Key Takeaways
- The global weakest links tally increased to 202 as of June 27, 2022, from 193 (as of April 25, 2022).
- The jump in weakest links was driven by an increase in issuers from the retail and restaurant and consumer products sectors, the majority of which are North America-based and show signs of deteriorating consumer confidence and demand.
- Despite increasing risks, all sector's negative bias remains below its five-year average.
The number of weakest links--issuers rated 'B-' or lower by S&P Global Ratings with negative outlooks or ratings on CreditWatch with negative implications--increased to 202 as of June 27, from 193 as of April 25, , driven by an increase in weakest links from the retail and restaurant and consumer products sectors (see chart 1). Ninety percent of additions from these sectors were from North America, where some lower-rated corporates are finding it more difficult to pass on the increase in input costs driven by multi-decade high inflation. We can expect consumer-focused sectors to have the strongest rating headwinds, especially those with a relatively high proportion of entities rated in the 'B-' and 'CCC' categories (see "Global Credit Conditions Q3 2022: Resurfacing Credit Headwinds," June 30, 2022).
Chart 1
Despite the increase in the weakest link tally, most sectors (except for health care, automotive, homebuilders, and financial institutions) remain below their tallies at this point in 2021, as many lower-rated issuers have been able to push out maturities after nearly two years of favorable refinancing terms (see chart 2). Additionally, the current speculative-grade negative bias--issuers with a negative outlook or on CreditWatch negative--for all sectors, is well below their five-year averages (see chart 3), signaling a lower downgrade risk in the near term. However, inflation, energy security, geopolitical uncertainty, and rapidly tightening financing are increasingly pressuring profitability and cash flow generation for speculative grade issuers, resulting in negative rating pressures mounting during 2023 (see chart 4).
Chart 2
Chart 3
Chart 4
Table 1
Weakest Links By Region | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number of Weakest Links ( B- and below Neg/Negative) | Five-year averages | 10-year averages | Total rated speculative issuers | % Of weakest links to total region wise speculative rated issuers | Current distribution by region (%) | Distribution by region 12-months prior (%) | ||||||||||
U.S. | 127 | 192 | 146 | 1531 | 8.3% | 62.9% | 63.3% | |||||||||
Europe | 46 | 42 | 32 | 584 | 7.9% | 22.8% | 21.9% | |||||||||
Asia/Pacific | 8 | 10 | 8 | 69 | 11.6% | 4.0% | 4.0% | |||||||||
Canada | 7 | 10 | 9 | 87 | 8.0% | 3.5% | 4.7% | |||||||||
Latin America | 5 | 13 | 16 | 115 | 4.3% | 2.5% | 4.7% | |||||||||
EEMEA | 9 | 10 | 11 | 77 | 11.7% | 4.5% | 1.3% | |||||||||
Data as of June 27, 2022. Source: S&P Global Ratings Research . EEMEA -- Eastern Europe/Middle East/Africa |
Table 2
Issuers Rated ‘B-’ Or Lower With A Negative Outlook Or On CreditWatch With Negative Implications | ||||||||
---|---|---|---|---|---|---|---|---|
Rating | Outlook / CreditWatch Placement | Subsector | Issuer | |||||
B- | CreditWatch Negative | Capital goods | CIRCOR International Inc., | |||||
B- | CreditWatch Negative | Homebuilders/real estate companies | Greenland Hong Kong Holdings Ltd. | |||||
B- | CreditWatch Negative | Homebuilders/real estate companies | PT Kawasan Industri Jababeka Tbk. | |||||
B- | CreditWatch Negative | Metals, mining, and steel | Mongolian Mining Corp. | |||||
B- | CreditWatch Negative | Telecommunications | Syniverse Technologies Corp. | |||||
B- | Outlook Negative | Aerospace and defense | Dynasty Acquisition Co. Inc., | |||||
B- | Outlook Negative | Automotive | EnTrans International, LLC | |||||
B- | Outlook Negative | Automotive | IXS Holdings Inc., | |||||
B- | Outlook Negative | Automotive | UC Holdings Inc. | |||||
B- | Outlook Negative | Automotive | Wheel Pros Inc., | |||||
B- | Outlook Negative | Capital goods | Artera Services LLC, | |||||
B- | Outlook Negative | Capital goods | ASP Unifrax Holdings Inc., | |||||
B- | Outlook Negative | Capital goods | Brand Industrial Services Inc., | |||||
B- | Outlook Negative | Capital goods | Hyster-Yale Materials Handling Inc. | |||||
B- | Outlook Negative | Capital goods | Norican Global A/S | |||||
B- | Outlook Negative | Capital goods | PLH Group Inc., | |||||
B- | Outlook Negative | Capital goods | QualTek LLC | |||||
B- | Outlook Negative | Capital goods | Wittur International Holding GmbH | |||||
B- | Outlook Negative | Consumer products | Blue Ribbon LLC, | |||||
B- | Outlook Negative | Consumer products | Boparan Holdings Ltd. | |||||
B- | Outlook Negative | Consumer products | Edward Don & Co. Holdings, LLC | |||||
B- | Outlook Negative | Consumer products | H-Food Holdings LLC | |||||
B- | Outlook Negative | Consumer products | KAMC Holdings Inc., | |||||
B- | Outlook Negative | Consumer products | Knowlton Development Corp. Inc., | |||||
B- | Outlook Negative | Consumer products | Kronos Acquisition Holdings Inc. | |||||
B- | Outlook Negative | Consumer products | Sierra Enterprises LLC | |||||
B- | Outlook Negative | Consumer products | Vincent Topco BV (NL) | |||||
B- | Outlook Negative | Consumer products | Wahoo Fitness Acquisition LLC | |||||
B- | Outlook Negative | Financial institutions | Albaraka Turk Katilim Bankasi AS | |||||
B- | Outlook Negative | Financial institutions | Banco Agricola S.A | |||||
B- | Outlook Negative | Forest products and building materials | Compact Bidco B.V. | |||||
B- | Outlook Negative | Forest products and building materials | Ideal Standard International S.A. | |||||
B- | Outlook Negative | Health care | Alvogen Pharma US Inc., | |||||
B- | Outlook Negative | Health care | Greenway Health, LLC | |||||
B- | Outlook Negative | Health care | Lima Corporate S.p.a. | |||||
B- | Outlook Negative | High technology | Avaya Holdings Corp. | |||||
B- | Outlook Negative | High technology | Franklin Ireland Topco Ltd. | |||||
B- | Outlook Negative | High technology | Imperva Inc., | |||||
B- | Outlook Negative | High technology | MYOB Invest Co Pty Ltd. | |||||
B- | Outlook Negative | Homebuilders/real estate companies | Diok Real Estate AG | |||||
B- | Outlook Negative | Homebuilders/real estate companies | KWG Group Holdings Ltd. | |||||
B- | Outlook Negative | Media and entertainment | Audacy Inc. | |||||
B- | Outlook Negative | Media and entertainment | Beasley Broadcast Group Inc. | |||||
B- | Outlook Negative | Media and entertainment | ConvergeOne Holdings Inc. | |||||
B- | Outlook Negative | Media and entertainment | EagleView Technology Corp. | |||||
B- | Outlook Negative | Media and entertainment | Global University Systems Holding BV | |||||
B- | Outlook Negative | Media and entertainment | Hanjin International Corp. | |||||
B- | Outlook Negative | Media and entertainment | International Park Holdings B.V. | |||||
B- | Outlook Negative | Media and entertainment | Lindblad Expeditions Holdings Inc. | |||||
B- | Outlook Negative | Media and entertainment | Peak Jersey Holdco Ltd. | |||||
B- | Outlook Negative | Media and entertainment | Piolin Bidco S.A.U. | |||||
B- | Outlook Negative | Media and entertainment | Sugarhouse HSP Gaming Prop. Mezz. L.P. | |||||
B- | Outlook Negative | Media and entertainment | TEG Pty Ltd. | |||||
B- | Outlook Negative | Metals, mining, and steel | IAMGOLD Corp. | |||||
B- | Outlook Negative | Metals, mining, and steel | Tacora Resources Inc. | |||||
B- | Outlook Negative | Retail/restaurants | GPS Hospitality Holding Co. LLC | |||||
B- | Outlook Negative | Retail/restaurants | Kirk Beauty 2 Beteiligungs GmbH and Co. KG | |||||
B- | Outlook Negative | Retail/restaurants | Party City Holdings Inc., | |||||
CCC+ | CreditWatch Negative | Consumer products | JHW Alphia Holdings Inc. | |||||
CCC+ | CreditWatch Negative | Financial institutions | Credivalores - Crediservicios SAS | |||||
CCC+ | CreditWatch Negative | High technology | Diebold Nixdorf Inc. | |||||
CCC+ | CreditWatch Negative | Media and entertainment | PlayPower Holdings Inc. | |||||
CCC+ | Outlook Negative | Aerospace and defense | Forming Machining Industries Holdings, LLC | |||||
CCC+ | Outlook Negative | Aerospace and defense | New Constellis Borrower, LLC | |||||
CCC+ | Outlook Negative | Aerospace and defense | Triumph Group Inc. | |||||
CCC+ | Outlook Negative | Aerospace and defense | Wesco Aircraft Holdings Inc. | |||||
CCC+ | Outlook Negative | Aerospace and defense | WP CPP Holdings LLC | |||||
CCC+ | Outlook Negative | Automotive | Accuride Corp. | |||||
CCC+ | Outlook Negative | Automotive | Cooper-Standard Holdings Inc., | |||||
CCC+ | Outlook Negative | Automotive | McLaren Group Ltd. | |||||
CCC+ | Outlook Negative | Automotive | Standard Profil Automotive GmbH | |||||
CCC+ | Outlook Negative | Capital goods | FGI Acquisition Corp. | |||||
CCC+ | Outlook Negative | Capital goods | JSG I Inc. | |||||
CCC+ | Outlook Negative | Capital goods | Mangrove Luxco III Sarl | |||||
CCC+ | Outlook Negative | Capital goods | Praesidiad Group Ltd. | |||||
CCC+ | Outlook Negative | Capital goods | Wastequip, LLC | |||||
CCC+ | Outlook Negative | Capital goods | Yak Access, LLC | |||||
CCC+ | Outlook Negative | Chemicals, packaging, and environmental services | Anchor Glass Container Corp. | |||||
CCC+ | Outlook Negative | Chemicals, packaging, and environmental services | Transcendia Holdings Inc., | |||||
CCC+ | Outlook Negative | Chemicals, packaging, and environmental services | Zep Inc. | |||||
CCC+ | Outlook Negative | Consumer products | 8th Avenue Food & Provisions Inc., | |||||
CCC+ | Outlook Negative | Consumer products | Anastasia Holdings, LLC | |||||
CCC+ | Outlook Negative | Consumer products | Arctic Glacier Group Holdings Inc., | |||||
CCC+ | Outlook Negative | Consumer products | Calceus Acquisition Inc., | |||||
CCC+ | Outlook Negative | Consumer products | CoolSys Inc., | |||||
CCC+ | Outlook Negative | Consumer products | Halo Buyer Inc. | |||||
CCC+ | Outlook Negative | Consumer products | INW Manufacturing, LLC | |||||
CCC+ | Outlook Negative | Consumer products | Missouri TopCo Ltd. | |||||
CCC+ | Outlook Negative | Consumer products | MVK Intermediate Holdings, LLC | |||||
CCC+ | Outlook Negative | Consumer products | Never Slip Topco Inc. | |||||
CCC+ | Outlook Negative | Consumer products | New TMW LLC | |||||
CCC+ | Outlook Negative | Consumer products | P&L Development Holdings, LLC | |||||
CCC+ | Outlook Negative | Consumer products | pH Beauty Holdings I Inc., | |||||
CCC+ | Outlook Negative | Consumer products | SIRVA Inc. | |||||
CCC+ | Outlook Negative | Financial institutions | Altisource Portfolio Solutions S.A. | |||||
CCC+ | Outlook Negative | Financial institutions | Ravnaq-bank Private Open Joint-Stock Commercial Bank | |||||
CCC+ | Outlook Negative | Health care | Alcami Corp. | |||||
CCC+ | Outlook Negative | Health care | BVI Holdings Mayfair Ltd. | |||||
CCC+ | Outlook Negative | Health care | Femur Buyer Inc., | |||||
CCC+ | Outlook Negative | Health care | Lannett Co. Inc., | |||||
CCC+ | Outlook Negative | Health care | Medical Depot Holdings Inc., | |||||
CCC+ | Outlook Negative | Health care | TecoStar Holdings Inc., | |||||
CCC+ | Outlook Negative | Homebuilders/real estate companies | IRSA Inversiones y Representaciones S.A. | |||||
CCC+ | Outlook Negative | Media and entertainment | Bioplan USA Inc., | |||||
CCC+ | Outlook Negative | Media and entertainment | Codere Luxembourg 2 S.a.r.l | |||||
CCC+ | Outlook Negative | Media and entertainment | Comet Bidco Ltd. | |||||
CCC+ | Outlook Negative | Media and entertainment | CWT Travel Group Inc., | |||||
CCC+ | Outlook Negative | Media and entertainment | Diamond Sports Holdings LLC | |||||
CCC+ | Outlook Negative | Media and entertainment | Dice Acquico | |||||
CCC+ | Outlook Negative | Media and entertainment | Enjoy S.A. | |||||
CCC+ | Outlook Negative | Media and entertainment | Hurtigruten Group AS | |||||
CCC+ | Outlook Negative | Media and entertainment | iQor Holdings Inc. | |||||
CCC+ | Outlook Negative | Media and entertainment | Lakeland Holdings, LLC | |||||
CCC+ | Outlook Negative | Media and entertainment | Learfield Communications, LLC | |||||
CCC+ | Outlook Negative | Media and entertainment | Monitronics International Inc. | |||||
CCC+ | Outlook Negative | Media and entertainment | Tribe Buyer LLC | |||||
CCC+ | Outlook Negative | Media and entertainment | Universal Entertainment Corp. | |||||
CCC+ | Outlook Negative | Media and entertainment | Vericast Corp. | |||||
CCC+ | Outlook Negative | Media and entertainment | Viking Cruises Ltd. | |||||
CCC+ | Outlook Negative | Media and entertainment | Vue International Bidco plc | |||||
CCC+ | Outlook Negative | Media and entertainment | WeWork Companies LLC | |||||
CCC+ | Outlook Negative | Metals, mining, and steel | Conuma Resources Ltd. | |||||
CCC+ | Outlook Negative | Metals, mining, and steel | Phoenix Services International LLC | |||||
CCC+ | Outlook Negative | Midstream | Epic Crude Services, LP | |||||
CCC+ | Outlook Negative | Midstream | Epic Y Grade Services, LP | |||||
CCC+ | Outlook Negative | Oil and gas | Ensign Energy Services Inc. | |||||
CCC+ | Outlook Negative | Oil and gas | HGIM Corp. | |||||
CCC+ | Outlook Negative | Retail/restaurants | 99 cents only stores LLC | |||||
CCC+ | Outlook Negative | Retail/restaurants | Belk Inc., | |||||
CCC+ | Outlook Negative | Retail/restaurants | Carrols Restaurant Group Inc., | |||||
CCC+ | Outlook Negative | Retail/restaurants | Foodco Bondco SAU | |||||
CCC+ | Outlook Negative | Retail/restaurants | L1R HB Finance Ltd. | |||||
CCC+ | Outlook Negative | Retail/restaurants | Moran Foods, LLC | |||||
CCC+ | Outlook Negative | Retail/restaurants | Quidditch Acquisition Inc., | |||||
CCC+ | Outlook Negative | Telecommunications | PrJSC VF Ukraine | |||||
CCC+ | Outlook Negative | Telecommunications | U.S. TelePacific Holdings Corp. | |||||
CCC+ | Outlook Negative | Transportation | Toro Private Holdings I, Ltd. | |||||
CCC+ | Outlook Negative | Transportation | URS Holdco Inc., | |||||
CCC+ | Outlook Negative | Utilities | AES Argentina Generacion S.A | |||||
CCC+ | Outlook Negative | Utilities | Ellaktor S.A. | |||||
CCC+ | Outlook Negative | Utilities | ESKOM Holdings SOC Ltd. | |||||
CCC | CreditWatch Negative | Health care | Envision Healthcare Corp. | |||||
CCC | CreditWatch Negative | Transportation | Ukrainian Railways JSC | |||||
CCC | Outlook Negative | Automotive | Bright Bidco B.V. | |||||
CCC | Outlook Negative | Automotive | Dayco LLC | |||||
CCC | Outlook Negative | Automotive | K&N Parent Inc., | |||||
CCC | Outlook Negative | Capital goods | Arvos LuxCo S.a.r.l. | |||||
CCC | Outlook Negative | Capital goods | The Cleaver-Brooks Co. Inc., | |||||
CCC | Outlook Negative | Chemicals, packaging, and environmental services | Hoffmaster Group Inc. | |||||
CCC | Outlook Negative | Chemicals, packaging, and environmental services | Strategic Materials Holding Corp. | |||||
CCC | Outlook Negative | Consumer products | Boardriders Inc., | |||||
CCC | Outlook Negative | Consumer products | Canopy Growth Corp. | |||||
CCC | Outlook Negative | Consumer products | CatLuxe Sarl | |||||
CCC | Outlook Negative | Consumer products | Frigoglass SAIC | |||||
CCC | Outlook Negative | Consumer products | GEO Group (The) Inc. | |||||
CCC | Outlook Negative | Consumer products | Isagenix Worldwide Inc., | |||||
CCC | Outlook Negative | Consumer products | KCIBT Holdings LP | |||||
CCC | Outlook Negative | Consumer products | KNB Holdings Corp. | |||||
CCC | Outlook Negative | Consumer products | NSA International, LLC | |||||
CCC | Outlook Negative | Consumer products | Outerstuff LLC | |||||
CCC | Outlook Negative | Consumer products | Premier Brands Group Holdings LLC | |||||
CCC | Outlook Negative | Consumer products | Rodan & Fields, LLC | |||||
CCC | Outlook Negative | Consumer products | Serta Simmons Bedding LLC | |||||
CCC | Outlook Negative | Consumer products | TMK Hawk Parent, Corp. | |||||
CCC | Outlook Negative | Financial institutions | Amigo Loans Ltd. | |||||
CCC | Outlook Negative | Financial institutions | Arab Tunisian Bank | |||||
CCC | Outlook Negative | Financial institutions | Banque de Tunisie et des Emirats | |||||
CCC | Outlook Negative | Forest products and building materials | PT Sawit Sumbermas Sarana Tbk | |||||
CCC | Outlook Negative | Health care | BW Homecare Holdings LLC | |||||
CCC | Outlook Negative | Health care | Endo International PLC | |||||
CCC | Outlook Negative | Health care | Vyaire Medical Inc., | |||||
CCC | Outlook Negative | High technology | 4L Topco Corp. | |||||
CCC | Outlook Negative | Homebuilders/real estate companies | Adler Group S.A. | |||||
CCC | Outlook Negative | Media and entertainment | AVSC Holding Corp. | |||||
CCC | Outlook Negative | Media and entertainment | CareerBuilder, LLC | |||||
CCC | Outlook Negative | Media and entertainment | Cineworld Group PLC | |||||
CCC | Outlook Negative | Media and entertainment | Data Axle Inc. | |||||
CCC | Outlook Negative | Media and entertainment | Equinox Holdings Inc. | |||||
CCC | Outlook Negative | Media and entertainment | Hornblower HoldCo, LLC | |||||
CCC | Outlook Negative | Media and entertainment | Odyssey Europe Holdco S.a r.l. | |||||
CCC | Outlook Negative | Metals, mining, and steel | PT Bumi Resources Tbk. | |||||
CCC | Outlook Negative | Oil and gas | Nine Energy Service Inc., | |||||
CCC | Outlook Negative | Oil and gas | Transocean Ltd. | |||||
CCC | Outlook Negative | Oil and gas | Vantage Drilling International | |||||
CCC | Outlook Negative | Retail/restaurants | Burger BossCo Intermediate Inc., | |||||
CCC | Outlook Negative | Telecommunications | Dawn Acquisitions LLC | |||||
CCC | Outlook Negative | Telecommunications | Logix Intermediate Holding Corp. | |||||
CCC- | CreditWatch Negative | Oil and gas | DTEK Renewables B.V. | |||||
CCC- | Outlook Negative | Consumer products | Takko Fashion S.a.r.l. | |||||
CCC- | Outlook Negative | Financial institutions | CORESTATE Capital Holding S.A. | |||||
CCC- | Outlook Negative | Media and entertainment | All Day AcquisitionCo LLC | |||||
CCC- | Outlook Negative | Media and entertainment | Exela Technologies Inc. | |||||
CCC- | Outlook Negative | Metals, mining, and steel | Mountain Province Diamonds Inc. | |||||
CC | CreditWatch Negative | Financial institutions | Belagroprombank JSC | |||||
CC | CreditWatch Negative | Health care | Carestream Health Inc. | |||||
CC | CreditWatch Negative | Retail/restaurants | Eurotorg LLC | |||||
CC | Outlook Negative | Automotive | SK HoldCo LLC | |||||
CC | Outlook Negative | Chemicals, packaging, and environmental services | Schur Flexibles GmbH | |||||
CC | Outlook Negative | Consumer products | Output Services Group Inc., | |||||
CC | Outlook Negative | Homebuilders/real estate companies | R&F Properties (HK) Co. Ltd. | |||||
CC | Outlook Negative | Retail/restaurants | Rite Aid Corp. | |||||
CC | Outlook Negative | Transportation | SAS AB | |||||
Data as of June 27, 2022. Source: S&P Global Ratings Research . Country is based on location of incorporation. |
Related Research:
- Credit Conditions North America Q3 2022: Credit Headwinds Turn Stormy, June 28, 2022
- Recession Risk And Ratings: What Recession Could Mean For European Speculative Grade Nonfinancial Corporates, June 23, 2022
- Which Emerging Markets Are Most At Risk From Slower-Than-Expected Growth In China?, April 26, 2022
- For U.S., Ripple Effects Of Russia-Ukraine Are More Concerning Than Direct Exposure, March 18, 2022
- The U.S. Distress Ratio Remains Stable, But Spreads Are Rising, March 9, 2022
- Bright Outlook For North American 'CCC' Issuers After Falling Over 40% In 2021, Jan. 19, 2021
This report does not constitute a rating action.
Credit Markets Research: | Nicole Serino, New York + 1 (212) 438 1396; nicole.serino@spglobal.com |
Patrick Drury Byrne, Dublin (00353) 1 568 0605; patrick.drurybyrne@spglobal.com | |
Leveraged Finance Europe: | Marta Stojanova, London + 44 20 7176 0476; marta.stojanova@spglobal.com |
Research Contributor: | Nivritti Mishra, Mumbai; Nivritti.Mishra@spglobal.com |
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