Angola, Argentina, Armenia, Aruba, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belize, Bhutan, Bolivia, Bosnia-Herzegovina, Brazil, Brunei Darussalam, Cambodia, Chile, China, Colombia, Costa Rica, Curacao, Dominican Republic, Ecuador, Egypt, El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Honduras, Hong Kong, India, Indonesia, Israel, Jamaica, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Lebanon, Liberia, Macao Special Administrative Region of China, Malaysia, Marshall Islands, Mauritius, Mexico, Mongolia, Morocco, Namibia, Netherlands Antilles, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Qatar, Russian Federation, Saudi Arabia, Singapore, South Africa, Sri Lanka, Syrian Arab Republic, Taiwan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, and Yemen. The issuer with the longest time to default in 2020 was U.S.-based Revlon Inc., with an initial issuer credit rating of 'AA' as of Dec. 31, 1980, 39.4 years before the rating was lowered to 'SD' (selective default) in May 2020. The U.S. has the largest number of rated corporate issuers, accounting for roughly 45.9% of the global total at the start of 2020. For instance, in table 32, the weighted average first-year default rate for all speculative-grade-rated companies for all 40 pools was 3.71%, meaning that an average of 96.29% survived one year. On April 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Utah-based credit report repair service provider PGX Holdings Inc. to 'D' from 'CCC'. We believe this bankruptcy filing is due to the combined effect of the coronavirus pandemic and the company's weak performance in 2019. On Sept. 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based business process outsourcing and product support services provider iQor Holdings Inc. to 'D' from 'CC' after the issuer filed petition under Chapter 11 of the U.S. Bankruptcy Code. For example, three-year transition matrices were the result of comparing ratings at the beginning of the years 1981-2018 with the ratings at the end of the years 1983-2020. On Aug. 26, 2020, we withdrew the issuer credit ratings on the company at its request. Post default, the issuer has been upgraded three times, leading to a 'B' rating on Dec. 14, 2020, with a positive outlook, due to its improved financials and liquidity. /ratings/en/research/articles/210407-default-transition-and-recovery-2020-annual-global-corporate-default-and-rating-transition-study-11900573 On Dec. 9, 2020, S&P Global Ratings withdrew its 'D' issuer credit rating at the issuer's request. On Feb. 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on RentPath LLC to 'D' after the issuer defaulted and filed for Chapter 11 bankruptcy. Average cumulative default rate calculation. We combined these percentages to obtain cumulative default rates for the 40 years the study covers (see tables 24-26 and 30-32). This was especially evident during the global financial crisis, when many highly rated banks defaulted within a short amount of time after initial downgrades. For example, if an entity was rated 'A' on Jan. 1, 2020, and was downgraded to 'BBB' in the middle of the year and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would be included only in the percentage of issuers that began the year as 'A' that ended the year as 'A'. On Aug. 7, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD'. On Oct. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on the Netherlands-based self-service retail and coffee services company Selecta Group B.V. to 'SD' from 'CC' after the England and Wales High Court sanctioned the scheme of arrangement proposed by pan-European vending machine operator Selecta Group B.V. and backed by the group's creditors. Throughout most of the year, the U.S. accounted for the majority of the debt (see chart 14). We considered the transaction as distressed given the company's weak operating performance, negative cash flow generation, and near-term debt maturities. There were no downgrades among the eight 'AAA' rated companies in 2020. On Aug. 4, 2020, we lowered our issuer credit rating on Forum to 'SD' from 'CC' as the company closed on its previously announced debt exchange for the majority of its 6.25% senior unsecured notes due in October 2021. Specifically, 87.6% were rated 'CCC+' or lower just prior to default, which is much higher than the 69.4% long-term average. On Aug. 26, 2020, S&P Global Ratings raised the issuer credit rating to 'B-' from 'SD'. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On April 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Delaware-based physician staffing and ambulatory services company Envision Healthcare Corp. to 'SD' from 'CC' after the settlement of its debt exchange offer on the notes due in 2026 and offering on 53-55 cents on the dollar for the new secured term debt. to 'SD' from 'CC' following its distressed exchange. Therefore, if an issuer has rated debt but not an issuer credit rating, we assign a proxy rating so that the CreditPro corporate dataset accurately represents the complete universe of ratings. All rating changes that occur in between are ignored. On April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based telecom service provider Speedcast International Ltd. to 'D' from 'CCC' after the issuer missed interest payments on its US$600 million term loan, due on March 31, 2020. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. Seven others also had default rates in 2020 that exceeded their long-term averages--leisure time/media, transportation, telecommunications, health care/chemicals, real estate, utilities, and high technology/computers/office equipment. As a result, the noteholders received less than the original promise. On Aug. 17, 2020, S&P Global Ratings withdrew its ratings on the issuer. On April 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based clinical toxicology laboratory services provider New Millennium Holdco Inc. to 'D' from 'CC'. We treated this as distressed because the issuer did not meet its contractual obligation to pay principal and interest in a timely manner, and did not adequately compensate lenders for agreeing to temporarily waive their rights. On Aug. 26, 2020, we raised the issuer credit rating to 'CCC' from 'SD'. The issuer entered into a forbearance agreement for its term loan, which allowed it to defer the interest and principal payments for 30 days until April 30, 2020. The squared difference between each cohort's transition rate and the weighted average--which is the data point in each cell--is multiplied by each cohort's weight. The fixed rate loan and the floating rates loans were repurchased at 85% and 84.875% of the original price, respectively. COMMENTS; 4 May, 2022 | 17:17; . On May 27, 2020, we lowered our ratings on the issuer to 'D' from 'SD' after it filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, and subsequently on June 26, 2020, we withdrew our credit ratings. Of the 28 defaults from companies that were not rated at the beginning of 2020, 11 were companies that had ratings withdrawn before the beginning of 2020 and 17 were companies that were first rated by S&P Global Ratings after Jan. 1, 2020. Note: Numbers in parentheses are standard deviations. On April 12, 2020, Pace Industries Inc. filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. This nonpayment was considered a general default, and the company was not expected to be able to pay most of its obligations. This helps explain the resemblance between the annual default rates of nonfinancial entities and those of the speculative-grade segment as a whole, which certainly contributes to the vast differences between cumulative default rates across financial and nonfinancial sectors (see table 16). Selective defaults accounted for just over half of all defaults in 2020. On Nov. 3, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on the basis of increased liquidity. The company eliminated its prepetition debt during the bankruptcy process. As a result, the trustee placed the issuer into receivership (with KordaMentha as receivers). On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Alta-based frac sand producer and supplier Source Energy Services Ltd. to 'D' from 'CCC-' after the issuer missed the interest payment due on June 15, and we believed the company was unlikely to make the interest payment within the 60-day grace period. 3Q 2021 . S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. On Feb. 26, 2020, S&P Global Ratings withdrew its ratings on the issuer. 1-2.Introduction to Credit Risk - Copy (3).pdf - Credit The issuer aims to eliminate US$840 million of debt by using restructuring and a US$230 million debtor-in-possession facility. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Delaware-based oil and gas exploration and production company Bruin E&P Partners LLC to 'D' from 'CC' after the issuer filed for Chapter 11 bankruptcy. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. Historically, nonfinancial defaulters tend to have a much smoother and shorter path to default (see chart 12). At the time of the withdrawal, our 'D' rating reflected the nonpayment of the coupon on the $350 million Eurobond in April 2020 followed by a nonpayment of its mezzanine loan. On April 29, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Kansas-based consumer products supplier CSM Bakery Solutions LLC to 'SD' from 'CCC' after the issuer executed an amendment to extend the maturity of its US$105 million asset-based lending and has not completed refinancing of its first-lien term loan due July 2020. On Dec. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Houston-based oil and gas exploration and production company Callon Petroleum Co. to 'SD' from 'CC' following a distressed exchange wherein it exchanged US$217 million of new 9% second-lien notes due 2025 for US$389 million of its existing unsecured notes. Default, Transition, and Recovery: Growing Strains Could Push The U.S. Speculative-Grade Corporate Default Rate To 4% By December 2023. (For a detailed explanation of our data sources and methodology, see Appendix I.). On Feb. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Italy-based maritime transportation services Moby SpA to 'SD' from 'CCC-' after the company entered into a standstill agreement to not pay scheduled payments in mid-February. We would include this hypothetical company in the 1987 and 1988 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Therefore, each annual default study is self-contained and effectively supersedes all previous versions. Earlier, on March 2, 2020, we lowered our issuer credit ratings on LSC to 'CC' from 'CCC+' after the issuer entered into a forbearance agreement for failing to comply with its consolidated leverage and interest ratio credit agreements covenants. Research & Ratings: Default & Ratings Analytics - Moody's The issuer announced that it voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code. However, some transition tables may use full rating categories for practical reasons. A mere 0.88% of the approximately $500 billion of U.S. CLOs issued from 1994-2009 that were rated by S&P Global Ratings experienced defaults, and no defaults were recorded among the AAA- and AA-rated tranches rated by Moody's. 7 In fact, default rates among CLOs were not only lower than those of CDOs, but also lower than those of similarly . to 'SD' from 'CCC-' after the issuer missed principal payment on its IDR150 billion domestic notes and entered a 10-day grace period. On Aug. 19, 2020, we raised our issuer credit rating on Forum to 'CCC+' from 'SD' following the completion of its debt exchange for the majority of its 6.25% senior unsecured notes due 2021. Based on quarterly intervals of measurement (nonannualized), default rates in second-quarter 2020 reached their highest point since the second quarter of 2009 (see chart 16). Over the long term (1981-2020), heightened ratings stability is broadly consistent with higher ratings (see table 21). Tables 30, 31, and 32 are broken out by the broadest rating classifications (all rated, investment grade, and speculative grade). The global corporate default tally has increased to 17 after two issuers defaulted since our last report. Default, Transition, and Recovery: The U.S. Speculative-Grade Corporate On Dec. 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pennsylvania-based high-availability infrastructure and disaster recovery services provider Sungard AS New Holdings LLC to 'SD' from 'B-'. Later, on Aug. 11, 2020, we withdrew our issuer credit ratings on the company at its request. On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on United Arab Emirates-based health care service provider NMC Health PLC to 'D' from 'CCC-' after the issuer missed interest payments on its bank loans. Defaults in 2020 came from all sectors, but--consistent with recent years--were heavily represented by two sectors: the energy and natural resources sector (with 62 defaults) and the consumer services sector (with 60 defaults). For instance, 92.9% of issuers rated 'A' at the beginning of 2020 were still rated 'A' by Dec. 31, 2020, whereas the comparable share for issuers rated 'B' was only 72%. On Aug. 5, 2020, we raised our issuer credit rating on SMLP to 'CCC' from 'SD' on completion of the distressed exchanges. A key consideration when analyzing transition matrices that present averages computed over multiple static pools is that the standard deviations associated with each transition point in the matrix are large relative to the averages (outside of stability rates). Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. The 2021 corporate default tally of 72 is the lowest since 2014--down nearly 70% from the previous year's total . PGS was also in talks with lenders to secure a new capital structure. But over the past three years--now that more than a decade has passed since the financial crisis of 2008-2009--financial services defaulters show a median rating in the 'B' category five years prior to default. On Feb. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Kansas-based Pizza Hut restaurants franchise operator NPC International Inc. to 'SD' from 'CCC-' after the company decided not to make interest payments due Jan. 31, 2020. On Jan. 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on paper manufacturer Lecta S.A. to 'SD' from 'CC' after failing to pay the interest of 3.8 million due November 2019 on its 225 million senior secured floating notes due 2020. On Dec. 23, 2020, we raised the issuer credit ratings to 'B-' from 'D'. This growth of the publicly rated speculative-grade market in Europe has resulted largely from newly assigned speculative-grade ratings (in addition to downgrades). This reflects our forward-looking opinion post the reduction in outstanding gross debt by approximately $127 million. We use the static pool methodology to avoid certain pitfalls in estimating default rates, such as by ensuring that default rates account for rating migration and allowing for default rates to be calculated across multiperiod time horizons. With its highly developed financing markets, the U.S. also has a considerably higher share of speculative-grade companies than other regions--it accounted for 52.6% of speculative-grade companies globally at the beginning of 2020. Likewise, it would be included in the 1989 and 1990 pools with the 'B' rating. We believe that COVID-19-related fitness club closures have materially impaired the company's liquidity position. Earlier, on Dec. 5, 2019, we lowered the rating on the company to 'CCC+' from 'B' because it was facing heightened risk in addressing the US$550 million secured notes maturing in November 2022. On Nov. 25, 2020, we lowered the issuer credit rating to 'SD' from 'CCC+' after the issuer disclosed it had repurchased a significant portion of senior unsecured notes due in 2022 and 2024 below par. S&Ps opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. 2021 US Loan Default Rate In Line with 2020; HY Trending Lower The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. On July 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Florida-based consumer products manufacturer and seller Tupperware Brands Corp. to 'SD' from 'CC' after the issuer completed a distressed exchange, for about US$97.6 million of its US$ 600 million, where noteholders received less than par value. In a theoretical exploration of recovery rates in a structural "ESPP" means the Company's 2020 Employee Stock Purchase Plan, . The issuer was going through debt restructuring for a wider capital improvement, but was adversely affected by falling oil prices and the coronavirus pandemic. On March 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based cyber security provider Optiv Inc. to 'SD' from 'CCC+' after the issuer completed a distressed exchange, repurchasing about US$47 million of second-lien debt for about US$23 million. 1Great Financial Crisis 2008/2009. Esma50 165 2229 TRV 2 22 | PDF | Inflation | Monetary Policy On Dec. 8, 2020, we raised the rating on the issuer to 'CCC' from 'SD', reflecting our view of reduced refinancing risk. The issuer missed an interest payment of US$8 million on its senior convertible notes due in 2024. Date of report (Date of earliest event reported): February 13, 2023. esgSubNav, Discover more about S&P Globals offerings. The group entered into a forbearance agreement with its bondholders, such that they will not take any enforcement action with respect to the nonpayment of interest payments on the 2026 notes that were due on Oct. 30, 2020, or on the 2024 notes that were due on Nov. 16, 2020. Trends in the one-year Gini ratio emerge during periods of both high and low default rates, which reflects the natural relationship between the two extremes. This page provides a central resource for Moody's research on default risks, impairment and loss rates, . Multiplying 96.29% by 96.39% results in a 92.81% survival rate to the end of the second year, which leads to a two-year average cumulative default rate of 7.19%. Similarly, the second- and third-year conditional marginal averages--shown in the "Summary statistics" section at the bottom portion of the table--were 3.61% for the first 39 pools (96.39% of those companies that did not default in the first year survived the second year) and 3.23% for the first 38 pools (96.77% of those companies that did not default by the second year survived the third year), respectively. On Dec. 8, 2020, S&P Global Ratings assigned a 'CCC+' issuer credit rating to CPK after the issuer emerged from bankruptcy, where it was able to restructure US$200 million of reported prepetition debt. We expect the company will not be able to pay most of its obligations as they come due, unless a major debt restructuring it is working on allows it to extend major debt maturities, including the $350 million Eurobond repayment due in September 2021. Infrastructure debt remained resilient during the pandemic - GI Hub The eligible holders of second-lien notes received 97.5 cents on the dollar of the principal amount, whereas first-lien notes holders received 90 cents on the dollar of the principal amount. Subsequently, we withdrew the ratings due to insufficient information. S&P Forecast. The new notes are in a payment favorable position. We viewed this transaction as tantamount to a default on the term loan because the company's operations were distressed, making it difficult for it to meet its obligations. 8-K: NETSCOUT SYSTEMS INC - MarketWatch Because errors, if any, are corrected by every new update and because the criteria for inclusion or exclusion of companies in the default study are subject to minor revisions as time goes by, it is not possible to compare static pools across different studies. On June 18, SMLP announced it repurchased approximately $90 million of its 2022 senior unsecured notes and 2025 senior unsecured notes for approximately $50 million in cash. This appendix provides summaries of the events leading up to each default and, in some cases, events following the default. More generally, evidence from many countries in recent years suggests that collateral values and recovery rates can be volatile and, moreover, they tend to go down just when the number of defaults goes up in economic downturns. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On June 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based oil and gas exploration and production company SM Energy Co. to 'SD' from 'CC' after the issuer announced the results of its previous exchange offer. Nick W Kraemer, FRM, New York+ 1 (212) 438 1698; Nivritti Mishra Richhariya, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai, Sundaram Iyer, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Abinash Meher, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Shripati Pranshu, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, APAC, United States of America, Latin America, Canada, EMEA, APAC. On June 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Houston-based Summit Midstream Partners L.P. (SMLP) to 'SD' from 'CCC'. On Nov. 6, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' on completion of restructuring. A market share war between Saudi Arabia and Russia led to a crash in crude oil prices, on top of the significant demand destruction for crude oil and natural gas due to the coronavirus. On Jan. 8, 2021, S&P Global Ratings withdrew its issuer credit rating. Corporate Defaults Slow, Lifting Debt Market - WSJ For instance, in the three years ended Dec. 31, 2020, 402 nonfinancial companies defaulted, while only 24 financials did. FORM 8-K. CURRENT REPORT Pursuant To Section 13 or 15 (d) of The Securities Exchange Act of 1934. Research & Ratings: Default & Ratings Analytics - Moody's On April 14, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. The issuer announced that it completed an amend-and-extend transaction for all of its US$100 million senior term loans due in February 2022 and most of its US$300 million junior term loans. PDF Default Recovery Rates and LGD in Credit Risk Modeling and Practice On April 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based oilfield services company KCA DEUTAG Alpha Ltd. to 'SD' from 'CCC+' after the issuer announced it would use the grace period for interest payments. The largest default in 2020 was from U.S.-based telecommunications provider Frontier Communications Corp., with $22.5 billion (6.3%) of the outstanding debt for the year. Prior studies have shown that fluctuations within default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. Some countries can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country. While these payments would have a higher interest rate, we considered this modification a selective default since investors were receiving less than they were originally promised under the security, partly because the amendment would delay the timing of the interest payments.