From BBB to Bust: Anatomy of a "Fallen Angel"
Why This Credit May Be Poised for Wider Spreads Amid Growing Pressures
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This week, I’ll be looking into a large American company whose credit profile appears challenged given its ongoing operational issues and elevated leverage. While optically the maturity profile and near-term liquidity appear sufficient, beneath the surface lies a business facing structural headwinds.
A recent refinancing provided temporary relief but fails to address fundamental business challenges including persistent market share erosion, competition, and potential tariff impacts. Most concerning is that topline pressures continue despite increased investment, suggesting deeper structural issues.
In this post, I’ll examine whether the company’s cap stack, supported by an unencumbered balance sheet, warrant current spread levels or if deteriorating fundamentals could drive meaningful spread widening ahead of several 2025 catalysts.
Let’s dive in.