In 2021, distressed companies (rated B3 negative and lower) in Europe, Middle East and Africa will remain close to the all-time high of 130 in June 2020, as the Coronavirus pandemic continues to hamper their performance, according to Moody's latest B3N list. The B3N list is the number of non-financial corporate debt issuers rated B3 negative rating or lower.
Key highlight - Sectors with the most companies on Moody's B3N list are manufacturing (17), services (16), energy (9) and retail (7). The UK has the highest number of companies on the list (28), while Germany showed the most volatility with the number of its companies on the list ranging from seven in December 2019 to 20 in June 2020 and 15 in December last year.
The number of distressed EMEA companies on Moody’s latest B3N list – which shows how many of the region’s non-financial corporate debt issuers have a B3 negative rating or lower – will remain close to record-highs this year as the coronavirus fallout continues to weigh on their performance, Moody’s Investors Service said in a report published today.
The sectors with the most companies on Moody’s B3N list are manufacturing (17), services (16) and energy (9) / retail (7). The UK has the highest number of companies on the list (28), while Germany showed the most volatility, with the number of its firms on the list ranging from seven in December 2019 to 20 in June 2020 and 15 in December last year.
The total number on the list fell to 113 in December 2020, from an all-time high of 130 in June. Even with this reduction, there are still nearly twice as many companies rated B3 and lower than the previous all-time December 2019 high of 60.
Downgrades and negative outlook actions fell dramatically toward the end of 2020 as companies in EMEA adjusted to the impact of the coronavirus.
“We expect the number of companies rated B3 and lower to remain broadly stable over the first six months of 2021 as defaults, upgrades, and withdrawals are set to outnumber downgrades at those levels,” says Kristin Yeatman, Vice President – Senior Analyst at Moody’s Investors Service. “On the other hand, companies close to joining our B3N list rose to 219 in December from 203 at the end of June and have a weaker ratings profile. This reflects continued vulnerability as the market stabilises.”
Moody’s B3 Negative and Lower List includes all EMEA nonfinancial corporate issuers with: a Probability of Default Rating (PDR) of Caa1 or lower; a B3 PDR with a negative rating outlook; or a B3 PDR on review for downgrade. The current list reflects rating activity up to December 2020.
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