The U.S. economy continued to show signs of a late-year recovery. After greatly suffering in the spring from the initial shock of the COVID-19 pandemic, private equity firms during Q4 2020 saw the fewest distressed assets among their portfolio companies.
In all, credit issuers assigned 28 different private equity-backed companies a distressed rating in Q4 2020. A distressed rating is defined as an issuer credit rating of B- or lower with a negative outlook from S&P or a corporate family rating of Caa1 or lower with a negative outlook from Moody’s.
Additionally, seven private equity portfolio companies end the quarter with a default rating, indicating a Chapter 11 filing or default of a loan payment.
Firms may not be in the clear just yet, however.
While the number o...