(Editor's Note: Our "Risky Credits" series focuses on U.S. and Canadian 'CCC' category rated corporate issuers because most defaults are typically by issuers rated in the 'CCC' category.)
Key Takeaways
- The number of North American issuers rated 'CCC+' or below held steady at 149 in April 2025, unchanged from January.
- However, the share of issuers downgraded to 'CCC+' or lower rose to 1.2% in April--up from the previous three-month average--driven largely by the high tech sector. The overall tally remained unchanged over the last three months due to several defaults and withdrawn ratings.
- Refinancing risk among 'B-' and below rated issuers is most pronounced in the media and entertainment, telecommunications, and high tech sectors, which together face over $60 billion in debt maturing through 2026.
As of April 2025, the number of North American issuers rated 'CCC+' and below remained steady at 149, unchanged from January. However, total debt volume declined to $270 billion from $349 billion as of the end of January. Looking at one rating level higher, the number of 'B-' rated issuers with negative outlooks dropped by nine during the same period, the total debt associated with these issuers--either on CreditWatch negative or with a negative outlook--surged nearly 50%, rising to $97 billion in April from $66 billion in January. This sharp increase was primarily driven by the downgrade of Great Canadian Gaming Corp., a Canada-based regional gaming operator, to 'B-', with nearly $30 billion in outstanding debt (see "Great Canadian Gaming Corp. Downgraded To 'B-' On Weaker-Than-Expected Credit Measures; Outlook Stable," April 1, 2025).
Chart 1
Despite the stabilization of overall risky credits, downward transitions into the 'CCC+' and below rating category increased since the previous three months as downgrades outpaced upgrades. In the latest period, 12 issuers were downgraded into this rating tier, compared with only five that were upgraded out (see chart 2). The tally remained unchanged due to a number of defaults and withdrawn ratings.
The high tech sector saw the most downgrades, with three issuers affected. The consumer products, and oil and gas sectors each recorded two downgrades. Among the new entrants, Ivanti Software Inc. and Newfold Digital Holdings Group Inc. are both facing near-term refinancing risks, with revolving credit facilities maturing in less than 12 months. The third high tech issuer, Polaris Parent LLC, was downgraded to 'CCC+' on slower-than-anticipated revenue growth and ongoing cash burn.
Chart 2
The media and entertainment, and consumer products sectors continue to lead with the most risky credits, each with 26 issuers rated 'CCC+' and below. High tech follows, with 18 issuers--more than half of which carry a negative outlook or are on CreditWatch negative. Most sectors have seen a decline in the number of high-risk credits compared with the same period of 2024. However, the media and entertainment, high tech, oil and gas, financial institutions, and homebuilders and real estate sectors have all experienced an increase in issuers rated 'CCC+' and below since April 2024.
Chart 3
Chart 4
Near-term refinancing challenges for 'B-' and below rated issuers are more pronounced among the media and entertainment, telecommunications, and high-tech sectors. The media and entertainment sector leads with the highest 'B-' and below rated debt maturing in 2025 and 2026 with $22.3 billion. This is closely followed by telecommunications, high tech, and health care with $21.9 billion, $17.1 billion, and $15.5 billion respectively.
Chart 5
Since the start of the year, downgrades across U.S. broadly syndicated loan (BSL) collateralized loan obligation (CLO) obligors have outnumbered upgrades. Additionally, 'CCC' category and nonperforming exposures across reinvesting U.S. BSL CLOs have gradually increased. Some issuers widely held in CLOs have recently had ratings placed on CreditWatch negative or had outlooks revised to negative.
Some of these rating actions are due to the impact of tariffs. For example, we placed the ratings on Harbor Freight Tools USA Inc., which has a BSL CLO exposure of 0.21%, on CreditWatch negative on April 16. There has been a small uptick in exposure to issuers with ratings on CreditWatch negative, while the overall exposure to issuers with a negative rating outlook remains low by historical standards, at least for now.
Table 1
U.S. BSL CLO Index metrics | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
As of date (%) | 'B-' | 'CCC’ category | Nonperforming assets | CreditWatch negative | Negative outlook | |||||||
April 30, 2024(i) | 25.69 | 6.13 | 0.92 | 0.92 | 15.82 | |||||||
May 31, 2024(i) | 25.34 | 6.4 | 0.41 | 0.93 | 15.47 | |||||||
June 30, 2024(i) | 25.24 | 6.11 | 0.33 | 1.13 | 14.92 | |||||||
July 31, 2024(i) | 25.11 | 6.2 | 0.27 | 0.93 | 15 | |||||||
Aug. 30, 2024(i) | 25.09 | 6.16 | 0.52 | 1.1 | 14.68 | |||||||
Sept. 30, 2024(i) | 24.98 | 6.15 | 0.52 | 1.43 | 14.9 | |||||||
Oct. 31, 2024(i) | 24.62 | 5.99 | 0.51 | 1.27 | 14.2 | |||||||
Nov. 30, 2024(i) | 25.23 | 5.19 | 0.65 | 1.16 | 13.3 | |||||||
Dec. 31, 2024(i) | 25.48 | 5.32 | 0.46 | 1.25 | 13.33 | |||||||
Jan. 31, 2025(i) | 25.39 | 5.43 | 0.44 | 0.68 | 13.23 | |||||||
Feb. 28, 2025(i) | 24.71 | 5.29 | 0.7 | 0.83 | 13.16 | |||||||
March 31, 2025(ii) | 24.22 | 5.68 | 0.71 | 1.09 | 12.9 | |||||||
April 22, 2025(iii) | 24.23 | 5.92 | 0.76 | 1.25 | 12.81 | |||||||
BSL CLO--Broadly syndicated loan collateralized loan obligation. SPWARF--S&P Global Ratings' weighted average rating factor. O/C--Overcollateralization.(i)Index metrics based on end of month ratings and pricing data and as of month portfolio data available. (ii)Index metrics based on March 31, 2025, ratings and pricing data and latest portfolio data available to us. (iii)Index metrics based on April 22, 2025, ratings and pricing data and latest portfolio data available to us. |
Table 2
Downgrades into 'CCC' category beginning 2025 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Rating action date | Issuer | Country | Sector | Rating to | Rating from | |||||||
1/13/2025 | Alvogen Pharma US, Inc. (Alvogen Lux Holdings S.a.r.l.) | United States | Health Care | CCC+ | B- | |||||||
1/14/2025 | JOANN Inc. | United States | Retail/Restaurants | CCC | B- | |||||||
1/16/2025 | College Parent LP | United States | Media & Entertainment | CCC+ | B- | |||||||
1/23/2025 | Hubbard Radio, LLC | United States | Media & Entertainment | CCC+ | B- | |||||||
1/28/2025 | ModivCare Inc. | United States | Health Care | CCC+ | B- | |||||||
2/13/2025 | Newfold Digital Holdings Group, Inc. | United States | High Technology | CCC+ | B- | |||||||
2/18/2025 | Ascend Performance Materials Operations LLC | United States | Chemicals, Packaging & Environmental Services | CCC+ | B | |||||||
2/21/2025 | Claros Mortgage Trust, Inc | United States | Finance Co. | CCC+ | B- | |||||||
3/5/2025 | Ingenovis Health, Inc. | United States | Health Care | CCC+ | B- | |||||||
3/5/2025 | Ivanti Software, Inc. | United States | High Technology | CCC+ | B- | |||||||
3/14/2025 | E.W. Scripps Company (The) | United States | Media & Entertainment | CC | B- | |||||||
3/17/2025 | Polaris Parent, LLC | United States | High Technology | CCC+ | B- | |||||||
4/8/2025 | Canacol Energy Ltd. | Canada | Oil & Gas Exploration & Production | CCC+ | B- | |||||||
4/11/2025 | Ferrellgas Partners L.P. | United States | Oil & Gas Exploration & Production | CCC+ | B | |||||||
4/15/2025 | Peacock Intermediate Holding II, L.P. | United States | Capital Goods | CCC+ | B- | |||||||
4/17/2025 | Elevate Textiles Holding Corporation | United States | Consumer Products | CCC+ | B- | |||||||
4/28/2025 | Conair Holdings LLC | United States | Consumer Products | CCC+ | B- | |||||||
Data as of April 30, 2025. Source: S&P Global Credit Research And Insights. |
Table 3
Upgrades from 'CCC' category beginning 2025 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Rating action date | Issuer | Country | Sector | Rating to | Rating from | |||||||
1/17/2025 | pH Beauty Holdings I, Inc. | United States | Consumer Products | B- | CCC | |||||||
1/24/2025 | Form Technologies LLC | United States | Capital Goods | B- | CCC | |||||||
1/31/2025 | Sierra Enterprises LLC | United States | Consumer Products | B- | CCC+ | |||||||
1/31/2025 | Premier Brands Group Holdings LLC | United States | Consumer Products | B- | CCC | |||||||
2/11/2025 | BCPE North Star Holdings, LP | United States | Consumer Products | B- | CCC+ | |||||||
2/19/2025 | Wok Holdings, Inc. | United States | Retail/Restaurants | B- | CCC+ | |||||||
3/3/2025 | Lumen Technologies, Inc. | United States | Telecommunications | B- | CCC+ | |||||||
3/13/2025 | WIN Waste Innovations Holdings Inc. | United States | Chemicals, Packaging & Environmental Services | B- | CCC+ | |||||||
3/19/2025 | Bausch Health Companies Inc. | Canada | Health Care | B- | CCC+ | |||||||
Data as of April 30, 2025. Source: S&P Global Credit Research And Insights. |
Related Research
- CLO Insights 2025 U.S. BSL Index: Loan Price Volatility Highlights Tariff-Affected Sectors; CLO Metrics Stable Except For Loan Prices, April 29, 2025
- Polaris Parent LLC Downgraded To 'CCC+' On Cash Burn And Slower Revenue Growth; Outlook Stable, March 17, 2025
- Ivanti Software Inc. Downgraded To 'CCC+' On Elevated Refinancing Risk, Outlook Negative, March 5, 2025
- Newfold Digital Holdings Group Inc. Downgraded To 'CCC+' On Elevated Refinancing Risk; ICR Placed On Watch Negative, Feb. 13, 2025
This report does not constitute a rating action.
Credit Research & Insights: | 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: | Minesh Patel, CFA, New York + 1 (212) 438 6410; minesh.patel@spglobal.com |
Secondary Contact: | Daniel Hu, FRM, New York + 1 (212) 438 2206; daniel.hu@spglobal.com |
Research Contributor: | Suresh Kasa, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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