CLOs Uncovered

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: 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: 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: 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:

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.