The Goldman Sachs headquarters in New York. Analysts on a Goldman Sachs Group Inc. trading desk have told clients they have “serious doubts” that the auto-parts supplier First Brands Group will be able to avoid bankruptcy. Most Read from Bloomberg In a note on Wednesday morning, the analysts expressed concern about First Brands’ financing arrangements, some of which carry interest rates north of 30%, according to a copy of the message seen by Bloomberg. The analysts wrote that their research was based on ...

Core Viewpoint - First Brands Group is facing significant financial distress, with creditors experiencing billions in paper losses due to concerns over the company's off-balance sheet financing and lack of communication, leading to a drastic decline in the value of its debt [1][2][3]. Group 1: Financial Distress and Debt Issues - First Brands has approximately $6 billion in debt, with a $2 billion loan due in 2027 that has fallen to under 50 cents on the dollar from over 90 cents in just over a week [7][13]. - The company's riskier junior loans have plummeted below 20 cents, indicating severe market distress [7]. - Concerns about the company's financial practices, particularly its reliance on factoring for 70% of its revenues, have raised alarms among investors [11][12]. Group 2: Market Reactions and Investor Sentiment - Investors have reacted by selling loans to mitigate losses, and some have organized for potential restructuring [3][4]. - Apollo Global Management and Diameter Capital Partners have closed out their short bets against First Brands, reflecting a significant shift in market sentiment [6]. - The situation has drawn parallels to other recent credit market disruptions, highlighting broader concerns about opaque financing arrangements [5]. Group 3: Company Background and Ownership - First Brands, owned by Patrick James, has expanded through debt-funded acquisitions, primarily selling auto parts through major retailers [8]. - The company has been under scrutiny since pausing a proposed debt refinancing in August, prompting calls for a quality of earnings report [9][10]. - Fitch Ratings has rated First Brands at B, indicating a junk status, and noted the challenges posed by the large sum of debt maturing in 2027 [13][14].