💥Watch Out!💥
A Near Intelligence Inc. ($NIR) Update, NanoString Technologies Inc. ($NSTG), two new names and more.
As the restructuring industry salivates over the prospect of some big names swirling around the bankruptcy bin — names like New York Community Bancorp Inc. ($NYCB), Spirit Airlines Inc. ($SAVE), Big Lots Inc. ($BIG) and Container Store Group Inc. ($TCS) — the reality is that activity remains depressed. Take a look at these charts ⬇️:
Here is what that looks broken down by sector ⬇️:
And that’s only half the story. The amount of high yield bonds trading distressed sits at approximately $87b — a figure that is down 38% FROM JANUARY 1, 2024. Go ahead, you can read that sentence again. 🤯
The figures aren’t any more encouraging — if you’re an RX professional, that is — in the leveraged loan space. The total amount of distressed paper sits at just over $83b, which is … wait for it … down 40% FROM JANUARY 1, 2024. Go ahead, marinate on that one too. Weren’t higher rates supposed to lead to all kinds of distress?!? We’re pretty sure we’ve been hearing that at cocktail parties for literally years.
So what is going on here? Per J.P. Morgan, one main culprit is liability management:
With distressed transactions equaling the number of defaults (Chapter 11 or payment miss) in January, distressed exchange activity has now matched or outpaced actual defaults in nine of the last ten months (49 exchanges vs 31 defaults over the 10-month period). This continues the trend of distressed exchanges as an alternative to Chapter 11: in 2023, there were 41 defaults vs 47 distressed exchanges.
There is no reason to think this trend will stop anytime soon. Certainly a number of RX pros don’t think it will. Here is a Debtwire piece titled, “Liability management deals heat up amid widespread borrower stress,” in which there was this kill shot of a quote:
“I’m confident that, unless something changes materially, 2024 is going to be even busier than 2023,” said Scott Greenberg, global chair of Gibson Dunn’s restructuring practice, adding that “it will be a combination of straight-up restructurings for companies that finally tip over and a tenfold amount of liability management transactions.”
Tenfold!?!?
Still, those of you more dependent upon in-court action, don’t you worry! There are still plenty of sh*tcos sure to wind their way into BK. We initiate coverage on a few names below, update a ‘23 filer, and discuss two filers from the past week. Let’s dig in ⬇️.