Corporate Finance News / Quotidien

Lundi 23 Juin 2014

S&P - Haut-rendement : Evolutions structurelles et relâchement des conditions de prêts

L’étude ci-dessous examine la structure de capital des entreprises ayant récemment émis de la dette high-yield en Europe.

S&P observe une évolution de ces structures et de l’usage des émissions de dette, avec un impact sur les perspectives de récupération des investisseurs dans l’éventualité d’un défaut.

Jusqu’ici, les entreprises notées en catégorie high-yield ont bien maintenu leur qualité de crédit et bénéficient de conditions d’émission avantageuses.
Toutefois, depuis 2009, les multiples de dette ne cessent d’augmenter.

La recherche de rendement ainsi que le déséquilibre entre l’offre et la demande risquent d’induire un relâchement excessif des conditions d’octroi des prêts.


The Supply Imbalance In Europe's Leveraged Finance Market Could Loosen Lending Standards, Says Report

In a report published today titled "As The European Market Heats Up, Recovery Prospects For Senior Secured Bondholders Cool," Standard & Poor's Ratings Services says the supply-demand imbalance prevalent in the speculative-grade bond market could lead to excessively borrower-friendly lending standards and more highly leveraged transactions. Indeed, leverage multiples on transactions in Europe have been steadily increasing since 2009.

As the report points out, the European Central Bank's (ECB's) recent cuts in key policy interest rates and unconventional measures to combat deflationary pressures and boost bank lending will likely further tighten pricing on high-yield debt and exacerbate investors' search for yield. Pricing for speculative-grade ('BB+' or lower) issuance has already tightened in the past year and a half, with the average yield for 'B' rated companies compressing to 6.1% in the six months to June 6, 2014, from 8.3% at the end of 2012. For 'BB' rated companies, yields have fallen to 4.4% from 5.7% over the same period, according to S&P Capital IQ LCD data.

Besides tighter pricing, we have observed structural changes in leveraged finance funding--the use of secured bond financing to refinance existing bank debt and hybrid transaction structures.

"And it is these structural changes that have resulted in a decline in our recovery expectations for these bonds," says Standard & Poor's analyst Taron Wade. "We see two reasons for this: First, companies are using bonds in a different way. In 2009 and 2010, firms mainly used senior secured bond debt to refinance existing senior secured loan debt on a pari passu basis. Over the past 12 months, however, the more common use of senior secured debt issuance is to refinance entire debt structures--typically with a super priority revolving credit facility (RCF) ranking ahead of the new senior secured debt.

"Second, the quantum of senior secured debt relative to the entire capital structure has increased as a result of refinancing, which affects expected recoveries post-default, particularly where stressed valuations are low."

Overall, we are assigning an increasing number of '4' recovery ratings to structures with sizable senior secured bond tranches. These debt tranches, although often secured, are subordinated to priority RCFs or other secured financing sources such as factoring facilities, all providing working capital.

- Leverage multiples for all European transactions were 5.1x in the first quarter of 2014, rising above the 10-year average (4.8x) for the first time since 2008.
- New (post financial crisis) transaction structures, particularly those using senior secured bonds and super senior revolving credit facilities, are now competing with more traditional debt structures, which include senior secured loans with subordinated mezzanine or bonds.
- However, the new structures have reduced potential recoveries for senior secured bondholders, who are replacing the more traditional senior secured loanholders. Recovery ratings for all senior secured bonds have fallen to between '3' (50%-70% recovery of principal) and '4' (30%-50%), compared with '3' in 2010 and '2' (70%-90%) in 2009.
- Covenant-lite transactions, which dominate the U.S. leveraged loan market, have yet to take off in Europe. However, we are starting to see these deals emerge here.

Note: Standard & Poor's assigns its recovery ratings indicating expected recovery of principal post-default to speculative-grade companies on a scale between '1+', indicating our expectation of full recovery, to '6', indicating our expectation of negligible recovery.

Standard & Poor's Ratings Services


Téléchargez ci-dessous les 2 études :
As The European Market Heats Up, Recovery Prospects For Senior Secured Bondholders Cool & European First-Lien Recovery Rates Remain Strong As Issuance Volumes Near 2006 Level

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