Money Makers Mentor

PE Firms See Fewest Distressed Assets of 2020 During Q4

The U.S. economy continued to show signs of a late-year recovery. After greatly suffering in the spring from the initial shock of the COVID-19 pandemic, private equity firms during Q4 2020 saw the fewest distressed assets among their portfolio companies.

In all, credit issuers assigned 28 different private equity-backed companies a distressed rating in Q4 2020. A distressed rating is defined as an issuer credit rating of B- or lower with a negative outlook from S&P or a corporate family rating of Caa1 or lower with a negative outlook from Moody’s.

Additionally, seven private equity portfolio companies end the quarter with a default rating, indicating a Chapter 11 filing or default of a loan payment.  

Firms may not be in the clear just yet, however.

While the number o…

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