CLOs Uncovered

Leveraged Finance & CLOs Uncovered Podcast: The story behind Infragroup's positive outlook. Hina and Sandeep are joined by Christopher Ewert to discuss Infragroup's strong operating performance, our current outlook for the company, and the areas we are closely monitoring. Our aim is to provide market participants with further advanced analytical insight into corporate credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to.   Click here to view the related article.

Hina and Sandeep discuss Cerba with Remi Bringuier, discussing our current expectations for the company's performance and the areas we are closely monitoring. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to.

After the summer break, Hina and Sandeep are joined by John Finn to discuss our recent Structured Finance conference, new features in CLO documentation, recent CLO performance, and future challenges faced by the market. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to.

Series 6, Episode 5: Before we all break for summer, Hina & Sandeep discuss Ardagh Group with Desiree Menjivar over an in-depth analysis of Ardagh's recent rating action and insights into the key factors shaping the company's performance, and the areas we are closely monitoring.

Leveraged Finance & CLOs Uncovered Podcast: How ASDA's Parent, Bellis Finco PLC, compares with other food retailers in a highly competitive UK landscape. Hina & Sandeep have a discussion with Raquel on credit fundamentals of Asda and its recent refinancing and S&P's expectation for a future trajectory. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to.

In our latest episode, Hina & Sandeep have a discussion with Alphee Roumens on how Merlin continued to access capital markets to finance further growth and focus on its evolution post covid era and the areas we closely monitor.

Hina & Sandeep discuss Altice France with Justine Miquee over an in-depth analysis of Altice France's recent rating action and insights into the key factors shaping the company's performance, and the areas we are closely monitoring.

Series 6, Episode 1: Hina & Sandeep have a discussion with Raquel on credit fundamentals of Nord Anglia and despite raising $600 million term loan add-on, it is able to preserve its ratings, though reducing our recovery estimate for its senior secured debt.

In Episode 33, Scott Tan, Analytical Manager and Managing Director of U.S. Credit Estimates, along with Denis Rudnev, Director of Leveraged Finance at S&P Global Ratings, delved into critical insights from their discussion on "Testing Private Debt's Resilience Through The Credit Estimate Lens." They analyzed over 2,000 credit estimated (CE) issuers, totaling more than $400 billion in outstanding debt, to evaluate the resilience of middle-market issuers amidst the challenges posed by increasing interest rates and margin erosion. Related Document Link: Scenario Analysis: Testing Private Debt's Resilience Through The Credit Estimate Lens| S&P Global Ratings (spglobal.com)

Series 5, Episode 5: Hina & Sandeep wrap up the year with Tia Zhang and discuss a workaround seen in loan documentation allowing borrowers to extend maturities more easily.

In Episode 32, Steve H Wilkinson, Managing Director of Leveraged Finance at S&P Global Ratings, discusses an interesting case study of Trinseo's creative debt structuring that helped the firm procure new debt financing to address pending near-term maturities.  Related Document Link: Leveraged Finance: Creative Structuring Helps Trinseo PLC, Comes With Lowered Recovery Prospects And Higher Costs | S&P Global Ratings (spglobal.com)

In episode 31, Minesh Patel, the U.S. sector lead of leveraged finance at S&P Global Ratings, and Daniel Pianki, the director of U.S. corporate ratings, discuss one of the most significant leveraged buyout transactions this year and Worldpay's credit rating rationale.

In Episode 27, Minesh Patel, the U.S. sector lead of leveraged finance at S&P Global Ratings, and Hanna Zhang, the director of U.S. leveraged finance and recovery, discuss Hanna's article titled: Disparities Emerge By Sector, Rating, Company Size, And Debt Cushion. Key takeaways from the article include: Earnings pressures were evident in the quarter as the momentum in revenue growth decelerated. However, the lower-rated 'B' category exhibited solid year-over-year EBITDA growth. To some extent, these entities even outperformed higher-rated 'BB' peers, particularly those operating in subsectors most susceptible to interest rates (homebuilders and real estate), navigating secular headwinds (TV and radio), or facing challenging comparisons (energy and commodity, retail discretionary).  As the impact of cumulative monetary tightening takes hold, smaller and lower-rated companies face the highest ratings pressure. We found that borrowers with the smallest scale show much worse interest coverage, exacerbated by persistent free operating cash flow deficits. Their particularly weak credit measures differentiate them from larger counterparts. About 21% of 'B-' rated borrowers had EBITDA interest coverage of less than 1x in the 12 months ended on March 31, 2023. First-lien loans with a 30% or more debt cushion hold a significant advantage over those with a negligible or nonexistent cushion (i.e., a first-lien-only debt structure). We calculated an average gap of about 30% in our first-lien lender recovery estimate between the two. However, having a priority claim ahead of the first lien will result in an average reduction of another 2.5%. View related article: U.S. Leveraged Finance Q2 2023 Update: Disparities Emerge By Sector, Rating, Company Size, And Debt Cushion

In episode 30, Minesh Patel, the U.S. sector lead of leveraged finance at S&P Global Ratings, and Hanna Zhang, the director of U.S. leveraged finance and recovery, discuss Hanna's article titled: Disparities Emerge By Sector, Rating, Company Size, And Debt Cushion. Key takeaways from the article include: Earnings pressures were evident in the quarter as the momentum in revenue growth decelerated. However, the lower-rated 'B' category exhibited solid year-over-year EBITDA growth. To some extent, these entities even outperformed higher-rated 'BB' peers, particularly those operating in subsectors most susceptible to interest rates (homebuilders and real estate), navigating secular headwinds (TV and radio), or facing challenging comparisons (energy and commodity, retail discretionary). As the impact of cumulative monetary tightening takes hold, smaller and lower-rated companies face the highest ratings pressure. We found that borrowers with the smallest scale show much worse interest coverage, exacerbated by persistent free operating cash flow deficits. Their particularly weak credit measures differentiate them from larger counterparts. About 21% of 'B-' rated borrowers had EBITDA interest coverage of less than 1x in the 12 months ended on March 31, 2023.   First-lien loans with a 30% or more debt cushion hold a significant advantage over those with a negligible or nonexistent cushion (i.e., a first-lien-only debt structure). We calculated an average gap of about 30% in our first-lien lender recovery estimate between the two. However, having a priority claim ahead of the first lien will result in an average reduction of another 2.5%.   Link to the article discussed in the podcast: U.S. Leveraged Finance Q2 2023 Update: Disparities Emerge By Sector, Rating, Company Size, And Debt Cushion: https://www.spglobal.com/ratings/en/research/articles/230727-leveraged-finance-u-s-leveraged-finance-q2-2023-update-disparities-emerge-by-sector-rating-company-size-12802865

In this latest episode of our Leveraged Finance & CLOs Uncovered Podcast is out. This time, we discuss how rising interest rates and decreasing consumer confidence led to a downgrade of building material maker LSF10 XL Investments S.a.r.l. (Xella).

In episode 29, Nishit Madlani, the U.S. sector lead for business services and autos at S&P Global Ratings and Ben Hirsch, an associate director within the S&P's U.S. business services team, discuss their latest article titled: Cash Flow Drought, Refinancing Wall Heighten Rating Risks In Business And Technology Services; But Some Sectors Are An Oasis. Key takeaways from the article include: Looming refinancing risks and weaker cash flow prospects amid tight credit conditions will weigh on the business and technology services sector through 2025. About 57% of U.S. issuers are projected to generate weaker free operating cash flow (FOCF) in 2023 due to higher interest costs, potentially complicating refinancing efforts. With a large majority of the sector coverage rated 'B' or below, we expect an increase in downgrades to the 'CCC' category as distressed exchanges and payment default scenarios intensify. Distributors, facilities maintenance providers, and software and information services providers are most vulnerable to downside risks, while providers of education and publishing services, security and safety services, and payment and insurance services remain relatively resilient.   Links to articles discussed in the podcast: Cash Flow Drought, Refinancing Wall Heighten Rating Risks In Business And Technology Services; But Some Sectors Are An Oasis: https://www.spglobal.com/ratings/en/research/articles/230627-cash-flow-drought-refinancing-wall-heighten-rating-risks-in-business-and-technology-services-but-some-sector-12768327 What Rising Interest Rates Could Mean For U.S. Business And Technology Services Companies Rated 'B' And 'B-': https://www.spglobal.com/ratings/en/research/articles/230118-what-rising-interest-rates-could-mean-for-u-s-business-and-technology-services-companies-rated-b-and-b-12613219

In this discussion, Minesh Patel, the US sector lead of Leveraged Finance at S&P Global Ratings, teams up with the Director of Leveraged Finance, Hanna Zhang, to explore the key insights presented in Hanna's latest commentary, titled "U.S. Leveraged Finance Q1 2023 Update: Ch-Ch-Ch-Changes -- Material Shifts In Key Credit Stats Drove Downgrades To 'B-' And 'CCC', And Upgrades To 'B-'." Key takeaways from the article include: Within 12 months leading to a rating action, higher debt service costs and slower profit growth were often the leading factors in downgrades to 'B-' and the 'CCC' category (CCC+/CCC/CCC-). Median leverage for companies downgraded to the 'CCC' category rose to 15.5x as EBITDA all but dried up. It was 8x for entities rated 'B-'. We estimate that roughly 37% of 'B' rated issuers employ interest rate hedges. Interest rate sensitivity for 'B-' rated companies is much higher, with roughly 19% employing hedges and 90% floating-rate debt exposure. Speculative-grade borrowers may be returning to cash preservation, but 2022 was loaded with shareholder rewards and heavy working capital investment for companies rated 'B+' and higher. Issues with recovery expectations within the 50%-70% range account for two-thirds of total new issuance in the first quarter of 2023, although average recovery expectations remain near the low end of the post-2017 average.  The commentary to the related article: https://www.spglobal.com/ratings/en/research/articles/230504-leveraged-finance-u-s-leveraged-finance-q1-2023-update-ch-ch-ch-changes-material-shifts-in-key-credit-st-12711927 The hyperlink to the interactive dashboard. https://www.spglobal.com/ratings/en/research-insights/sector-intelligence/interactives/us-leveraged-finance-q1-2023      

In this episode Hina Shoeb & Sandeep Chana spoke with Lukas Brockmann about PortaVentura's amend and extend deal and S&P Global Ratings' rationale for considering it as opportunistic. The theme park operator International Park Holding (PortaVentura) extended maturity and upsized its deal while meeting ongoing leisure demands. This is S&P Global Ratings' only cross sector podcast, providing market participants with advanced analytical insights into Leveraged Finance deals overlaying CLOs. We highlight the key features we're seeing in corporate credits, leveraged loans, and sectors that CLOs are most exposed to. Related Research: International Park Holdings (PortAventura) Outook Revised To Stable On Term Loan Maturity Extension European Lodging Outlook 2023: A Window Is Opening Scenario Analysis: Can European Lodging Companies Sleep Easy About Rising Rates?

U.S. and Canadian companies have been raising prices over the past year or so in an effort to restore margins. A few fully done so, but many others' margins have eroded. In this episode of The Upgrade podcast Hanna Zhang, and Minesh Patel discuss key highlights from our recently published articles,  "U.S. Leveraged Finance Q4 2022 Update: Inflation Pressures Hit Margins, Rate Rises To Hit Cash Flow". The report also tracks key credit trends such as profit growth, debt leverage, interest coverage, and free cash flow within our speculative-grade corporate rating universe.

We are happy to be back with a new series of the Leveraged Finance & CLOs Uncovered podcast. In this episode your regular hosts Hina Shoeb & Sandeep Chana talk with Raquel Delgado Galicia about Nord Anglia's (Bach Finance) refinancing on strong footing thanks to improved performance, reduced leverage, & expected organic growth and the credit factors behind the upgrade to 'B'.

On average, during the previous three recessions (2001, 2009, and 2020), about a quarter of 'B-' rated companies were downgraded to 'CCC', 'CC', or 'C' within the recession year, an indication of the vulnerability of the increasingly crowded 'B-' space. In this episode of The Upgrade podcast Hanna Zhang, Dan Hu, and Minesh Patel discuss key highlights from our recently published articles, "U.S. Leveraged Finance Q3 Update: 'CCC' Buckets Pick Up In CLOs As Cash Flow Generation Falls” and "U.S. BSL CLO And Leveraged Finance Quarterly: Is Winter Coming?"

Diverging trends between benchmark rates and credit spreads in leveraged loan pricing in the majority of quarters over the past 15 years have kept loan funding costs in check, but the trend reversed in 2022. In this episode of The Upgrade podcast Ramki Muthukrishnan, Omkar Athalekar, and Minesh Patel discuss key highlights from our recently published article, "Leveraged Finance: Leveraged Loan Market Could Feel The Pinch Of Higher Benchmark Rates And Risk Premiums For A While".

Loan investors are becoming increasingly concerned about the risk of aggressive out-of-court restructurings, given weaker lender protections within credit documentation. In this episode of The Upgrade podcast Bek Sunnu, Steve Wilkinson, and Minesh Patel discuss key highlights from our recently published article, "Envision Healthcare Corp.'s Two Major Restructurings in 100 Days". Related Articles: Credit FAQ: Envision Healthcare Corp.'s Two Major Restructurings In 100 Days, Sep 02, 2022 EBITDA Addbacks Continue To Stack, Feb 08, 2022 A Closer Look at How Uptier Loan Exchanges Leave Excluded Lenders Behind, June 15, 2021 Default, Transition, and Recovery: Out-Of-Court Restructurings May Lead To Repeat Defaults Among Distressed U.S. And Canadian Corporates, May 11, 2021 A Look At "J. Crew Blocker" Provisions In Loan Agreements, Sep. 23, 2019

Credit quality has proven resilient as some credit measures return to (or in some sectors are better than) pre-pandemic levels. Nevertheless, risks are weighted to the downside as profit growth momentum and macroeconomic activity slow. In this episode of The Upgrade podcast Hanna Zhang and Minesh Patel discuss key highlights from our recently published article titled “U.S. Leveraged Finance Q2 2022 Update: Corporate Borrowers Brace For Slow-Growth Recession”.

Shifting markets has resulted in CLO structures and documents being reassessed. Listen in to this special episode where Hina & Sandeep are joined by Abhijit Pawar, Senior Analyst from our Structured Finance Team.

In this episode Hina & Sandeep are joined by Lukas Brockmann, analyst on Action. Listen how a value discounter in Benelux, with improving geographical diversification supports earnings resilience.

In this episode of The Upgrade podcast, Alessio Di Francesco, Steve Wilkinson, Daniel Hu, and Minesh Patel discuss Envision Healthcare Corp.'s recent distressed exchange, ongoing operational challenges, and rating drivers. Our latest research titled "Envision Healthcare Corp. Upgraded To 'CCC' From 'SD' And Placed On CreditWatch Negative Following Distressed Exchange" can be found here. For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

In this episode of The Upgrade podcast, Hanna Zhang and Minesh Patel discuss interest rate and cash flow pressures faced by our lowly rated ‘B-‘ issuers, as well as key highlights from our recently published article titled “U.S. Leveraged Finance Q1 2022 Update: Free Operating Cash Flow Is Put To The Test As Headwinds Blow Harder.” For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

In this episode we are joined by Pascal Seguier, primary analyst on Tarkett. Listen in on how elevated raw material prices and geopolitical tensions are altering its credit quality. For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

In this episode Hina & Sandeep are joined by Ruth Yang, Global Head of Thought Leadership as their guest. Listen to their discussion and hear about the current challenges to the credit markets. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to. For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

In this episode Hina & Sandeep are joined by Simon Redmond, Sector Lead for Oil & Gas as their guest. Listen to their discussion and hear about the impact of the geopolitical crisis on Oil & Gas prices and whether it may delay the transition to cleaner fuel. Related Articles: Europe's Exit From Russian Gas: 10 Questions On Utilities Extremely High And Volatile Gas Prices Signal A Structural Shift In Europe's Energy Market Russia-Ukraine Conflict. Implications For European Corporate And Infrastructure Sectors For more Leveraged Finance and CLOs Insights visit: Leveraged Finance & CLOs Essentials

Hina Shoeb & Sandeep Chana are joined by Winston Chang -Chief Analytical- Structured Finance practice where they discuss direct and indirect impact of the geopolitical crisis and how some sectors are more impacted than others. Read the related article here >> For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

For our second episode of the year, Hina & Sandeep are joined by. Marta Stojanova from European Leveraged Finance team where we discuss how upgrades outpaced downgrades since the start of 2021, new issuer activity and a deep dive on default rates for 2021 and expectations on 2022. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to. For more Leveraged Finance and CLOs Insights visit: Leveraged Finance & CLOs Essentials. Please note this episode was recorded on 25th February 2022.

In this episode of The Upgrade podcast, Ramki Muthukrishan and Daniel Hu discuss the rapid growth of middle-market lending, as well as key highlights from our recently published article titled “A Credit-Cycle Turn Could Expose Vulnerabilities In The Middle Market”. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to. For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

For our first episode of the year, Hina & Sandeep are joined by Paul Watters, Head of Credit Research for EMEA, to discuss our house views on issues that could impact Corporates in 2022. Listen in and hear about inflationary pressures, evolving geopolitical landscape and default expectations for 2022. Our aim is to provide market participants with further advanced analytical insight into Corporate Credits, CLOs and Leveraged Finance deals, with S&P Global Ratings regular podcast, based on key features we're seeing in corporate credits and sectors that CLOs are exposed to. For more Leveraged Finance and CLOs Insights visit Leveraged Finance & CLOs Essentials

In this episode of The Upgrade podcast, we discuss S&P Global Ratings' fourth annual analysis of EBITDA addbacks. It finds most U.S. speculative-grade corporate issuers continue to be unable to achieve the earnings, debt, and leverage projections. We also discuss if EBITDA adjustments are an accurate picture of future earnings. Related Article: EBITDA Addbacks Continue To Stack

In this episode of The Upgrade podcast, we discuss lender recoveries during the 2020 and 2021 default cycle, as well as key highlights from our recently published article Recovering From COVID-19: Why The Timing Of Bankruptcy and Emergence Matters For Debt Recovery.

In this episode of The Upgrade podcast we discuss research into dilution of First-Lien credit quality from weakening debt structures and loan terms, as well as takeaways from the recent OPAL conference - one of the first in-person CLO conferences since March 2020.

In this episode of The Upgrade podcast we discuss why the default rate is so low - and expected to remain so well into next year - even as the CCC ratings cohort is so large. We also talk about past and present CLO exposure to the CCC category.

In this episode of The Upgrade podcast we discuss the recent large LBO of healthcare sector company Medline. Topics include our views on the company's business, financial and debt recovery prospects, as well as how Medline compares to existing CLO collateral. Guests include analysts from S&P's corporate healthcare, recovery, and CLO teams.

In this episode of The Upgrade podcast we discuss recent research showing how quickly PE backed M&A returned, the higher leverage in PE deals, and which sectors have been most active with M&A. We also look what the proliferation of B- rated issuers, largely due to PE ownership, means for CLO portfolios.

In this episode of The Upgrade podcast we discuss what's new with rising stars and fallen angels based on recent research, along with a detailed discussion of a recent rising star – Advanced Micro Devices.

In today's episode, Hina and Sandeep are joined by Gaetan Michel to discuss Winterfell Financing, the Norther European building materials distributor. Here we discuss the key findings of the company's recent performance and focus in on the ESG components against its €1.345 Bn TLB issue, which is popularly held in Euro CLOs and makes part of LCD's ESG Leveraged Finance Tracker.

In today's episode, Hina and Sandeep are joined by Patrick Janssen from the Corporate Ratings team to discuss Tipico (also know as Tackle S.a.r.l), the German sports betting operator. Listen in as we discuss key findings of the company's recent performance, it's current outlook status and the drivers behind its current recovery rating.

In this episode of The Upgrade podcast we discuss interesting research about the pace of speculative grade upgrades, default rates, and how often out-of-court restructurings are effective in avoiding an additional default or buying time to improve operations.

In this episode of The Upgrade podcast we discuss some interesting research about leverage, cash trends, recovery ratings and how we mine data from financial statements across our rated universe.

In today's episode, Hina and Sandeep are joined by Fabio Manfredonia and Patrick Flynn from the Corporate Ratings team to discuss the U.K. based childcare services provides Busy Bees (also known as Eagle Midco). Listen in as we discuss key findings of the company's recent refinancing, it's current outlook status and the drivers behind its current recovery rating.    

In this episode of The Upgrade podcast we discuss big picture topics: leverage and rating action trends, views from market participants, default forecasts, CLO performance, and new issue volumes this year.

In today's episode, Hina and Sandeep are joined by Marta Stojanova, Director in Corporate Ratings, to discuss her recent publication European Leveraged Finance Recovery in the fourth quarter of 2020 titled “Leverage Increases, Recovery Slips”. Listen in as we discuss how trends in new issue and outstanding average recovery rates, how they vary across industries and why leverage is increasing.

In today's episode, Hina and Sandeep are joined by Paul Watters, Head of Credit Research for EMEA, to discuss a recent publication he co-authored titled “EU Could Meet 70% Vaccination Target By Late July If Production Steps Up”. Listen in as we discuss the key findings of the article, what it means for various sectors within Corporates including the impact of delays in vaccine distributions, risks of new variants and the progress of global immunization programs.