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Default, Transition, and Recovery: 2017 Annual Global Corporate Default Study and Rating Transitions

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Default, Transition, and Recovery: 2017 Annual Global Corporate Default Study and Rating Transitions

The year following the U.K.'s watershed vote to leave the EU and the U.S. election of Donald Trump had the potential to produce quite a deal of market turbulence, but that never came to pass. Instead, equity markets roared ahead in 2017, and the corporate bond market saw increased issuance and falling yields globally. The Brexit process followed a somewhat predictable path, the Trump Administration made few, if any, legislative changes through most of the year, and emerging markets experienced improved economic growth.

Amid exceptionally low volatility, defaults among corporate entities rated by S&P Global Ratings were relatively limited in 2017, falling to a three-year low of 95 (see table 1). Residual stress among oil and gas companies caused the energy and natural resources sector to remain the leading industry in defaults for the fourth straight year. Running nearly alongside was the consumer services sector, which saw many retailers in developed markets default amid sector-specific structural changes that have been causing many brick-and-mortar store closures--a trends that is expected to continue. The 95 total defaulted corporate issuers in 2017 accounted for $104.6 billion in debt, less than half the $239.8 billion total for 2016.