Global corporate defaults in 2021 reach four, after two U.S.-based companies defaulted since our last report, including:
- Delaware-based quick-service restaurant operator Burger BossCo Intermediate Inc., and
- California-based information technology services provider Riverbed Parent Inc.
This Week's Observations
- All four defaults in 2021 so far are related to distressed exchanges, continuing the trend seen in the final quarter of 2020.
- By region, the U.S. leads the defaults tally in 2021, with three, followed by Europe, with one.
- By sector, there is one default each from oil and gas, media and entertainment, retail and restaurants, and high technology sectors in 2021.
- Looking ahead, we expect the number of defaults to continue at their elevated pace, with the U.S. trailing-12-month speculative-grade default increasing slightly to 6.6% in December 2020 from 6.4% in November 2020.
Distressed exchanges continue to lead the default tally moving into the early weeks for 2021 as issuers look for alternative ways to avoid bankruptcy and reduce their debt burdens or extend their upcoming maturities. Over one-third of defaults in 2020 were a result of distressed exchanges. While distressed exchanges typically buy some time to resolve operational issues with companies under stress, they do generally carry high risk (roughly 1 in 3) of defaulting again if operational or business conditions do not improve. Additionally, all four defaults were rated 'CCC' and below prior to default, illustrating the high default risk associated with this part of the ratings spectrum.
In the U.S., negative bias (percentage of issuers with their outlook or negative or ratings on CreditWatch with negative implications) among 'CCC+' or lower rated issuers has lowered to pre-pandemic levels. However, the counts of issuers with these ratings are still high (nearly double of pre-pandemic counts), which suggests more rating actions are to follow for lower rated issuers in 2021 (see chart 1).
|U.S. Leads 2021 Corporate Default Tally, With Three|
|12-month-trailing speculative-grade default rate (%)||2021||2020||2019||Weakest links|
|Note: *Trailing-12-month default rates from Dec. 31, 2019 - Dec. 31, 2020, are preliminary and subject to change. Year-to-date data as of Jan. 13, 2021. Weakest link data is as of Nov. 19, 2020. 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®.|
|The 2021 Global Corporate Default Tally At Four|
|U.S.||Oil and gas||SD||CC||Distressed exchange|
Promotora de Informaciones S.A.
|Spain||Media and entertainment||SD||CC||Distressed exchange|
Burger BossCo Intermediate Inc.
Riverbed Parent Inc.
|U.S.||High technology||SD||CC||Distressed exchange|
|NR--Not rated. SD--Selective default. Data as of Jan. 13, 2021. Sources: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®. (B) designation indicates the issuers second default for 2020.|
- Burger BossCo Intermediate Downgraded To 'SD' On Recap, Including Conversion Of Second-Lien Debt To Preferred Equity, Jan. 9, 2021
- Riverbed Parent Inc. Downgraded To 'SD' Following Completed Distressed Exchange; Debt Ratings Lowered To 'D', Jan. 9, 2021
- Industry Top Trends 2021: Oil And Gas, Dec. 10, 2020
- Industry Top Trends 2021: Retail and Restaurants, Dec. 10, 2020
- Industry Top Trends 2021: Technology, Dec. 10, 2020
- Industry Top Trends 2021: Media and Entertainment, Dec. 10, 2020
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (financial and nonfinancial)
- 2019 Annual Greater China Corporate Default And Rating Transition Study
- 2019 Annual Emerging Markets Corporate Default And Rating Transition Study
- 2019 Annual European Corporate Default And Rating Transition Study
- 2019 Annual Latin American Corporate Default And Rating Transition Study
- 2019 Annual Asia Corporate Default And Rating Transition Study
- 2019 Annual Global Financial Services Default And Rating Transition Study
- 2019 Annual U.S. Corporate Default And Rating Transition Study
- 2019 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2019 Annual Global Corporate Default And Rating Transition Study
- 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
- 2017 Annual Australia And New Zealand 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
- 2019 Annual European Structured Finance Default And Rating Transition Study
- 2019 Annual Global Leveraged Loan CLO Default And Rating Transition Study
- 2019 Annual Global Structured Finance Default And Rating Transition Study
- 2019 Annual Taiwan Structured Finance Default And Rating Transition Study
- 2019 Annual Japanese Structured Finance Default And Rating Transition Study
- 2018 Annual Mexican Structured Finance Default And Rating Transition Study
U.S. public finance
- 2019 Annual U.S. Public Finance Default And Rating Transition Study
- 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
- 2019 Annual Sovereign Default And Rating Transition Study
- 2019 Annual International Public Finance Default And Rating Transition Study
This report does not constitute a rating action.
|Credit Markets Research:||Nicole Serino, New York + 1 (212) 438 1396;|
|Sudeep K Kesh, New York (1) 212-438-7982;|
|Research Contributor:||Shripati Pranshu, Mumbai;|
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