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Distressed Debt: Affinion, Linn Energy, Peabody, W&T Offshore Join Restructuring Watchlist

Four issuers joined LCD’s Restructuring Watchlist last week, bringing the total number of issues on the list to 40, according to S&P Global Market Intelligence LCD. Joining the list:

  • Customer loyalty concern Affinion Group, which posted a drop in fourth-quarter revenue and forecasted a decline for 2016. Affinion is controlled by Apollo Management.
  • Linn Energy, which delayed filing an annual report, saying it needed additional time to disclose concerns about debt covenants
  • Coal miner Peabody Energy, which issued a going-concern warning
  • W&T Offshore, which drew down most of what was remaining on the company’s revolving credit line, prompting a downgrade by S&P to CCC-

Three of those names might sound familiar: Affinion, Linn, and Peabody already have been on the list at one time or another, each returning this week. Nearly half of the Watchlist – 19 issuers – comprises energy companies proper (such as oil & gas), while three are mining/commodities concerns. This distressed debt activity comes as the U.S. leveraged loan default rate increased to a still relatively low 1.45% in February, from 1.33% in January, according to LCD’s Steve Miller

Noranda Aluminum and Paragon Offshore were the two leveraged loan issuers to default last month, according to LCD.

loan v bond distress ratio More broadly, S&P puts the 2016 Global corporate default count at 22 issuers through February, compared to 17 by that time in 2015. LCD’s Restructuring Watchlist tracks companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisors or entered into credit negotiations.

It is compiled by Matt Fuller, and is published each week in LCD’s Distressed Weekly.

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