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Already high number of ‘distressed’ EMEA companies to rise if recession hits

Publication Date: 02 Aug 2019 - By ReachX Team By ReachX Team
Actionable
Differentiated

Equity Fundamental Macro Equity MENA EU ex-UK UK

Number of ‘distressed’ companies in EMEA [‘Europe Middle East and Africa’] rose in H1 2019, with manufacturing sector players appearing particularly vulnerable and it could all get a whole lot worse should a global recession rear its head later down the year, or early on in 2020, according to a leading ratings agency. 

In a recent note to its clients, Moody’s said the tally of its rated companies on cusp of 'distressed' status was high but stable, with the number of EMEA speculative-grade companies deemed distressed or most likely to default (i.e., rated B3-PD negative and lower by Moody’s) rose in H1 2019 to 47, up from 39 at end-2018.

Manufacturing companies topped the list with five distressed companies, following the downgrades of IDEMIA Group (B3 negative), Praesidiad Group Limited (B3 negative) and Senvion SA (Ca negative).

"The number of distressed companies will likely rise in the next 12-18 months, particularly if a recession takes hold, as the number of companies close to joining the list significantly outnumbers those that could leave due to an upgrade," said Kristin Yeatman, Vice President and Senior Analyst at Moody's.

The number of these B2-PD and B3-PD companies not on the list remained stable at 213 at end-June 2019, although this is 35% higher than versus January 2018.

 

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