Revolving credit facilities continue to show strong bankruptcy recoveries and offer the highest likelihood of recovery among the various types of rated first-lien debt, according to a new report from Fitch Ratings.

Fitch analyzed revolver utilization rates and recovery rates for 411 facilities in our U.S. corporate enterprise valuation and creditor recovery bankruptcy case study dataset, comprised of mainly large broadly syndicated loan issuers.

“Asset-backed loans (ABLs) demonstrate some of the highest bankruptcy recovery rates in the first-lien universe, seeing nearly 100% recovery rates. ABL collateral is typically a well-defined set of assets that is easily measured and monitored, and they have structural features that support the outstanding recoveries,” said Joshua Clark, Senior Director, Fitch Ratings.

Revolver facilities had an ultimate recovery average of 87%, 96% for ABLs and 80% for cash flow revolvers. The majority (73%) of revolver facilities received recoveries of 91%?100%, equivalent to Fitch’s strongest Recovery Rating (RR) category of ‘RR1’. Recovery distributions for revolver claims were paid exclusively in cash for 63% of the 411 facilities.

Petition date revolver usage data supports Fitch’s analytical approach of assuming full draws of cash flow facility commitments and variable ABL utilization in our RR analysis for U.S. corporate issuers rated ‘B+’ and lower.