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The Default Notice — Brought to you by PE-backed ‘sidestepping’

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Market Wrap

The Default Notice — Brought to you by PE-backed ‘sidestepping’

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  1. 9fin team
23 min read

Welcome to 9fin’s weekly newsletter dedicated to US distressed debt, restructuring and special situations news and developments. Check out what else we do for distressed and restructuring here.

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Private equity-backed companies are defaulting at almost double the clip of non-sponsor backed companies — with a higher proportion of defaults coming from LMEs versus bankruptcies. And it’s not surprising which PE firms’ portfolio companies account for most of those defaults over that time span, according to a new report by Moody’s on defaults among rated PE portfolio companies from the period between 2022 and August of this year.

While non-PE backed firms defaulted at a rate of 7.1% during that period, companies owned by the 12 largest sponsors tracked by Moody’s defaulted at a rate of 14.3%. The rate was even worse among other PE firms tracked by the credit rating agency, at 16.7%.

Moody’s observed 31 defaults among 217 firms owned by the 12 largest sponsors, a list that includes Apollo, Blackstone, Clearlake and Platinum Equity.

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