Although the number of “CCC” rated companies has reached record highs since the start of the pandemic, only 16% of “CCC” rated issuers have defaulted in the past 12 months, compared to a historical average of 35%. This is what we read in an S&P report that highlights how the impact of the pandemic has caused companies with relatively stronger businesses to downgrade than those downgraded in the pre-pandemic era, which means that their recovery prospects may be better. once the current restrictions are removed.
“Upgrades from the CCC category have historically taken longer in the years following a major crisis, as improved credit metrics need to be shown to be sustainable over time. However, default rates may rise in 2022. if growth and deleveraging prospects were to stop and if key support measures such as unprecedented political support and accommodative capital markets, essential for weaker companies, were lacking. “