Weak commodity prices could continue to raise the subordination risk for natural resource fallen angels, according to Fitch Ratings. Additionally, while lien limitations provide a line of subordination defense, the lack of explicit guarantee language and, in some cases, lax lien carve-out provisions can provide fallen angels with additional subordination opportunities.
The commodity downcycle has created a need for companies in the natural resource sector to preserve and generate liquidity. The traditional playbook has been some combination of operating cost cuts, capex reductions, asset sales and secured/unsecured debt and equity issuances...............................................Full Article: Source
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