(Finance) – S&P Global Ratings has found that the number of European issuers with “CCC” rating and lower rose to 59 as of March 31, 2022, from 53 to December 31, 2021, due to the increase in issuers directly or indirectly linked to the conflict between Russia and Ukraine. The recovery of ratings in Europe seems slower than in North America, the rating agency points out, as European companies with “CCC” ratings are still above the five-year average, while North American companies have already returned below. that level.
The ripple effects of the conflict, combined with expected monetary tightening and lower low liquidity levels, are likely to represent an ongoing challenge for European “CCC” rated issuers. The report shows that two-thirds of “CCC” broadcasters have one insufficient or weak liquidity, while leverage levels above 10x suggest that capital structures could become unsustainable, based on future economic and market conditions. The media and entertainment sector continues to hold the largest number of “CCC” rated issuers, although their number is declining.
There haven’t been default in Europe in the first quarter of 2022, which brought the speculative-grade European default rate to 0.7% in March 2022. However, the pace of defaults increased in April with four defaults in the region in the past two weeks. “We expect the pressures ofincreased input costs will always weigh more on corporate margins over the course of the year and we expect default rates to rise to 2.5% as of December 31, 2022, “writes S&P.