by Structured Settlement Watchdog
JG Wentworth is the market leader in the structured settlement secondary market but according to S&P Global ratings, JG Wentworth "is saddled with an untenable debt burden".
On June 26, 2017, S&P Global Ratings said lowered its issuer credit rating on J.G. Wentworth LLC (JGW) to 'CCC-' from 'CCC+'. The outlook is negative. A CCC rating represents an extremely high risk bond or investment; banks are not allowed to invest in CCC rated bonds. CCC bonds are junk bonds. JG Wentworth's credit rating is worse than Greece.
At the same time, S&P lowered its issue-level rating on the company's senior secured debt to 'CCC-' from 'CCC+'. The recovery rating remains at '4', indicating that creditors could expect 30%-40% recovery in the event of payment default. "Our rating action today reflects our opinion that a distressed debt exchange transaction, which the company publicly disclosed it was contemplating earlier this year, is likely in the next six months" said S&P Global Ratings credit analyst Chris Cary. JGW's proposals indicate two scenarios: the first is the company aiming to reduce its debt to $90 million from $449 million, and thesecond is the company proposing to reduce its debt to $65 million. Both scenarios would greatly enhance the company's financial position and likely,in our view, position the company to face upcoming headwinds from both rising interest rates in its structured settlements business and expected lower refinancing volume in its mortgage business
The highlighted statement is also a clue into what motivates JG Wentworth competitor Novation Funding to use "Fire Sale" marketing featuring daily blasts about rising interest rates. As Standard & Poors suggests, rising interest rates are not good for structured settlement factoring companies and Novation Funding is out there hustling annuitants to sacrifice long term security for pennies on the dollar.