Investors are increasingly valuing below investment grade corporate loans on their books at par, even when the loans change hands in the secondary market at prices once considered distressed.
A quarterly survey polling the opinions of credit managers show a clear consensus that credit conditions will worsen over the next three months.
Horsehead Holding Corp. has been hit with a selective default rating by Standard & Poors after the zinc producer missed a $1.9 million coupon payment on its $100 million convertible notes issue this week.
The company missed a $21 million interest payment due Jan. 15. It will have 30-days before it triggers an event of default.
The paper producer's could leave its debt holders with weak recoveries, Fitch Ratings said Wednesday.
The $2.9 billion announced acquisition of Canadian Oil Sands Ltd. (COS) by A-rated Suncor Energy will not necessarily head off a potential downgrade of COS unsecured debt to junk status, according to Moody's.
The exploration and production company is offering holders of its 10% senior notes due 2017 the opportunity to swap out the debt for a new bond, cash and stock.
The rating agency has weighed in on the oilfield services providers plans to reduce its $1.6 billion debt load.
Widening spreads, commodity sector stress and Chinas economic woes are all expected to drive the default rate for junk-rated companies even higher this year.
The St. Louis company will eliminate more than $4.5 billion in debt under a restructuring agreement reached with lenders.