(Editor's Note: Our "Risky Credits" series focuses on U.S. and Canadian corporate issuers rated 'CCC+' and lower. Because many defaults are of companies in those categories, ratings with negative outlooks or on CreditWatch negative are even more important to monitor.)
Key Takeaways
- The number of 'CCC+' and below rated corporate issuers decreased to 149 in January 2025, from 155 in September 2024, marking a steady decline since first-quarter 2024.
- There were 17 downgrades into the 'CCC' rating category since September 2024, compared to only eight upgrades out of it, with the media and entertainment and health care sectors combined contributing nearly two-thirds of downgrades.
- Despite the drop in numbers, issuers rated 'CCC+' and below continue to hold elevated debt--$86 billion over the five-year average--with six that remain on negative outlooks or CreditWatch holding over $10 billion outstanding each.
- Although U.S. 'CCC+' and below refinancing risk seems manageable, 2025 started with volatile long-term yields, reflecting investor uncertainty about inflation and U.S. monetary policy.
Key Highlights
Risky credit in North America continued to decline into 2025. The number of North American issuers rated 'CCC+' and below decreased to 149 as of January 2025, from 155 in September 2024. However, total debt rose to $349 billion from $337 billion in the same period. Despite a decrease in overall count, debt at 'CCC+' and below rated issuers remains historically high with $349 billion outstanding, $86 billion over the five-year average. Additionally, seven issuers carry over $10 billion in debt outstanding, six of which are on negative outlooks or CreditWatch--indicating higher risk of a downgrade. They are concentrated in the heath care and telecommunication sectors including Bausch Health Cos. Inc., EchoStar Corp., Altice USA Inc., Medical Properties Trust Inc., Community Health Systems Inc., and iHeartMedia Inc.
Chart 1
The number of issuers downgraded to 'CCC+' and below has surpassed those upgraded out of the rating category by 17 to eight since September 2024. Despite this, the monthly average for downgrades fell to 4.25 as of Jan. 31, 2025, versus 5.0 in third-quarter 2024.
By sector, media and entertainment experienced the most downgrades into the 'CCC' category with six including: Auction.com Holding Co. Inc., Cumulus Media Inc., Affinity Interactive, Urban One Inc., College Parent L.P., and Hubbard Radio LLC.
Half of these downgrades were due to weak and challenging operating performance amid ongoing declines in broadcast radio advertising. Notably, this industry is affected by cyclical and secular challenges in a soft economic environment, along with heightened competition from alternative media. The remaining media and entertainment downgrades were due to increased leverage, weak operating performance, and/or refinancing risk.
The consumer products sector experienced the most upgrades since September 2024, including: pH Beauty Holdings I Inc., Sierra Enterprises LLC, Premier Brands Group Holdings LLC, Traeger Inc., and Outerstuff LLC. Most of these issuers were upgraded due to improvements in operating performance, liquidity, and leverage.
Chart 2
Near-term refinancing risk seems manageable for issuers in the 'B' and 'CCC' rating categories with maturity walls peaking in 2028. However, lower-rated borrowers tend to be vulnerable to refinancing pressure, especially during periods of volatility or tighter financing conditions. Of 'CCC+' and below rated debt, 25% amounting to $68.8 billion is coming due during the next two years. Given the uncertainties around inflation and monetary policy, the easing in financing conditions for U.S. borrowers may have stalled. This could make it harder for issuers in the 'CCC+' and below rating category to meet their refinancing needs (see "Global Refinancing: Credit Market Resurgence Helps Ease Upcoming Maturities," published Feb. 4, 2025, on RatingsDirect).
Chart 3
Reported debt to EBITDA for 'CCC+' and below rated issuers was mixed across sectors. Overall debt to EBITDA fell to 11.1x as of Sept. 30, 2024, from 11.5x in the previous quarter, with about half of the sectors recording a decrease in their weighted-average adjusted debt to EBITDA ratios. Meanwhile, other sectors like health care, business and consumer services, and media and entertainment saw increases in their weighted-average debt to EBITDA due to both weaker operating performance and still-high interest rates. Issuers continue to focus on liquidity in 2025.
Chart 4
Broadly syndicated loan (BSL) collateralized loan obligation (CLO) metrics showed signs of improvement in 2024, alongside overall credit quality. Loans from 'B-' obligors in U.S. BSL CLOs have steadily declined since peaking at just over 30% in mid-2023. After reaching a recent low in October 2024, at just under 25% of total BSL CLO assets, we lowered our ratings on a handful of widely held issuers in different industries to 'B-' in December 2024, resulting in a small uptick back above 25%.
Table 1
Collateralized loan obligation BSL index metrics (CLO insights U.S. BSL index; %) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
As of date | 'B- bucket' | CCC' bucket | Nonperform bucket | CreditWatch neg | Outlook neg | |||||||
1/31/2024* | 26.11 | 6.39 | 0.88 | 0.35 | 17.89 | |||||||
2/29/2024* | 26.41 | 6 | 0.98 | 0.53 | 16.56 | |||||||
3/31/2024* | 26.15 | 6.81 | 0.74 | 0.66 | 16.15 | |||||||
4/30/2024* | 25.70 | 6.44 | 0.97 | 0.93 | 15.95 | |||||||
5/31/2024* | 25.42 | 6.67 | 0.48 | 0.95 | 15.62 | |||||||
6/30/2024* | 25.30 | 6.36 | 0.4 | 1.14 | 15.04 | |||||||
7/31/2024* | 25.19 | 6.46 | 0.32 | 0.94 | 15.13 | |||||||
8/30/2024* | 25.18 | 6.4 | 0.57 | 1.11 | 14.82 | |||||||
9/30/2024* | 25.07 | 6.37 | 0.59 | 1.44 | 15.00 | |||||||
10/31/2024* | 24.73 | 6.21 | 0.54 | 1.29 | 14.22 | |||||||
11/30/2024* | 25.38 | 5.37 | 0.69 | 1.17 | 13.36 | |||||||
12/31/2024** | 25.57 | 5.65 | 0.51 | 1.31 | 13.41 | |||||||
1/20/2025*** | 25.54 | 5.77 | 0.69 | 1.08 | 12.87 | |||||||
*Index metrics based on end of month ratings and pricing data and as of month portfolio data available. **Index metrics based on Dec. 31, 2024, ratings and pricing data and latest portfolio data available to us. ***Index metrics based on Jan. 20, 2025, ratings and pricing data and latest portfolio data available to us. |
Table 2
Downgrades into 'CCC' category beginning 2024 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Rating date | Issuer | Country | Sector | Rating to | Rating from | |||||||
1/4/2024 | Hughes Satellite Systems Corporation (EchoStar Corporation) | United States | Telecommunications | CCC+ | BB | |||||||
1/12/2024 | GoTo Group, Inc. | United States | High technology | CCC+ | B- | |||||||
1/16/2024 | Baffinland Iron Mines Corp. | Canada | Metals, mining, & steel | CCC | B- | |||||||
2/6/2024 | Pluto Acquisition I, Inc. | United States | Health care | CC | B- | |||||||
2/27/2024 | Cumulus Media Inc. | United States | Media & entertainment | CC | B- | |||||||
3/1/2024 | iHeartMedia Inc. | United States | Media & entertainment | CCC+ | B | |||||||
3/11/2024 | WW International, Inc. | United States | Consumer products | CCC+ | B- | |||||||
3/12/2024 | Emergent BioSolutions Inc. | United States | Health care | CCC+ | B- | |||||||
3/15/2024 | American Rock Salt Company LLC | United States | Metals, mining, & steel | CCC+ | B- | |||||||
3/26/2024 | Sandvine LP | Canada | High technology | CCC | B- | |||||||
4/4/2024 | Athletico Holdings, LLC | United States | Health care | CCC+ | B- | |||||||
4/12/2024 | Pathway Vet Alliance LLC | United States | Health care | CCC+ | B- | |||||||
4/30/2024 | Dodge Construction Network LLC | United States | Consumer products | CCC+ | B- | |||||||
5/2/2024 | Del Monte Foods, Inc. | United States | Consumer products | CCC+ | B- | |||||||
5/2/2024 | SIRVA Inc. | United States | Consumer products | CCC | B- | |||||||
5/10/2024 | Forest City Realty Trust Inc. (Brookfield Corporation) | United States | Homebuilders/real estate co. | CCC+ | B- | |||||||
5/10/2024 | TJC Spartech Acquisition Corp. (Spartech Parent Corp.) | United States | Capital goods | CCC+ | B- | |||||||
5/10/2024 | Connect Holding II LLC | United States | Telecommunications | CCC | B- | |||||||
5/15/2024 | Altice USA, Inc. | United States | Telecommunications | CCC+ | B- | |||||||
5/20/2024 | Calumet Specialty Products Partners LP | United States | Utility | CCC+ | B- | |||||||
5/24/2024 | LD Holdings Group LLC | United States | Financial institutions | CCC+ | B- | |||||||
5/24/2024 | Lereta, LLC | United States | Media & entertainment | CCC+ | B- | |||||||
5/29/2024 | Cobra Holdings, Inc. (Confluence Technologies, Inc.) | United States | Consumer products | CCC+ | B- | |||||||
6/5/2024 | American Tire Distributors Inc. | United States | Automotive | CCC+ | B- | |||||||
6/13/2024 | Upstream Newco, Inc. | United States | Health care | CCC+ | B | |||||||
6/13/2024 | Vertex Energy, Inc. | United States | Utility | CCC | B- | |||||||
6/17/2024 | PAI Holdco, Inc. | United States | Retail/restaurants | CCC+ | B- | |||||||
6/21/2024 | Aegis Toxicology Sciences Corporation (Aegis Acquistion, Inc.) | United States | Health care | CCC+ | B- | |||||||
6/28/2024 | EagleView Technology Corp. | United States | Media & entertainment | CCC | B- | |||||||
7/3/2024 | Container Store Group, Inc. (The) | United States | Retail/restaurants | CCC+ | B- | |||||||
7/18/2024 | Allen Media, LLC | United States | Media & entertainment | CCC+ | B- | |||||||
7/18/2024 | CMG Media Corporation (CMG Holdings, Inc.) | United States | Media & entertainment | CCC+ | B- | |||||||
7/22/2024 | Congruex Group LLC | United States | Capital goods | CCC | B- | |||||||
7/23/2024 | Corus Entertainment Inc. | Canada | Media & entertainment | CCC | B- | |||||||
7/24/2024 | Franchise Group Inc. | United States | Retail/restaurants | CCC+ | B- | |||||||
8/9/2024 | EmployBridge Holding Co | United States | Media & entertainment | CCC+ | B- | |||||||
8/16/2024 | Gainwell Holding Corp. | United States | Health care | CCC+ | B- | |||||||
8/19/2024 | Redstone Buyer LLC | United States | High technology | CCC+ | B- | |||||||
8/22/2024 | GrafTech International Ltd. | United States | Metals, mining, & steel | CCC+ | B- | |||||||
8/23/2024 | TMK Hawk Parent, Corp. | United States | Consumer products | CCC | B- | |||||||
8/28/2024 | Optiv, Inc. | United States | High technology | CCC+ | B- | |||||||
8/29/2024 | Berry Corporation | United States | Oil & gas exploration & production | CCC+ | B- | |||||||
9/20/2024 | Naked Juice LLC | United States | Consumer products | CCC+ | B- | |||||||
9/27/2024 | Thrive Merger Sub, LLC | United States | Health care | CCC+ | B- | |||||||
10/3/2024 | Golden West Packaging Group LLC | United States | Chemicals, packaging, & environmental services | CCC- | B- | |||||||
10/18/2024 | Physician Partners LLC | United States | Health care | CCC+ | B- | |||||||
10/22/2024 | Auction.com Holding Company, Inc. | United States | Media & entertainment | CCC+ | B- | |||||||
10/24/2024 | VeriFone Systems Inc. (Vertex HoldCo Inc.) | United States | High technology | CCC+ | B- | |||||||
11/6/2024 | Emerald Technologies (U.S.) AcquisitionCo., Inc. | United States | High technology | CCC+ | B- | |||||||
11/19/2024 | Cumulus Media Inc. | United States | Media & entertainment | CCC+ | B- | |||||||
11/21/2024 | Medical Properties Trust Inc. | United States | Homebuilders/real estate co. | CCC+ | B- | |||||||
12/3/2024 | Affinity Interactive | United States | Media & entertainment | CCC+ | B- | |||||||
12/13/2024 | Urban One, Inc. | United States | Media & entertainment | CCC+ | B- | |||||||
12/17/2024 | Flexsys Holdings Inc. | United States | Chemicals, packaging, & environmental services | CCC+ | B | |||||||
12/19/2024 | Knight Health Holdings LLC | United States | Health care | CCC+ | B- | |||||||
12/24/2024 | MultiPlan Corp. | United States | Health care | CC | B | |||||||
Source: S&P Global Credit Research And Insights. Data as of Dec. 31, 2024. |
Table 2.1
Downgrades into 'CCC' category beginning 2025 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Rating 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- | |||||||
Source: S&P Global Credit Research And Insights. Data as of Jan. 31, 2025. |
Table 3
Upgrades from 'CCC' category beginning 2024 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Rating date | Issuer | Country | Sector | Rating to | Rating from | |||||||
1/26/2024 | Artera Services, LLC | United States | Capital goods | B- | CCC+ | |||||||
3/5/2024 | KAMC Holdings, Inc. | United States | Consumer products | B- | CCC+ | |||||||
3/14/2024 | Patchell Holdings Inc. | Canada | Media & entertainment | B- | CCC+ | |||||||
3/21/2024 | Vericast Corp. | United States | Media & entertainment | B- | CCC | |||||||
4/8/2024 | LendingTree, Inc. | United States | Media & entertainment | B- | CCC+ | |||||||
4/11/2024 | Five Point Holdings, LLC | United States | Homebuilders/Real estate co. | B- | CCC+ | |||||||
4/12/2024 | Michaels Companies, Inc. (The) | United States | Retail/restaurants | B- | CCC+ | |||||||
4/19/2024 | IAMGOLD Corporation | Canada | Metals, mining, & steel | B- | CCC+ | |||||||
4/22/2024 | Hubbard Radio, LLC | United States | Media & entertainment | B- | CCC+ | |||||||
5/7/2024 | Aptim Corp. | United States | Capital goods | B- | CCC+ | |||||||
6/4/2024 | Bulldog Purchaser Inc. | United States | Media & entertainment | B- | CCC+ | |||||||
6/6/2024 | Triumph Group Inc. | United States | Aerospace & defense | B- | CCC+ | |||||||
6/7/2024 | IXS Holdings, Inc. | United States | Automotive | B- | CCC+ | |||||||
7/23/2024 | Kronos Worldwide Inc. | United States | Chemicals, packaging, & environmental services | B- | CCC+ | |||||||
7/30/2024 | MicroStrategy Inc. | United States | High technology | B- | CCC+ | |||||||
7/31/2024 | Syniverse Corporation | United States | Telecommunications | B- | CCC+ | |||||||
8/14/2024 | Carvana Co. | United States | Automotive | B- | CCC+ | |||||||
8/15/2024 | Team Health Holdings, Inc. | United States | Health care | B- | CCC | |||||||
8/20/2024 | Power Stop LLC | United States | Automotive | B- | CCC+ | |||||||
8/29/2024 | Great Lakes Dredge & Dock Corp. | United States | Capital goods | B- | CCC+ | |||||||
9/11/2024 | Emergent BioSolutions Inc. | United States | Health care | B- | CCC | |||||||
9/26/2024 | Glatfelter Corp. | United States | Forest Products & building materials | B+ | CCC+ | |||||||
10/23/2024 | Flame NewCo | United States | Metals, mining, & steel | B- | CCC+ | |||||||
11/18/2024 | Advanced Integration Technology LP | United States | Aerospace & defense | B- | CCC+ | |||||||
12/9/2024 | Traeger, Inc. | United States | Consumer products | B- | CCC+ | |||||||
12/16/2024 | Outerstuff LLC | United States | Consumer products | B- | CCC+ | |||||||
Source: S&P Global Credit Research And Insights. Data as of Dec. 31, 2024. |
Table 3.1
Upgrades from 'CCC' category beginning 2025 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Rating 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 foods | 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 | |||||||
Source: S&P Global Credit Research And Insights. Data as of Jan. 31, 2025. |
Related Research
- Hubbard Radio LLC Rating Lowered To 'CCC+' From 'B-' On Challenging Operating, Financial Trends; Outlook Negative, Jan. 23, 2025
- Industry Credit Outlook 2025: Media and Entertainment, Jan. 14, 2025
- Cumulus Media Inc. Rating Lowered To 'CCC+' From 'B-' On Challenging Operating, Financial Trends; Outlook Negative, Nov. 19, 2024
- Auction.com Holding Co. Inc. Downgraded To 'CCC+' From 'B-' On Cash Flow Deficits And Elevated Leverage; Outlook Stable, Oct. 22, 2024
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 N Kasa, Mumbai; suresh.kasa@spglobal.com |
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