Lower recoveries likely on US corporate defaults during coronavirus pandemic
Recoveries will decline in a pandemic-driven default cycle
Our review of past recoveries shows that US companies that default because of the coronavirus pandemic will likely return less to investors than those that defaulted because of the 2008-09 recession, with prospects particularly poor for first-lien debt. We expect that more companies will complete distressed exchanges, and that many of those firms will later file for bankruptcy. Recoveries will be even worse in a prolonged downturn.
