by greenmellen
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November 2015 – Moody’s default rate finished the third quarter at 2.1%, while the S&P default rate rose to 2.5%, its highest level since 2013. According to Moody’s, increasing liquidity pressures in the oil and gas industry are likely to propel a rise in the default rate to a four-year high of 3.8% in October 2016.
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by greenmellen
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November 2015 – Announced healthcare M&A transactions in the third quarter of 2015 totaled 379, up 10% compared with the same quarter a year ago, according to preliminary figures from Irving Levin Associates, Inc. Deal value in the third quarter of 2015 reached $198 billion, 20% more than the entire annual M&A spend in 2013 ($164 billion), largely due to two large cap transactions announced in the managed care sector totaling $91 billion (Aetna/Humana and Anthem/Cigna). Both deals are being studied carefully by the Federal Trade Commission
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November 2015 – The industrial sector remains in a choppy market relative to other market sectors. Key fundamentals remain broadly weak as Q3 U.S. real GDP capital spending rose at an annual rate of +2.1%, which is half the pace recorded in Q2, due primarily to: (1) declines in mining and oilfield equipment spending, (2) decreases in spending in nonresidential structures which fell at a (-4.0%) rate, and (3) soft order volumes in the trucking sector of 25.2k units vs. expected volumes in the mid-30ks. Furthermore, a strengthening of the U.S. dollar has…
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August 2015 – The SCA Business Services once again outperformed the broader market indices in Q2 2015, increasing by 2.2% compared to an increase of 0.2% for the S&P 500. However, despite the sector’s overall positive performance, there was significant variability among the various subsectors. The Professional Staffing sector (+2.5%), the IT Consulting sector (+4.8%), and Specialty Consulting sector (+3.8%) all significantly outperformed the S&P 500, while several other sectors such as…
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by greenmellen
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August 2015 – In this edition, we provide our perspectives on the restructuring market during the second quarter of 2015 which include: Moody’s default rate finished the second quarter at 1.9%, while the S&P default rate rose to 2.1%, the highest rate since December 2013 when it reached 2.2%. Moody’s expects the default rate to finish the year at 2.5%, while S&P is projecting 2.8% by the end of March 2016. Defaults appear concentrated, not widespread across industries. Although energy, metals, and mining comprise only 7% of leveraged loans, they represented almost half of defaults during the first half of 2015. Moody’s default-forecasting model estimates a near doubling of the 12-month probability of default in the oil & gas sector. Even if energy prices recover gradually, weaker oil & gas issuers will still be positioned for a much greater risk of default. Independent exploration and production companies should have the most trouble in the coming year, as they are typically smaller in size and more reliant on outsized capital spending to replenish their reserves.
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by greenmellen
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July 2015 – Announced healthcare M&A transaction in the second quarter of 2015 totaled 312, down 4% compared with the same quarter a year ago, according to preliminary figures from Irving Levin Associates. Inc. Deal value in Q2 2015 reached $54.2 billion, 60% less than the Q2 2014 total of $135.8 billion, which was the largest Q2 on record. One key factor in the lower dollar volume for this year’s Q2 was the lack of billion-dollar-plus acquisitions. Q2 2015 had 10 one billion-dollar-plus transactions, totaling approximately $40.7 billion. The same quarter a year earlier had 14 deals at $1 billion or more, representing a total of $117.1 billion. The Long-term Care sector generated the highest transaction volume for the quarter with 21% of the quarter’s transactions (64 deals) with REITs announcing 14 acquisitions totaling $4.1 billion.
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by greenmellen
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August 2015 – During much of Q2 2015, the industrial sector has shown sluggish to no growth across several indices as the ISM Manufacturing Index for July came in at 52.7 and well below consensus, and July’s PMI Manufacturing Index was in line with estimates at 53.8. Key drivers in these reports include: weak employment among manufacturers, continued contraction in exports as new export orders fell for the fifth contractionary reading in the last seven months, and backlogs dropped by 4.5 points representing the sharpest decline in three years. Despite these negative trends, there are some positive elements in the current manufacturing environment. Specifically, production was strong at 56.0 and new orders rose by 0.5 points to the strongest reading of the year, suggesting that domestic demand is improving. Positive trends in domestic demand should help alleviate, but not offset…
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May 2015 – In this edition, we provide our perspectives on the restructuring market during the first quarter of 2015. During the first quarter, the big news for loan defaults was Caesars’ long-anticipated bankruptcy filing. According to Moody’s and S&P, default rates finished the first quarter at 1.9% and 1.7%, respectively. Moody’s expects the default rate to rise to 2.7%, while S&P is projecting a 2.5% default rate in 2015. Sectors to continue to watch for restructuring and distress in 2015 include energy, retail, hospitals and municipalities. Oil & Gas-related loans account for just 4.8% of the S&P Index, yet a significant 39.6% of the Index’s distressed ratio, which tracks the percent of performing Index loans trading at a yield of L+1,000 or higher.
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May 2015 – The SCA Business Services Index significantly outperformed the broader markets in Q1 2015, increasing by 10.2% compared to an increase of 0.5% for the S&P 500. While virtually all subsectors of the SCA Business Services Index outperformed the broader market, the SCA Professional Staffing sector (+14.8%), the SCA HR Services sector (+16.7%) and the SCA IT Consulting sector (+9.8%), each exhibited significant appreciation due to investor expectations for accelerating economic growth in the U.S., a tightening labor supply (particularly among skilled professionals), and increased IT spending driven by corporate demand for productivity gains.
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by greenmellen