DISTRESS WATCH: First Brands’ Fall Highlights Credit Dispersion

The First Brands’ debacle highlights the level of dispersion between the haves and have-nots in the leveraged loan market. The US auto parts manufacturer filed for bankruptcy on Sunday in Texas less than two months after seeking to refinance its $6 billion debt. Loans due 2027 are indicated at around 36 cents on the dollar, down from the mid-90s earlier this month.

Strategists at Morgan Stanley said in a report on Friday that the company’s crisis is an idiosyncratic event but shows credit dispersion remains a “key theme” especially among those names at the bottom end of the ...