It settled to 48 units the number of European companies rated “CCC+” or lower at the end of the first quarter of 2024, down from 51 at the end of 2023 and equal to the five-year average. We read it in a report by S&P Global Ratings on the topic.
Debt at risk jumps to 80 billion
“Changes in the number of risky credits primarily reflect downward migration within the category “CCC+” and below, rather than improvements from this category – said the S&P Global Ratings credit analyst Ekaterina Tolstova – Two-thirds of the removals from the risky credit category in the first quarter of 2024 were due to defaults and rating withdrawals, while new additions were mainly due to credit issues. refinancing”.
The S&P Report
Going into detailsalmost 67% of the removals from the risky credit category are due to defaults – which mainly reflect the need for companies to restructure their debt – and rating withdrawals, rather than improvements in operating performance. Europe is the only region where the year-to-date number of defaults is higher than the year-to-date count through 2023. Defaults in the region remain at the highest levels since 2008.
Altice France weighs
The outstanding debt of European risky credits increased 45% to 80.1 billion euros compared to 55.1 billion euros at the beginning of 2024, mainly due to the downgrading of French telecom company Altice France SA to “CCC+”. Altice France alone added almost €23.8 billion to the total risky credit debt.
The negative bias increased to 63.0% as of March 31, 2024, from 58.3% at the end of 2023, in line with the long-term average and signaling future pressure on ratings. Most of the downward transitions into the risky credit category involved highly leveraged companies with negative free operating cash flows or liquidity or refinancing problems due to lower demand or production.
