events in 2020 as in 2019."|
|CHG PPC Parent LLC||Food products||"...stronger-than-expected recovery in the foodservice business." "U.S. Census Bureau data showed sequential monthly improvement in food services & drinking places revenues." "Retail sales may moderate in the back half of the year due to some initial pantry-loading sales surges."|
|KAR Auction Services Inc.||Commercial services and supplies||"Used car demand has exceeded our previous expectations, with used car prices reaching record levels." "There remain uncertainties regarding the sustainability of the volume pickup."|
|Gol Linhas Aereas Inteligentes S.A.||Airlines||"We now expect global air traffic to fall by as much as 60%-70% in 2020 versus 2019, and 2021 air passenger traffic to decline 30%-40% compared with the 2019 base." "The company has shown considerable flexibility in its costs and operations, efficiently matching capacity to demand, and has reached favorable agreements with aircraft lessors, suppliers, and labor unions."|
|BSL--Broadly syndicated loan. CLO--Collateralized loan obligation. GIC--Global industry classification.|
We are also including a table listing all rating actions on issuers with loans held in U.S. BSL CLOs that have taken place over the past two weeks. For each issuer, we include the 250 cohort rank, to give an indication of how widely held the issuer's loans are across U.S. BSL CLOs rated by S&P Global Ratings. U.S. BSL CLOs, collectively, have had exposure to over 1,500 parent issuers operating across several different global industry classification (GIC) sectors. For the past several quarters, the top 250 parent issuers have made up just over half of the assets under management within S&P Global Ratings-rated U.S. BSL CLOs, while the remaining 1,250+ issuers make up the other half of the exposure. We categorize each of the issuers into cohorts of 250. (For the list of top 250 issuers as of second-quarter 2020, see "The Most Widely Referenced Corporate Obligors In Rated U.S. BSL CLOs: Second-Quarter 2020," published July 9, 2020.)
|Rating Actions Over Past Two Weeks|
|On corporate issuers with loans held in BSL CLOs|
|Action Date||Issuer||GIC Sector||Rating to||Rating from||Action||PR Links||Rank within U.S. BSL CLOs|
|September 14, 2020||APC Automotive Technologies Intermediate Holdings LLC||Auto components||NR||D||Withdrawal||Link||1,001 to 1,250|
|September 14, 2020||Specialty Building Products Holdings LLC||Building products||B-/Positive||B-/Negative||Affirmed||Link||501 to 750|
|September 14, 2020||GCI LLC||Diversified telecommunication services||B-/Watch Pos||B-/Negative||Placed on Watch Pos||Link||1,251 to 1,500|
|September 15, 2020||Town Sports International LLC||Hotels, restaurants, and leisure||CC/Negative||SD||Upgrade||Link||1,001 to 1,250|
|September 15, 2020||Penn National Gaming Inc.||Hotels, restaurants, and leisure||B/Negative||B/Watch Neg||Affirmed; off Watch Neg||Link||top 250|
|September 15, 2020||Calceus Acquisition Inc.||Textiles, apparel, and luxury goods||B/Negative||B/Watch Neg||Affirmed; off Watch Neg||Link||1,001 to 1,250|
|September 16, 2020||Adtalem Global Education Inc.||Diversified consumer services||BB/Watch Neg||BB/Stable||Placed on Watch Neg||Link||751 to 1,000|
|September 16, 2020||Camelot UK Holdco Limited||Interactive media and services||B/Positive||B/Watch Pos||Affirmed; off Watch Pos||Link||251 to 500|
|September 17, 2020||WestJet Airlines Ltd.||Airlines||B-/Negative||B-/Watch Neg||Affirmed; off Watch Neg||Link||top 250|
|September 17, 2020||GBT JerseyCo Ltd.||Hotels, restaurants, and leisure||B/Negative||B+/Negative||Downgrade||Link||251 to 500|
|September 17, 2020||Epic Crude Services L.P.||Oil, gas, and consumable fuels||B-/Negative||B/Negative||Downgrade||Link||1,001 to 1,250|
|September 17, 2020||SuperMoose Newco Inc.||Software||CCC/Negative||CCC+/Negative||Downgrade||Link||251 to 500|
|September 18, 2020||Hanjin International Corp.||Real estate management and development||CCC+/Negative||CCC+/Watch Neg||Affirmed; off Watch Neg||Link||501 to 750|
|September 21, 2020||PGS ASA||Energy equipment and services||SD||CCC/Negative||Downgrade||Link||751 to 1,000|
|September 21, 2020||Frontera Generation Holdings LLC||Electric utilities||CCC/Negative||BB-/Stable||Downgrade; outlook to negative||Link||751 to 1,000|
|September 23, 2020||FTS International Inc.||Energy equipment and services||D||CC/Negative||Downgrade||Link||1,001 to 1,250|
|September 23, 2020||Technicolor S.A.||Entertainment||SD||CC/Watch Neg||Downgrade||Link||751 to 1,000|
|September 23, 2020||The Pasha Group||Air freight and logistics||B-/Negative||B/Stable||Downgrade; outlook to negative||Link||1251 to 1,500|
|September 23, 2020||Travelport Finance (Luxembourg) S.A.R.L||IT services||CC/Watch Neg||CCC/Negative||Downgrade; on Watch Neg||Link||top 250|
|September 23, 2020||UFC Holdings LLC||Entertainment||B/Stable||B/Watch Neg||Affirmed; off Watch Neg||Link||top 250|
|September 24, 2020||Boardriders Inc.||Textiles, apparel, and luxury goods||CCC/Negative||SD||Upgrade||Link||1,001 to 1,250|
|September 24, 2020||CHG PPC Parent LLC||Food products||B/Stable||B-/Negative||Downgrade||Link||501 to 750|
|September 24, 2020||Garrett Motion Inc.||Auto components||D||B/Watch Neg||Downgrade||Link||501 to 750|
|September 24, 2020||KAR Auction Services Inc.||Commercial services and supplies||B/Negative||B/Watch Neg||Affirmed; off Watch Neg||Link||501 to 750|
|September 24, 2020||Pioneer UK Midco 1 Limited||Life sciences, tools, and services||B-/Stable||B/Negative||Downgrade||Link||251 to 500|
|September 25, 2020||Gol Linhas Aereas Inteligentes S.A.||Airlines||CCC+/Developing||CCC-/Watch Neg||Upgrade||Link||1,001 to 1,250|
|BSL--Broadly syndicated loan. CLO--Collateralized loan obligation.|
This report does not constitute a rating action.
|Primary Credit Analysts:||Daniel Hu, FRM, New York (1) 212-438-2206;|
|Robert E Schulz, CFA, New York (1) 212-438-7808;|
|Secondary Contact:||Bryan A Ayala, New York + 1 (212) 438 9012;|
|CLO Sector Lead:||Stephen A Anderberg, New York (1) 212-438-8991;|
|Analytical Manager, Leveraged Finance:||Ramki Muthukrishnan, New York (1) 212-438-1384;|
No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: firstname.lastname@example.org.