U.S. Leveraged Finance Q3 2024
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Primary credit analysts
Content visualization contacts
Published article
Hanna Zhang
Hanna.Zhang@spglobal.com
Minesh Patel
minesh.patel@spglobal.com
Omkar Athalekar
omkar.athalekar@spglobal.com
Bryan Ayala
bryan.ayala@spglobal.com
Deegant Pandya
deegant.pandya@spglobal.com
Bushra Dawawala
bushra.dawawala@spglobal.com
spglobal.com
CapitalIQ
Oct 30, 2024. Source: S&P Global Ratings
Overview
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Index
Most EBITDA growth Q2 2024
Least EBITDA growth Q2 2024
Overview
2.9%
Aerospace/defense
-3.6%
Mining & minerals
-1.8%
Auto/trucks
2.1%
Health care
Changes between the 12 months ended Jun. 30, 2024, and the 12 months ended Mar. 31, 2024
Key takeaways
- Our dataset consists of roughly 910 public and private speculative-grade companies in the U.S. and Canada, with about 35% backed by one or more private-equity sponsors. A quick comparison of the two groups confirms our expectation that sponsor-backed companies are smaller in size and have lower credit ratings.
- Sponsor-backed companies have generally outperformed non-sponsored ones in profit growth since 2023, helping to narrow the leverage gap. However, not all strong earnings momentum translated into higher free operating cash flow (FOCF), with twice as many sponsor-owned companies reporting negative FOCF than non-sponsored ones in the 12 months ended June 30, 2024.
- In the past 12 months, downgrades have outnumbered upgrades for PE-owned companies but not by a large margin. In contrast, rating trends have turned generally positive for companies not backed by sponsors for the same period.
- In the 12 months ended Aug. 31, 2024, PE-owned companies had a disproportionately large share of defaults led by distressed debt exchanges, including LMTs, outnumbering those by non-sponsored companies by 1.5 to 1 -- an observation that we believe is consistent with the credit ratings.
Oct 30, 2024. Source: S&P Global Ratings