EMEA Corporate Defaults Through Amend & Extend to Increase

Fitch Ratings treats some amend and extend (A&E) exercises initiated by stressed corporate borrowers as distressed debt exchanges (DDEs), eventually leading to restricted defaults (RDs), Fitch Ratings reported. Since the coronavirus pandemic began affecting Europe in March 2020, Fitch has classified 11 transactions in its EMEA bond and loan portfolio as DDEs, which will contribute to default rates rising towards 4%-5% by end-2020 from 1% in 2019. Examples of transactions that we recently treated as DDEs include UK-based gaming group Inspired Entertainment, which entered into a grace period following the non-payment of its loan interest coupon. The company announced an agreement with lenders to convert a cash-pay portion of the coupon to payment-in-kind. Read more