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Default, Transition, and Recovery: North American Consumer-Related Sectors Push The Weakest Link Tally To More Than 200

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

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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

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Chart 3

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Chart 4

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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:

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
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