articles Ratings /ratings/en/research/articles/201201-credit-trends-risky-credits-u-s-and-canadian-ccc-rated-companies-are-walking-on-thin-ice-11760023 content esgSubNav
Log in to other products

Login to Market Intelligence Platform


Looking for more?

In This List

Credit Trends: Risky Credits: U.S. And Canadian 'CCC' Rated Companies Are Walking On Thin Ice


Credit Trends: 'BBB' Pulse: Potential Fallen Angels Continue To Decrease Even As Risks Remain


Default, Transition, and Recovery: Global Corporate Default Tally Remains At Four


Credit Trends: U.S. Corporate Bond Yields As Of Jan. 20, 2021


Default, Transition, and Recovery: The Elevated Weakest Links Tally May Signal Sustained Default Pressure In 2021

Credit Trends: Risky Credits: U.S. And Canadian 'CCC' Rated Companies Are Walking On Thin Ice

(Editor's Note: Our monthly "Risky Credits" report will not be published in December but will return in January 2021. This series focuses on U.S. and Canadian 'CCC' rated corporate issuers, as well as their first cousins rated 'B-'. Because the majority of defaults are from companies rated in the 'CCC' category, these and 'B-' rated companies with negative outlooks or ratings on CreditWatch negative are even more important to monitor in this unprecedented downturn and uncertain recovery.)


On This Month's Front Burner

Walking on thin ice:  Although the total number of U.S. and Canadian corporate issuers rated in the 'CCC' category or lower by S&P Global Ratings decreased to 237 as of Oct. 31--its lowest since March--it is substantially higher than pre-pandemic totals. The pandemic has intensified the U.S. economy's heavy reliance on debt, a long-term trend resulting from low borrowing costs. As investors' risk-on approach continues, lower-rated companies continue to build leverage and reduce coverage ratios, as reflected by steady declines in metrics such as EBITDA to interest. This could prove problematic for lower-rated issuers if credit conditions once again tighten (see "U.S. Leveraged Finance Q3 2020 Update: Pandemic-Induced Borrowing Dilutes Recovery Prospects And Lessens Interest Coverage," Nov. 2, 2020).

Defaults keep a steady pace:  The number of defaults in the region rose to 10 in October from eight in the previous month, led by oil and gas defaults with three, followed by consumer products and the media and entertainment sector with two each. Distressed exchanges have dominated defaults since Aug. 1, 2020, at 50% of total defaults. We expect the U.S. trailing-12-month speculative-grade corporate default rate to rise to 9% by September 2021 from 6.3% in September 2020 (see "The U.S. Speculative-Grade Corporate Default Rate Could Rise To 9% By September 2021," Nov. 23, 2020).

Transitioning to 'CCC':  Transition rates to the 'CCC' category from 'B-' have continued to decrease, to 0.5% in October 2020 from 0.6% in September, while transitions to 'B-' from 'B' increased slightly, to 1.7% from 1.1%.

Market conditions continue to improve:  U.S. 'CCC' and 'B' composite spreads showed continued improvement in October 2020, tightening to 949 basis points (bps) and 586 bps, respectively. Meanwhile, speculative-grade (rated 'BB+' or lower) issuance in 2020 is about 58% higher than at this point in 2019, as an increase in investors' risk appetite has allowed for even the lowest-rated issuers to pay down short-term debt. Total year-to-date issuance stands at $292.3 billion in 2020, compared with $185.2 billion in 2019 to date (as of Oct. 31) (see "Global Financing Conditions: Bond Issuance Is Expected To Finish 2020 Up 16% And Decline In 2021," Oct. 26, 2020).

Pockets of upgrades:  For the first time this year, in September and October the number of issuers upgraded to 'B-' from 'CCC+' or lower leveled out with the number of issuers downgraded to 'CCC+' or lower. However, the number of issuers rated 'CCC+' or lower still remains 50% higher than in 2019, suggesting that excess liquidity and low interest rates are only postponing the inevitable for some lower-rated speculative-grade issuers in the riskiest sectors.

Bids steady:  The average bid of 'B' rated loans has dropped marginally since our last report, to 96.2 as of Nov. 5, 2020, which is slightly higher than 95.8 as of Nov. 5, 2019. Meanwhile, the average bid for 'CCC' rated loans has increased by 0.52 bp to 82.2 as of Nov. 5, still higher than 78.9 at this point in 2019.

CLO collateral actions:  The overall credit quality of U.S. collateralized loan obligation (CLO) portfolios continues to stabilize following the spike in corporate downgrades this past spring and summer. The proportion of CLO assets on CreditWatch with negative implications has declined to below 2%, a level not seen since the COVID-19 pandemic began. However, the proportion of CLO assets with negative outlooks remains roughly double the pre-pandemic total (see "Some O/Cs Recover As Junior Note PIK Balances Get Repaid," Oct. 30, 2020).

Chart 1


Chart 2


Chart 3


Chart 4


Chart 5


Chart 6


Chart 7


Chart 8


Chart 9


Chart 10


Chart 11


Chart 12


Top 20 Rating Changes To 'CCC+' Or Lower From 'B-' By Debt Amount (YTD)
Rating date Issuer Country Sector Rating to Rating from Debt amount (mil. US$)

Finastra Ltd.

Cayman Islands High technology CCC+ B- 36,029

Bombardier Inc.

Canada Aerospace and defense CCC+ B- 9,287

First Quantum Minerals Ltd.

Canada Metals, mining, and steel CCC+ B- 6,000

Clear Channel Outdoor Holdings Inc.

U.S. Media and entertainment CCC+ B- 5,835

Hertz Global Holdings Inc.

U.S. Transportation CCC- B- 5,050

Nabors Industries Ltd.

Bermuda Oil and gas exploration and production CCC+ B- 3,725

GTT Communications, Inc.

U.S. Telecommunications CCC+ B- 3,415

Advantage Solutions Inc.

U.S. Consumer products CCC+ B- 3,345

Varsity Brands Holding Co Inc.

U.S. Consumer products CCC+ B- 2,800

CDS Group

Canada Media and entertainment CCC- B- 2,745

Cengage Learning Holdings II Inc.

U.S. Media and entertainment CCC+ B- 2,580

SM Energy Co.

U.S. Oil and gas exploration and production CC B- 2,300

McGraw-Hill Education Inc.

U.S. Media and entertainment CCC+ B- 2,125

Aveanna Healthcare LLC (Aveanna Healthcare Holdings Inc.)

U.S. Health care CCC+ B- 2,091

Wesco Aircraft Holdings Inc. (Wolverine Intermediate Holding Corp.)

U.S. Aerospace and defense CCC+ B- 2,075

FXI Holdings Inc.

U.S. Chemicals, packaging, and environmental services CCC+ B- 2,075

Helix Acquisition Holdings Inc.

U.S. Capital goods CCC+ B- 2,055

Life Time Inc.

U.S. Media and entertainment CCC+ B- 1,984

AVSC Holding Corp.

U.S. Media and entertainment CCC B- 1,980

Syniverse Holdings Inc.

U.S. Telecommunications CCC+ B- 1,922
Data as of Oct. 31, 2020. Source: S&P Global Ratings.

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;
Leveraged Finance:Robert E Schulz, CFA, New York + 1 (212) 438 7808;
Ramki Muthukrishnan, New York + 1 (212) 438 1384;
Research Contributor:Shripati Pranshu, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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, (free of charge), and and (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

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:

Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back