According to S&P Global Ratings, the number of companiesdefaulting on debt has reached 104 so far in 2016 — 60% more than in the sameperiod of 2015 — with oil, mining and steel companies accounting for most ofthe total.
Energy and natural resource companies, including miners,accounted for over half of non-payments so far in 2016, with about 14.9% ofspeculative-grade companies in these sectors in default — about seven timeshigher than the average default rate for all other sectors.
"The last time the global [default] tally was higher atthis point in the year was in 2009, when it reached 181 during the financialcrisis," according to the July 21 report.
The oil and gas sector has overtaken the financialinstitutions sector in S&P Ratings' global weakest links assessment, amidthe steep fall in commodities prices. The low-price environment for oil andmetals has pressured balance sheets in these sectors, pushing many to the brinkof insolvency.
The rating agency added that its U.S. distress ratio — themeasure of the number of speculative-grade companies with yields above 1,000basis points compared to U.S. treasuries — fell in June to 17.1%, representingapproximately US$145 billion in total outstanding debt as of June 15.
Of the 300 companies in the distressed category, about 22%were oil and gas companies, and about 10% were metals, mining and steelcompanies.
Overall, the number of companies rated B- and below, with anegative outlook, climbed to 245 in June — close to the level of November 2009,when the count was 251 companies.
S&P Global Ratingsand SNL Metals & Mining are owned by S&P Global, Inc.