Munis

“Since April, the decline in corporate credit has resulted in a significant number of downgrades among the assets underlying some CLOs,” a Moody’s press release stated on Wednesday.

In a report issued Tuesday, the ratings agency notes that 1,287 companies as of April 28 faced prospects of potential debt and issuer downgrades, impacted by the coronavirus outbreak and a virtual shutdown of the global economy this spring.

A $425 million franchise-fee securitization sponsored by TGI Fridays has taken another ratings hit because of the 796-store chain’s increasingly poor financial performance, now magnified by COVID-19 stresses.

Fitch Ratings on Tuesday sharply downgraded all of Hertz Global Holdings’ outstanding asset-backed bonds, amid growing doubts that the rental car company can pay off the notes in the event of a COVID-19 pandemic-driven bankruptcy.

An indefinite closure of New York retail businesses during the COVID-19 pandemic added credit pressure on revenue bonds issued for the state’s largest mall.

The agency is scrutinizing recent deals involving credit-card receivables from private specialty finance companies that issue general-purpose and private-label retail cards to a near-prime/non-prime customer base.

About $474M in bonds backed by aircraft leases managed by GE Capital Aviation Services (GECAS) has been downgraded, tied to the increasingly poor financial health of several foreign airlines from the COVID-19 shutdown in global air traffic.

Hertz and Avis will likely each have to seek to relief from lenders – including asset-backed securities investors that make up the bulk of funding for both companies’ fleets, Moody’s stated in research reports.

Moody’s Investors Service has placed hundreds of non-senior U.S. CLO tranches under review for downgrade, affecting 358 broadly syndicated loan-backed portfolios as Moody’s measures the ongoing economic shocks of the coronavirus outbreak.

The Fed's actions are designed to ensure the flow of credit to midsize businesses and state and local governments hit hard by the economic impact of the coronavirus pandemic.