Credit markets are surging on hopes that a successful coronavirus vaccine will soon be rolled out, slashing the inventory of distressed debt and all but halting U.S. bankruptcy filings. But the pandemic has permanently damaged travel and retail companies, some of which may not survive next year, according to Kelly Conlan, managing director at Duff & Phelps LLC.

“The next wave of filings will come from the companies which continue to be impacted by the pandemic, even after a vaccine is distributed,” said Conlan, who specializes in disputes and tort claims consulting.

Providers of travel products and services -- including conferences -- are most at risk as work-from-home measures become entrenched and their clients transition to video communication, according to Conlan.

“Huge industries that relied on business travel won’t return to pre-Covid levels,” Conlan said, citing hotels and airlines as examples. “The whole system as we know it is beginning to contract.”

Retail will also struggle, after a disappointing back-to-school shopping season, with the exception of Amazon and companies like Walmart that successfully pivoted to e-commerce. “The usual end-of-the-year Christmas miracle isn’t happening this year,” Conlan said.

Retailers are negotiating with landlords and restructuring debt to avoid filing for bankruptcy. But these measures are “Band-Aids to get through year’s end that will only last until early next year when a robust number of bankruptcy filings will come,” Conlan said.

Her forecast for the timing of the next wave of Chapter 11s is in line with that of other bankruptcy experts. Borrowers in the entertainment, food and beverage, hospitality and leisure services are especially vulnerable the Covid-19 pandemic, according to Howard Steel, partner in the financial restructuring group at law firm Goodwin Procter.

Slow November

There was just one Chapter 11 filing by a company with more than $50 million in liabilities in the week ended Nov. 28. That matched the prior week -- the slowest since mid-January -- making November the lightest month of the year with just 11 filings, data compiled by Bloomberg show.

Getting December off to an early start, Seadrill Partners LLC filed for Chapter 11 in Texas on Tuesday. The oil rig operator aims to fix its balance sheet after years of low oil prices amid a pandemic that’s already forced some of the biggest companies in the sector to seek creditor protection.

There have been 228 bankruptcy filings year-to-date by companies with more than $50 million in liabilities, according to data compiled by Bloomberg. That’s the most since 2009, when there were 275 in the comparable period.

The total amount of distressed bonds and loans traded shrank 13% to about $200 billion as of Nov. 27. That’s down from $935 billion in March, Bloomberg data show. Volume of distressed bonds declined 11.4% while troubled loans dropped 16.6%.

There were 419 distressed bonds from 223 issuers trading as of Monday, down from 470 and 228 the previous week. That’s significantly less than the 1,896 deals from 892 companies at the March 23 peak.

Diamond Sports Group LLC had the most distressed debt of issuers that hadn’t filed for bankruptcy as of Nov. 27, data compiled by Bloomberg show.

Several distressed companies have significant dates approaching. Transocean has a deadline to cure a default alleged by certain creditors, while Diamond Sports has a loan payment due.