Europe's most indebted firms face refinancing crunch as rates climb
A handful of heavily leveraged European companies, many rated CCC, are confronting looming debt maturities while central banks push interest rates higher.
Rising deposit rates at the European Central Bank and a parallel hike by the U.S. Federal Reserve have amplified borrowing costs for Europe’s most vulnerable companies. S&P Global Ratings highlighted ten CCC-rated borrowers whose loans, bundled in collateralised loan obligations, total €5.3 billion and mature mainly in 2027-2028. The list includes the operator of Legoland and Madame Tussauds, the Lipton tea parent Cuppa Bidco, residential-property manager Emeria, chemicals group Arxada, telecom empire Altice International, and luxury carmaker Aston Martin.
Yields on their senior debt now range from roughly 5% to more than 60%, signalling investor doubts about repayment. While Merlin Entertainments managed a modest refinancing, others like Altice and Aston Martin see bond prices plunge, implying yields near 60% and 37% respectively. The broader high-yield market remains relatively stable, but these outliers illustrate how earlier cheap-money borrowing is now exposing a thin slice of Europe’s corporate sector to severe refinancing risk.
Why it matters
The story shows how higher rates threaten heavily indebted European firms, potentially leading to defaults that could ripple through financial markets.
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