MarketInsights

SectorIntelligence|LeveragedFinance

Thisreportdoesnotconstitutearatingaction

EuropeanSummaryReport

Dec.11,2023

TheNovemberSnapshot

Lower-ratedissuersremainunderpressure

Stable

CWnegative,

outlooknegative

CWpositive,

outlookpositive

Fournewspeculative-gradeissuersinNovember

34

Newissuers

YTDNov.2023vs.

62YTDFY2022

Primaryleveragedloanissuance

sloweddowninNovember,after

reachinghighestlevelin2023

YTDNov.2023

€24.8bil.

YTDSept2022

EuropeanCLOissuanceclosertolastyear’slevels

020406080100

Media,

entertainment,andleisure

Businessand

consumerservices

Restaurantsandretail

€25.1bil66deals

Outlookdistribution

Topsectors

YTDNov.2023

YTDNov.2022

16%8%

€33.8bil.

63deals

€29.7

76%

Note:Dataaboveisyear-to-date(YTD)exceptfortheoutlookdistribution.CW--CreditWatch.CLO--Collateralizedloan

obligations.OutlookdistributionroundedtoawholenumberandonlyincludesEuropeancorporateratings(excludingutilitiessector).Source:S&PGlobalRatings.LeveragedloanandCLOdataissourcedfromPitchBookLCD.

Thisreportcoversissuersincorporatedin:Bulgaria,CaymanIsland,Croatia,Cyprus,CzechRepublic,Denmark,Estonia,

Finland,France,Germany,Gibraltar,Greece,Guernsey,Hungary,Iceland,Ireland,IsleofMan,Italy,Jersey,Latvia,

Liechtenstein,Lithuania,Luxemburg,Malta,Monaco,Netherlands,Norway,Poland,Portugal,Romania,Spain,Sweden,

Switzerland,andtheU.K.WeupdateallthegraphsandchartsasperthelatestNewsletterperiod.Evenwhentherearenochanges,wecontinuetoincludethechartsforcontinuity.

EUROPEANCORPORATERATINGS

LEVERAGEDFINANCECONTACTS

NicoleGuido

London

nicole.guido

@

+44-20-7176-0468

MartaStojanova

London

marta.stojanova

@

+44-20-7176-0476

DavidWGillmor

London

david.gillmor

@

+44-20-7176-3673

MaulikShah

CRISILGlobalAnalyticsCenter,an

S&Paffiliate,Mumbai

CREDITRESEARCH&INSIGHTS

NicoleSerino

NewYork

nicole.serino

@

+1-212-438-1396

CONTENTS

MonthlyHighlight2

YTDSpeculative-GradeNew

Issuers3

Defaults4

Speculative-GradeRatingOutlook

Mix5

RecoveryRatings6

High-YieldBondInsights7

CLOs8

Sources9

RelatedResearch9

Downloaddata>>

LeveragedFinance:EuropeanSummaryReport

/ratingsDec.11,20232

KeyInsights

1.Combinedhigh-yieldbondandleveraged-loanissuanceinEuropehasbeenmore

subduedthisyearthanusual.High-yieldbondissuancehassignificantlyoutpaced

leveragedloanissuance,andmuchofthatfundinghasbeenusedtopaydownexistingdebt,helpingreducerefinancingrisk.Maturingspeculative-gradedebtwillspikein

2025.Dependingontheeconomicandinterest-rateenvironments,thesematuritiescouldprovechallengingtorefinance.

2.AnanalysisofleveragedloansdocumentationinEuropeanCLOshighlightedthe

presenceofa"snoozedrag"clause.Europeanleveragedloanborrowerscould

increasinglyuseasnoozedragworkaroundintheirloandocumentationtoextendloanmaturitiesmoreeasilyamidhigherinterestratesandanupcomingmaturitywall.

3.Privatecreditactivitycontinuestofillthevoidforsponsorsseekingtofundtransactionsintheabsenceofunderwritinginthebroadlysyndicatedmarket.Certaintyoffunding

andspeedofexecutioncontinuetotrumpconventionalbank-backedunderwritingwithitsfully-flexedlender-friendlypricing,tickingfees,andlongertimetomarket.

MonthlyHighlight

HowHasPrivateCreditDevelopedinEurope?

SizeofEuropeanlendingdeals

€99millionorless

■€350million-€499million

€100million-€349million

€500million-€999million

100%

80%

60%

40%

20%

0%

202020212022Yeartodate

2023

DataasofSept.30,2023.AnalysisbasedontransactionscoveredbyLCDNews;sharecalculatedbasedondealswheresizeinformationisdisclosed.Sources:PitchBookLCD.

Europeandirectlendingdealsharebytopfivesectors

202020212022Yeartodate2023

Professionalandbusinessservices

Computingandelectronics

Healthcare

other

Manufacturing

05101520253035

(%)

DataasofSept.30,2023.AnalysisbasedontransactionscoveredbyLCDNews;shareisbydealcount.Source:PitchBookLCD.

Readthefullreport>>

ThesweetspotfordirectlendersinEuropeisloansof€100million-€350million,corresponding

tocompaniesgenerating€20million-€60millionofEBITDA.Sectorwise,asdirectlendershave

becomemoreselective,soastolimitcreditexposuretomorecyclicalandchallengedsectors,

thelargestnumberofprivatedebtdealshaveinvolvedprofessionalandbusinessservice

companies,withhealthcareandtechslightlybehind.

LeveragedFinance:EuropeanSummaryReport

/ratingsDec.11,20233

(No.)

■Nov.2022

Nov.2023

Nov.2023

■Nov.2022

YTDSpeculative-GradeNewIssuers

Chart1

Newissuersbyrating

50

45

40

35

30

25

20

15

10

5

0

BBcategoryB+BB-CCCcategory

Note:DatarepresentsnewissuersasofNov.30,2022,and2023.IncludesEuropeancorporateratingsandexcludes

confidentialissuers.Source:S&PGlobalRatings.

Chart2

Newissuersbyindustrygroup

Chemicals

Restaurantsandretail MetalsandminingAerospaceanddefense oilandgas TransportationTelecommunications

Autos

ConsumerproductsHightechnology

Forestproducts,buildingmaterialsandpackagingMedia,entertainmentandleisureHealthcare

CapitalgoodsBusinessandconsumerservices

02468

10

(No.)

Note:DatarepresentsnewissuersasofNov.30,2022,andNov.30,2023.IncludesEuropeancorporateratingsandexcludes

confidentialissuers.Source:S&PGlobalRatings.

LeveragedFinance:EuropeanSummaryReport

/ratingsDec.11,20234

Defaults

Chart3

Downgradeto'SD'/'D'

23

DEFAULTS

Table1

Ratingsraisedafterselectivedefault('SD')anddefault('D')

Issuername

Priorrating

Ratingraisedto

Sector

Reasonfordefault

CineworldGroup

PLC*

D

B-/Stable

Mediaand

entertainment

Bankruptcy

Technicolor

CreativeStudios§

D

CCC/Negative

Mediaand

entertainment

Missedinterest

payments

ToroPrivate

HoldingsI,Ltd

SD

CCC+/Negative

Transportation

Distressed

exchange

CovisFincoS.ar.l

D

B-/Negative

Healthcare

Distressed

exchange

IdealStandard

InternationalS.A

SD

CCC/Developing

Building

materials

Distressed

exchange

MallinckrodtPLC

D

B+/Stable

Healthcare

Missedinterest

payments

?CovisFincoandCineworldGrouparethetwodefaultswherewesawdebthaircuts,with

CineworldfinallyemergingfromrestructuringinSeptember,nearlyafullyearafterfilingitsChapter11petition.Travelport(ToroPrivateHolding)sawdefactoprimingofitsfirst-lien

termloansviaexchangetojuniorpriorityloans.WhileTravelport'semergencefrom

restructuringwassupportedbya$200millionequityholderinjection,CoviswasfacilitatedthroughApollorelinquishingpartofitsequityownershiptolenders,butremainingincontrol.

?IdealStandardhadbattledwithinflationarypressuresonitscostbase,coupledwithseverelyimpactedrevenueandcashflowsleadingtoadowngradeto‘CCC’inJuly.Followingthis,thecompanyannouncedanexchangeoffersuggestingleavingparintactforlenders,intheshorttermatleast,andalteringpotentialrecoveryuponchangeofcontroltoatleast72%ofthe

facevalue,comparedto101%originally.Uponcompletionofthe€325millionseniorsecurednotesexchange,thecompanyannouncedthesigningofabindingsaleagreementtoVilleroy&Boch.Thediminishedfinancialflexibility,withthemajorityofitsliquiditysourcesutilized,anduncertaintyregardingthefinalcapitalstructurepost-merger,cappedthepost-default-

emergenceratingat‘CCC’withadevelopingoutlook.

*CineworldGroupPLChasbeenre-ratedasNewCineworldMidcoLtd.

§Ratinghasbeenwithdrawn

Note:Dataonnumberofdefaultsisasofoctober2023.ExcludesEuropeancorporateratings.SD--Selectivedefault.For

moreinformationonEuropeandefaults,refertoourmonthlypublication,

"U.S.DefaultsToRiseAfteroctoberLull"

published

Nov.30,2023.Listofratingsraisedafter'SD'and'D'isasofNov.30,2023.Source:S&PGlobalRatings.

LeveragedFinance:EuropeanSummaryReport

/ratingsDec.11,20235

(%)

(%)

5

4

3

2

1

0

Chart4

Europeantrailing-12-monthspeculative-gradedefaultrate

Expectedspeculativegradedefaultrateof3.75%

Long-termspeculativegradedefaultrateaverageof3.05%(sinceJanuary2002)…

2.90%

Jan.2022May.2022Sep.2022Jan.2023May.2023Sep.2023Jan.2024May.2024Sep.2024

Note:DataasofSept.30,2023.Thelong-termaveragedatesbacktoJanuary2002.Source:S&PGlobalRatings.

See

"ElevatedInterestRatesCouldPushTheEuropeanSpeculative-GradeCorporateDefaultRateTo3.75%BySeptember

2024"

publishedNov.17,2023.

Speculative-GradeRatingoutlookMix

Chart5

November2022/2023speculative-gradeCreditWatch/outlookdistribution

80

70

60

50

40

30

20

10

0

74%

76%75%

17%

17%

16%

9%

9%

8%

Nov.2022

Nov.2023

May.2023

CWneg/outlookneg

Stable

CWpos/outlookpos

Note:DataasofNov.30,2022,andNov.30,2023.CreditWatch/outlookdistributionincludesallEuropeancorporateratings.

Doesnotincludeinvestment-gradeissuers.Source:S&PGlobalRatings.

LeveragedFinance:EuropeanSummaryReport

/ratingsDec.11,20236

(%)

Newissueratingcount

%oftotalnewratings

RecoveryRatings

Chart6

Recoveryratingdistributionforweakestlinks

80

70

60

50

40

30

20

10

0

FirstlienseniorsecuredSecondlienseniorsecuredSeniorunsecured

■1(90-100%)

2(70-90%)

■3(50-70%)

■4(30-50%)

■5(10-30%)

6(0-10%)

Note:DataasofSept.30,2023.WeakestLinks--Issuersrated'B-'andbelowwitheithernegativeoutlooksoronCreditWatch

negative.Source:S&PGlobalRatings.

Chart7

Recoveryratingsdistributionoffirst-liennewissues(Europe)

100

90

80

70

60

50

40

30

20

10

0

100

90

80

70

60

50

40

30

20

10

0

Q12019

Q22019

Q32019

Q42019

Q12020

Q22020

Q32020

Q42020

Q12021

Q22021

Q32021

Q42021

Q12022

Q22022

Q32022

Q42022

Q12023

Q22023

Q32023

1(90-100%)

2(70-90%)

3(50-70%)

4(30-50%)

5(10-30%)

6(0-10%)

3(%oftotalissuance)(rightscale)

Source:S&PGlobalRatings.

LeveragedFinance:EuropeanSummaryReport

/ratingsDec.11,20237

High-YieldBondInsights

Chart8

Three-monthbondspread(bps)

BBB

700

600

500

400

300

200

100

0

Sep.2023oct.2023Nov.2023

BBB

Min

318

518

Max

390

600

Avg

348

555

Current

323

518

DataasofNov.30,2023.Source:S&PMarketIntelligence.

Chart9

Three-monthbondyield

BBB

10

9

8

7

6

5

Sep.2023

oct.2023

Nov.2023

BB

B

Min

5.7

7.6

Max

6.7

8.8

Avg

6.2

8.3

Current

5.7

7.6

?‘B’ratedhighyieldspreadshavedeclinedconsiderablyinNovember,80bpslowerthan