List of ‘weakest links’ has most PE-backed companies since 2010

These 10 distressed companies have a combined affected debt of $14.9 billion, with the notable addition to this quarter’s list of SandRidge Energy Inc, which has an affected debt of $5 billion on its own.

Overall, 28 companies owned by buyout shops around the world made the list in September, the highest number of portfolio companies on the list since November of 2010. Moreover, the affected debt total reached its highest point since August of 2011.

Sponsors with multiple portfolio companies on the latest list include Apollo Global Management, The Carlyle Group, Energy & Minerals Group, and Welsh, Carson, Anderson & Stowe.

Each month, S&P compiles a list of what it calls “weakest links,” or companies most in danger of debt default. The latest iteration was published on September 4. To make the list, companies must have had speculative corporate credit ratings of B- or lower with either a negative outlook or a negative CreditWatch implication on August 27. From 1981-2014, an average of 7.5 percent of all global entities rated B- defaulted within 12 months, and the average default rate was much higher for entities rated lower than B-.

Overall, the latest S&P report totaled 161 companies globally, both sponsored and non-sponsored. The entire list has total affected debt of about $222 billion.

The 28 private equity-backed companies on the new list have a total of more than $93.4 billion in affected debt, which is up from the May 28 edition of the list, the last to be reviewed by Buyouts. Through the third quarter of 2015, 15 portfolio companies received a default rating and eight filed for bankruptcy.