Bangkok--28 Oct--Standard & Poor's
U.S. corporations will see a meaningful amount of debt come due in the next two years. According a report published today by Standard & Poor's, that debt amount should be manageable. However, the maturity schedule will ramp up over the next three years for speculative-grade firms. Standard & Poor's believes that the weak spot in terms of refinancing risk is within the 'B' and 'CCC' rating categories during 2013 and 2014, when approximately $390 billion, or 34%, of the $1.1 trillion of outstanding 'B' and 'CCC' rated corporate debt will come due.
"In our opinion, the main refinancing risk facing speculative-grade issuers during 2013 and 2014 will be the end of the CLOs reinvestment period, and the prospect for little-to-moderate new CLO creation," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "However, we expect that the loan asset class will draw in new investors to partially fill the void. Moreover, through a combination of equity issuance, acquisitions by stronger firms, bond-for-loan takeouts, and loan paydowns, companies that are currently in the 'B' rating class with solid business prospects will likely be able to handle the maturity bubble."
Nevertheless, according to the report, titled "U.S. Refinancing Study: Maturities Should Be Manageable Over Next Five Years, Except For 'B' Rated Issuers In 2013-2014," companies with weak balance sheets that have deteriorating operating fundamentals or are on the losing end of a technological or structural shift in their industry could be forced to cut debt through exchanges or bankruptcy. This could cause a modest uptick in the default rate in the 2013 through 2015. "However," said Ms. Vazza, "we do not envision a recession-level increase in the default rate due to the maturity bubble without an actual double dip in the economy."
The report is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760