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Default, Transition, and Recovery: Five U.S. Defaults This Week Brings The 2020 Default Tally To 33

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Default, Transition, and Recovery: Five U.S. Defaults This Week Brings The 2020 Default Tally To 33

The 2020 global corporate default tally reached 33 this week after one Shanghai-based (Cayman Island-incorporated) and four U.S.-based issuers defaulted. The defaulted companies were: Chinese-based business parks developer and operator Yida China Holdings Ltd., U.S.-based cyber security service provider Optiv Inc., credit report repair service provider PGX Holdings Inc., hamburger restaurant chain Steak n Shake Inc. (SnS), and crude oil and natural gas exploration and production company Whiting Petroleum Corp.

There have been 10 defaults from the consumer/services sector (which includes both consumer and retail and restaurants sectors) so far in 2020--nine of which are U.S.-based. Credit risks to the global retail sector have increased dramatically as the effort to contain COVID-19 continues, in many cases through social distancing and mandatory closures of nonessential business operations. This is resulting in store closures, changes to shopping habits, and heightened expectations for broad-based macroeconomic decline (and subsequently lower spending prospects). The degree of any impact on our ratings will depend on the duration of shutdowns and trajectory of a future rebound (see "Coronavirus Dramatically Increases Risk For Already Stressed Retail And Restaurant Sectors," March 21, 2020).

Chart 1

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This Week's Observations

  • The current 2020 tally is just slightly above where it was at this point in 2019 and 2018, with 31 and 26, respectively.
  • By sector, consumer products and retail and restaurants lead the tally with five defaults each.
  • Distressed exchanges lead defaults in 2020, with 13, followed by missed principal and interest payments, with 10.
  • We estimate the 12-month-trailing speculative-grade default rate for the U.S. region will increase to 3.4% in March 2020 from 3.2% in February 2020, while we expect the same for the European region to fall to 2.4% in March 2020 from 2.5% in February 2020.

Chart 2

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Chart 3

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Chart 4

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Table 1

Global Corporate Default Summary
Region 12-month trailing speculative-grade default rate (%) 2020 year-to-date default tally 2019 year-to-date default tally 2019 Weakest links
U.S. 3.4* 23 23 78 190
Emerging market 1.6 5 4 22 41
Europe 2.4* 4 3 15 43
Other developed 2.6 1 1 3 8
Global 2.7 33 31 118 282
Note: *Trailing-12-month default rates from March 31, 2019 - March 31, 2020, are preliminary and subject to change. Year-to-date data as of April 1, 2020. Weakest link data is as of Dec. 31, 2019. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially-rated issuers. Sources: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®.

Table 2

Global Corporate Defaults 2020
Date Parent company Country Subsector To From Reason
1/2/2020

Constellis Holdings LLC

U.S. Aerospace and defense SD CC Missed principal payments
1/7/2020

TOMS Shoes LLC

U.S. Consumer products D CCC Distressed exchange
1/9/2020

Moran Foods LLC (SAL Acquisition Corp.)

U.S. Retail/Restaurants SD CCC Missed interest payments
1/13/2020

Lecta S.A.

Luxembourg Forest Products & Building Materials SD CC Missed interest payments
1/14/2020

Qinghai Provincial Investment Group Co. Ltd.

China Metals, mining, and steel D CCC- Missed interest payments
1/19/2020

Krystal Co. (The)

U.S. Retail/restaurants D NR Chapter 11
1/21/2020

Panda Green Energy Group

Bermuda Utilities SD CC Distressed exchange
1/22/2020

Deoleo S.A.

Spain Consumer products SD CC Distressed exchange/ out-of-court restructuring
1/29/2020

Doncasters Group Ltd.

U.K. Capital goods SD CCC- Distressed exchange/ out-of-court restructuring
1/30/2020

Pinnacle Operating Corp.

U.S. Chemicals, packaging, and environmental services SD CCC Distressed exchange/ out-of-court restructuring
2/7/2020

Commercial Barge Line Co.

U.S. Transportation D CC Chapter 11
2/12/2020

RentPath LLC

U.S. Media and entertainment D NR Chapter 11
2/13/2020

McClatchy Co. (The)

U.S. Media and entertainment D CC Chapter 11
2/14/2020

Moby SpA

Italy Transportation SD CCC- Distressed exchange/ out-of-court restructuring
2/14/2020

NPC International Inc.

U.S. Retail/restaurants SD CCC- Missed interest payments
2/18/2020

Pier 1 Imports Inc.

U.S. Retail/restaurants D CCC- Chapter 11
2/21/2020

Tunghsu Group Co. Ltd.

China High technology SD CCC- Missed principal and interest payments
2/24/2020

VIP Cinema Holdings Inc.

U.S. Consumer products D CCC- Chapter 11
2/25/2020

Calfrac Well Services Ltd.

Canada Oil and gas SD CC Distressed exchange
2/28/2020

PFS Holding Corp.

U.S. Consumer products SD CCC- Missed interest payments
3/3/2020

Pioneer Energy Services Corp.

U.S. Oil and gas D CCC- Chapter 11
3/12/2020

Ascena Retail Group Inc.

U.S. Consumer products SD CCC Distressed exchange
3/12/2020

Optimas OE Solutions Holding LLC

U.S. Capital goods SD CCC+ Distressed exchange
3/12/2020 Confidential Confidential Metals, mining, and steel SD CCC- Confidential
3/16/2020

Frontier Communications Corp.

U.S. Telecommunications SD CCC- Missed interest payments
3/17/2020

Internap Corp.

U.S. Telecommunications D CCC+ Chapter 11
3/19/2020

Geo Energy Resources Ltd.

Singapore Metals, mining, and steel SD B- Distressed exchange
3/20/2020

Grain Insurance Co. JSC

Kazakhstan Insurance D B Missed interest payments
3/27/2020

Optiv Inc.

U.S. High technology SD CCC+ Distressed exchange
3/27/2020

Yida China Holdings Ltd.

Cayman Islands Homebuilders/real estate companies SD CC Distressed exchange
4/1/2020

PGX Holdings Inc.

U.S. Media and entertainment D CCC Missed principal and interest payments
4/1/2020

Steak n Shake Inc.

U.S. Retail/restaurants SD CCC- Distressed exchange
4/1/2020

Whiting Petroleum Corp.

U.S. Oil and gas D CCC+ Chapter 11
NR--Not rated. SD--Selective default. Data as of April 1, 2020. Sources: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®.

Related Research

  • PGX Holdings Inc. Downgraded To 'D' From 'CCC' On Missed Interest And Principal Payments And Forbearance Agreement, April 2, 2020
  • Whiting Petroleum Corp. Downgraded To 'D' From 'CCC+' On Announced Commencement Of Chapter 11 Bankruptcy Proceeding, April 2, 2020
  • Steak n Shake Inc. Rating Lowered To 'SD' Following Distressed Exchange; Debt Rating Lowered To 'D', April 1, 2020
  • Optiv Inc. Issuer Credit Rating Revised To 'CCC' From 'SD' Following Distressed Debt Exchange; Outlook Negative,April 2,2020
  • Optiv Inc. Downgraded To 'SD' From 'CCC+' On Distressed Debt Exchange; Second-Lien Rating Lowered To 'D', March 28, 2020
  • Yida China Downgraded To 'SD', Issue Rating Lowered To 'D' On Distressed Exchange Completion, March 27, 2020
  • Coronavirus Dramatically Increases Risk For Already Stressed Retail And Restaurant Sectors, March 21, 2020

Default Studies

More analysis and statistics are available in our annual default studies, published on RatingsDirect:

Corporate (financial and nonfinancial)
  • Japanese Issuer Credit Rating Transitions Study 2019
  • 2018 Annual Infrastructure Default And Rating Transition Study
  • 2018 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
  • 2018 Annual Latin American Corporate Default And Rating Transition Study
  • 2018 Annual Global Financial Services Default And Rating Transition Study
  • 2018 Annual Greater China Corporate Default And Rating Transition Study
  • 2018 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
  • 2018 Annual Global Corporate Default And Rating Transition Study
  • 2018 Annual U.S. Corporate Default And Rating Transition Study
  • 2018 Annual Asia Corporate Default And Rating Transition Study
  • Japanese Issuer Credit Rating Transitions Study 2018
  • 2017 Annual Australia And New Zealand Corporate Default Study And Rating Transitions
  • 2017 Annual Emerging Markets Corporate Default Study And Rating Transitions
  • 2017 Annual European Corporate Default Study And Rating Transitions
  • 2017 Annual Canadian Corporate Default Study And Rating Transitions
  • 2017 Inaugural Nordic Default Study And Rating Transitions
  • 2017 Annual Brazil Corporate Default Study And Rating Transitions
Structured finance
  • 2018 Annual Mexican Structured Finance Default And Rating Transition Study
  • 2018 Annual European Structured Finance Default And Rating Transition Study
  • 2018 Annual Global Leveraged Loan CLO Default And Rating Transition Study
  • 2018 Annual Taiwan Structured Finance Default Study And Rating Transitions
  • 2018 Annual Global Structured Finance Default Study And Rating Transitions
  • 2018 Annual Japanese Structured Finance Default Study And Rating Transitions
U.S. public finance
  • 2018 Annual U.S. Public Finance Default Study And Rating Transitions
  • 2017 Annual U.S. Public Finance Not-For-Profit Health Care Default Study And Rating Transitions
  • 2017 U.S. Public Finance Utility Default Study And Rating Transitions
  • 2017 U.S. Public Finance Transportation Default Study And Rating Transitions
  • 2017 Annual U.S. Public Finance Housing Default Study And Rating Transitions
  • 2017 Annual U.S. Public Finance Charter School Default Study And Rating Transitions
  • 2017 Annual U.S. Public Finance Higher Education And Nonprofit Organization Default Study And Rating Transitions
Sovereign and international public finance
  • 2018 Annual International Public Finance Default And Rating Transition Study
  • 2018 Annual Sovereign Default And Rating Transition Study

This report does not constitute a rating action.

Credit Markets Research:Nicole Serino, New York + 1 (212) 438 1396;
nicole.serino@spglobal.com
Sudeep K Kesh, New York (1) 212-438-7982;
sudeep.kesh@spglobal.com
Research Contributor:Shripati Pranshu, Mumbai;
shripati.pranshu@spglobal.com

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