NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: Revolving Credit Facility Performance in Bankruptcy (U.S. Corporate Revolver Utilization and Recovery Rates)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=774408
Utilization rates for cash flow (CF) revolvers exceeded asset-backed loan (ABL) facilities among U.S. corporate issuers that defaulted between 2005 and 2013, according to a Fitch Ratings analysis.
The median CF facility utilization rate in Fitch's sample was 94% for the 64 CF revolvers. The rate supports Fitch's recovery-estimate analytical approach of assuming full draws of CF facilities. Results of Recovery Rating (RR) analyses determine issue ratings relative to Issuer Default Rating (IDR) for Fitch-rated issuers rated 'B+' and lower.
Fitch based its analysis on a review of utilization rates and recoveries for 94 committed revolving credit facilities in place for companies that defaulted between 2005 and 2013, with a concentration of issuers defaulting during the 2008-2010 peak default cycle.
The companies reviewed are part of Fitch's U.S. corporate enterprise valuation and recovery database covering 17 industry sectors.
Revolver debt had excellent recovery rates. Ultimate recoveries averaged 90% for the 92 facilities that had borrowings outstanding at bankruptcy. ABL lender recoveries were superior to those of CF facility providers. Recoveries averaged 97% and 87% on ABL and CF revolvers, respectively. Among ABL claims, 90% (27 out of 30) received full recovery, including the 15 retail sector facilities structured as ABLs.
Fitch notes that not all companies in its database had revolvers in place at the time of default - 25 of 120 had no committed revolving credit facilities when they defaulted.
The full report 'Revolving Credit Facility Performance in Bankruptcy' is available at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.