Intensifying financial strains pushed a couple of speculative-grade U.S. companies to skip interest payments this month, Fitch Ratings says.
In a new report, the rating agency said WeWork and Audacy didn’t make scheduled interest payments in early October.
Fitch attributed the missed payments to “the ongoing strain from high debt burdens, declining operating revenues and unsustainable capital structures.”
Fitch said that Audacy, an audio content and entertainment company, skipped a US$18-million interest payment on Oct. 2.
“Audacy has been challenged by falling revenue and EBTIDA and elevated leverage,” it said.
That same day, WeWork also missed a total US$37.3 million in interest payments.
“The company had enough liquidity to make the interest payment but elected to withhold payment to preserve liquidity and commence restructuring discussions,” Fitch said, citing a press release from the company.
The missed payments don’t yet count as defaults, as the companies are still in their grace periods. “However, they are tangible examples of mounting stress,” Fitch said.
Amid accumulating financial pressures, the rating agency’s list of bonds that are most at risk of default has increased by US$4.3 billion.
So far this year, U.S. high-yield defaults total US$33.6 billion from 30 issuers, compared with US$20.2 billion from 13 issuers in the same period last year, Fitch said.