U.S. Leveraged Finance and CLO Weekly (U.S HY Default Rates Rose with Higher Interest Rates; Fitch Published TMT Bankruptcy Case Studies)
This is the Aug. 21, 2023 edition of the U.S. Leveraged Finance and CLO Weekly Newsletter. Fitch Ratings’ U.S. Top Market Concern Bond list rose by $703 million in August 2023, driven by the addition of chemicals company Alkegen ($1.2 billion); golf, city and stadium club owner/operator Constellation Merger Sub (aka Club Corp) ($425 million); and CNG Holdings Inc. ($310 million). Top sectors include healthcare and pharmaceutical (33%), retail (14%) and telecom (23%).
Bond debt in the healthcare sector is dominated by Bausch Health Companies Inc. ($12.7 billion). If Bausch were to file for Chapter 11, it would raise the healthcare sector default rate to 15% from 4%. There are 15 issuers on the Top Market Concern Bond list with bonds outstanding at $1.0 billion or greater.
The top three companies, Bausch, Carvana and Ligado Networks, comprise a total volume of $24.1 billion of bond debt, or 45% of the Top Market Concern Bond list by par value outstanding.
