S&P Global Ratings expects recovery rates for rated first-lien debt to be lower than historical averages. Empirical estimates of actual first-lien debt recoveries show a notable recent degradation. This could persist or worsen given the increase in top-heavy debt structures and the dominance of covenant-light term loans. Out-of-court restructurings pose challenges to the predictability of outcomes because they can materially impair the recovery prospects of certain investors and create winners and losers in the same group of creditors.