💥Retailers Stumble into '24💥
Updates for Joann Stores, Big Lots & Selina Hospitality. Inversiones & Nogin File.
In terms of chapter 11 bankruptcy activity November ended with a whimper. WeWork Inc. ($WE) garnered most of the industry’s attention while the hangover from the earlier Party City filing carried on through to the Anagram Holdings LLC case. Beyond those two … well … spitwads, basically. According to JPMorgan, the default rate is set to end the year around 3%.*
What factors into that figure? Per JPM:
Year-to-date a total of 40 companies defaulted totaling $57.1bn in bonds ($27.5bn) and loans ($29.6bn), while 45 companies completed a distressed exchange totaling $25.0bn in bonds ($10.1bn) and loans ($14.9bn). Notably, the $25.0bn of distressed exchange volume is the highest total in a calendar since 2008 ($36.4bn). The combined total of $82.1bn defaults/distressed exchanges YTD already ranks as the 4th largest on record. Looking forward, JPM forecasts high-yield bond and leveraged loan default rates to decline modestly in 2024 to 2.75% (HY) and 3.25% (LL), respectively, which we preliminarily expect to rise in 2025 to 3.00% and 3.75%.
Fitch Ratings isn’t exactly on the same page with JPM:
Fitch Ratings is forecasting corporate high yield (HY) and leveraged loan (LL) default rates to rise in 2024 from 2023 levels before declining in 2025. We expect 2024 default rates of 3.5%-4.0% for leveraged loans, and 5.0%-5.5% for HY, up from 2023 default forecasts of 3.0%-3.5%, and 2025 default rates to range from 2.0%-3.0% across both markets. On an issuer count basis, we forecast 3.5%-4.0% for leveraged loans and 4.5%-5.0% for HY in 2024.
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As the calendar turns, all eyes turn to the issuer of November’s worst performing loan, Cano Health ($CANO), which appears headed towards a 1H’24 filing. But don’t worry: we’ve got a long list of other names we’re tracking.
Stick with us as we close out ‘23 soon and head into ‘24. 👍
*They also point out that, while low, this number is 2x ‘22’s rate which, in turn, was 3x ‘21’s rate.
💥New Chapter 11 Bankruptcy Filing - Nogin Inc. 💥
On December 5, 2023, NY-based Nogin Inc., Nogin Commerce Inc. and Native Brands Group LLC (collectively, the “company” or the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Goldblatt). The debtors are — ⚡️wait for it⚡️— yet ANOTHER busted deSPAC to soil our precious bankruptcy dockets. If there’s one thing we love more than deSPAC sh*tco bankruptcies it’s deSPAC sh*tco bankruptcies that list professional services firms as the top general unsecured creditors, LOL. Looks like some folks at Jefferies, Stifel and Latham & Watkins are gonna take a solid hit on the ol’ noggin. 😜
They wouldn’t be alone. There’s also shareholders. Check it: