SRS Acquiom surveyed lending professionals in May and June 2020 to capture the pulse of the distressed debt market. Results were published in the SRS Acquiom Barometer™ on Distressed Debt and Lending During COVID-19.

On July 22, 2020, The American Bankruptcy Institute and SRS Acquiom hosted a panel discussion on the Barometer findings and other changes being reported in the credit markets. The discussion focused on capturing Q1 2020 changes versus year ago, trends playing out currently, how 2020 differs from other recessions and the implications.

1. WHAT HAPPENED?
“New issuances declined sharply in the first quarter. March recorded only $34 billion, compared to $118 billion in February and $145 billion in January. Year over year, that’s a 57% drop.” — THOMAS FINNIGAN, Head of Complex Credits | White Oak

New lending opportunities

Source: Source: SRS Acquiom Barometer™ on Distressed Debt and Lending During COVID-19: May results | June results

2. TRENDS
“Real payment defaults happened at the end of the second quarter. We are working with clients to restructure their debt, and we expect waves of defaults will continue to occur.” — SAMANTHA GOOD, Partner, Kirkland & Ellis

“In June, 53% of participants in the SRS Acquiom Barometer survey said 10-25% of their portfolio is in default or has a waiver in place, up from 35% in May. This is no surprise, as more borrowers are distressed due to the pandemic and economic uncertainty.” — RENEE KUHL, Executive Director, Loan Agency, SRS Acquiom


Source: Source: SRS Acquiom Barometer™ on Distressed Debt and Lending During COVID-19: May results | June results

3. DIFFERENCES
“The federal government has taken unprecedented steps to stabilize the economy, including a bond buying program for ETF’s, High Grade, and High-Yield debt. Pricing has increased, and we see far more buyers than sellers currently, particularly in loans.” — PAUL ST. MAURO, Head of Bank Loan Agency Services, Seaport Global


Source: BBC Research. Note: Great recession stimulus numbers are in 2020 dollars.

4. IMPLICATIONS
“We’re seeing a repeat of trends from prior contentious credit facilities. Travelport is transferring assets to unrestricted subsidiaries, while there are coercive re-tranchings of first lien debt at Serta. Expect a tightening of credit agreements going forward.” — HARRISON DENMAN, Partner, Restructuring and Insolvency, White & Case


Source: SRS Acquiom Barometer™ on Distressed Debt and Lending During COVID-19: May results | June results

True to our heritage of bringing simplicity, efficiency and expertise to complex financial transactions, the SRS Acquiom Loan Agency Team brings decades of combined experience in providing unbiased, independent, third-party loan agency services for thousands of complex credit agreements.

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