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Yahoo
a day ago
- Business
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US corporate defaults on private debt rose in Q2, Fitch says
By Matt Tracy (Reuters) -U.S. corporate issuers defaulted on privately placed debt at a higher rate in the second quarter this year than in the first quarter, ratings agency Fitch Ratings said on Monday. In its monitor of roughly 1,200 corporate borrowers of private credit, Fitch reported a default rate of 5.5% in the second quarter versus 4.5% in the first quarter. Eight different borrowers defaulted in the second quarter versus four in the first quarter, it found. Four of the eight second-quarter defaults arose from maturity extensions by "financially stressed" companies, while three defaults stemmed from interest deferrals and the introduction of payment-in-kind, or non-cash, payments. One remaining second-quarter default resulted from an "uncured payment default," according to Fitch. The second quarter witnessed a 16% drop in debt issuance by the U.S. middle market - the cohort of middle-sized businesses that comprise the majority of private credit lending. The volume of new U.S. middle-market debt fell to $11.6 billion in the second quarter from $13.7 billion a year ago, Fitch found. 'Smaller, private issuers remain particularly vulnerable to economic swings, GDP slowdowns, and persistent elevated interest rates, especially given their floating-rate structures,' said Lyle Margolis, Fitch Ratings' head of private credit, corporates. About three-quarters of Fitch's 1,200 monitored private credit issuers belong to Fitch's rated middle market collateralized loan obligation portfolio, the report noted, while the remaining quarter is privately rated by Fitch for the benefit of insurance companies. Sign in to access your portfolio
The Star
05-08-2025
- Business
- The Star
Intel's credit rating downgraded by Fitch on demand challenges
A smartphone with a displayed Intel logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo (Reuters) -Fitch downgrading U.S. chipmaker Intel's credit rating by one notch on Monday, according to a note by the ratings agency, which assigned a negative outlook to Intel's rating. Fitch downgraded Intel to BBB from BBB-plus, placing it just two notches shy of junk credit status. The downgrade follows Fitch's assessment that Santa Clara, California-headquartered Intel faces heightened challenges maintaining demand for its products. Fitch cited growing competition from peers such as Dutch rival NXP Semiconductors, Broadcom Inc and Advanced Micro Devices. "Credit metrics remain weak and will require both stronger end markets and successful product ramps, along with net debt reduction over the next 12-14 months" for Intel to recover its recent ratings, Fitch analysts wrote on Monday. Fitch added that while Intel holds a better market position than other similarly rated peers, its financial structure is relatively weaker and it faces "higher execution risk." Intel still enjoys a strong market position in the provision of PCs and traditional enterprise servers, Fitch noted, while warning the company faces heightened PC competition from Qualcomm and AMD. Intel will need to ramp up its PC shipments while also reducing its balance sheet debt to recover its previous credit ratings, Fitch said. The ratings agency called Intel's liquidity profile "solid," which as of June 28 consisted of a $21.2 billion mix of cash, cash equivalents and short-term investments, as well as an untapped $7 billion credit revolver. It also had an undrawn $5 billion, 364-day revolver that will come due in January 2026, Fitch said. Fellow ratings agency S&P Global similarly downgraded Intel's credit rating to BBB from BBB-plus in December, while Moody's Ratings downgraded its senior unsecured debt's rating in August last year. (Reporting by Matt Tracy; Editing by Leslie Adler)
Yahoo
30-06-2025
- Business
- Yahoo
ICE index exclusion likely to slow Warner Bros $14.3 billion bonds move to junk portfolios
By Matt Tracy (Reuters) -A total $14.3 billion of media giant Warner Bros Discovery's bonds' move to their new home in high-yield bond portfolios will likely be slowed by a recently announced exclusion from a major index, said a BofA Global Research report. ICE Data Indices said on Thursday it would postpone including Warner Bros recently downgraded bonds on its ICE BofA High Yield Index, one of the major indices tracking U.S. junk-rated corporate bonds, until at least August, said BofA Global analysts in a report on Friday. The delay was because ICE was reevaluating its inclusion criteria after a debt buyback by Warner Bros earlier this month, said the report. This delayed inclusion could prevent some investors buying the Warner Bros' bonds from those seeking to sell them out of their portfolios that had only high-grade debt, the analysts wrote in the report. The Warner Bros debt is expected to make up a little over 1% of the ICE BofA High Yield Index upon its eventual inclusion, the analysts said, adding that some 35% of high-yield bond portfolios are benchmarked to ICE. A pause in trading of Warner Bros' bonds from June 11 to June 25, following the company's announced split-up into two separate publicly-traded companies and debt buyback, will also likely contribute to a delay in trading interest, the BofA analysts noted. "This pause, combined with the index exclusion, could make it difficult for HY investors to buy near term, even as IG investors potentially look to sell following the rating agency downgrades in June," the analysts wrote. ICE counterpart Bloomberg, however, is expected to include the Warner Bros bonds in its own junk bond index next month, according to the BofA report. BofA said credit spreads, or the premium paid by companies over Treasuries, on 4.279% March 2032 bonds tightened 20 to 25 basis points in anticipation of being bought by high-yield accounts, but that this could be partially reversed. Intercontinental Exchange, which owns ICE Data Indices, did not immediately return a request for comment. Warner Bros also did not immediately return a comment. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-06-2025
- Business
- Yahoo
Exclusive-Musk's xAI is on track to raise $5 billion in fresh debt, following modest demand
By Matt Tracy, Echo Wang and Davide Barbuscia NEW YORK (Reuters) -Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI didn't immediately respond to a request for comment while Morgan Stanley declined. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, said the two people, who were briefed on the deal. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
17-06-2025
- Business
- Yahoo
Exclusive-Musk's xAI is on track to raise $5 billion in fresh debt, following modest demand
By Matt Tracy, Echo Wang and Davide Barbuscia NEW YORK (Reuters) -Elon Musk's xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter. The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI didn't immediately respond to a request for comment while Morgan Stanley declined. The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, said the two people, who were briefed on the deal. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
