Welcome
Welcome to Standard & Poor’s Recovery Ratings. The purpose of this site
is to give you easy access to the most important recent documents related
to our work on recovery and links to other sites related to leveraged
loans. A list of all the recovery ratings assigned and the corresponding issue-level rating are available in the announcements section.
Recovery Update: July 2009
We expect that recoveries on leveraged debt will be lower in the current credit cycle than both recent and historical average recoveries for all debt classes across the capital structure. In the US, where we have the most historic data, our recovery ratings indicate the estimated recovery for senior secured bank debt to be 76%. This compares with record high recoveries in 2008 of 99% for senior secured loans, 92% in 2007 and 84% in 2006, according to Standard & Poor's data. We expect European data, which we are collecting, to show similar trends.
For subordinated debt in the U.S., the contrast is starker. Our recovery ratings indicate an averaged estimated recovery of 36% for senior unsecured bonds. This compares with an average recovery for this asset class of 69% in 2008, 83% in 2007 and 71% in 2006.
Recovery rates historically decline when defaults rise as the overall volume of defaulted debt climbs relative to the supply of funds seeking to invest in default debt or the assets underlying them. Recoveries in this cyclical downturn are also being affected by changes in the debtholder mix, the rise of complex structures and an increase in liquidations. For more information and data, please see the article "Liquidiation And Other Factors Are Increasingly Likely To Affect Some Post-Default Recoveries," on the US recovery ratings homepage.
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In December 2003 Standard & Poor’s Rating Services became the
first rating agency to assign recovery ratings (debt instrument-specific
estimates of post–default principal recovery) to senior secured loans
in the leveraged loan market in the United States. Since then we have
expanded our leadership in the development of post-default recovery
analytics and have assigned recovery ratings to over 4,100 loans and
other secured instruments globally. In May 2004 recovery ratings were introduced
to leveraged loans in the European leveraged loan market, and have
since been expanded to Canada and Australia. In October 2006 we announced
that we would, subject to market feedback and sufficient data, roll
out recovery ratings in three additional ways: throughout the organization’s
capital structure to include unsecured debt; in sectors beyond corporates
such as sovereigns and banks; and in new jurisdictions once we had
analyzed the insolvency regimes.
On 30 May 2007, we announced changes to our recovery
rating scale which, along with our enhanced analytics, will give investors
what they have demanded, namely, greater clarity and specificity with
respect to recovery prospects on debt instruments of all types of
issuers globally.
On 19th March 2008, Standard & Poor's assigned recovery ratings to more than 1,800 unsecured loan and bond issues sold by nearly 900 speculative-grade rated corporate issuers in the U.S., Canada and Europe.
For a list of all our existing recovery ratings and accompanying
issue ratings, as well as recent commentary about enhancements and
changes to Standard & Poor’s recovery rating scale and issue-rating
policies, please see the articles and other links to the right.
| Bank Loan & Recovery Ratings |
Standard & Poor's Bank Loan Ratings are issue-specific ratings that capture
the impact of covenants, collateral and other repayment protection
provided specifically to holders of the senior bank debt. Bank loan
ratings may be higher than the borrower's corporate credit ratings.
Recovery Ratings are debt instrument-specific estimates of post-default
recovery level.
| Leveraged Commentary & Data |
Standard
& Poor's Leveraged Commentary & Data (LCD) delivers unique insight
into the leveraged loan market through a combination of data, analysis,
commentary and real-time news. The foundation of LCD's service is
a proprietary database of loan information - the only industry-wide
database of leveraged loan information memoranda.
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