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Default, Transition, and Recovery: The 2021 Global Corporate Default Tally Rises To 17 After Two Emerging Market Defaults

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Default, Transition, and Recovery: The 2021 Global Corporate Default Tally Rises To 17 After Two Emerging Market Defaults

The global corporate default tally has increased to 17 after two issuers defaulted since our last report. The defaulters are:

  • Argentina-based oil and gas company YPF S.A., and
  • Cayman Islands-incorporated (China-based) real estate developer Sunshine 100 China Holdings Ltd.

We have also revised our default tally in a monthly reconciliation process to include Oregon-based digital media and marketing company Alpha Media LLC.

By region, the U.S. leads the default tally with 12, followed by Europe with four. The Argentina-based oil and gas company YPF S.A. and China-based real estate developer Sunshine 100 China Holdings Ltd. are the first defaults from the emerging markets region so far in 2021.

With an additional default this week, the oil and gas sector's year-to-date tally has reached three, one each from the U.S., Europe, and Emerging markets regions (see chart 1). The sector led the year-end default tally in both 2020 and 2019 with 50 and 20 defaults, respectively, and continues to face downward rating pressure and the potential for continued defaults in 2021 from lower demand due to a gradual economic recovery despite rising crude oil prices. Among 50 oil and gas sector defaults last year, 10 were from the European region and were primarily based in the U.K. We expect the 12-month-trailing speculative-grade default rate for Europe to rise to 6.5% by December 2021 from 5.3% in December 2020, with 47 defaults (see "The European Speculative-Grade Corporate Default Rate Could Reach 6.5% By December 2021," Feb. 26, 2021).

Chart 1

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This Week's Observations

  • By region, the U.S. is leading the default tally, with 12 out of 17 defaults in 2021 so far, followed by Europe with four (see chart 3).
  • The media and entertainment sector leads 2021 defaults, with four, followed by retail and restaurants (3) and oil and gas (3). These three sectors contribute to about 60% of the 2021 defaults (see chart 2).
  • The 12-month-trailing speculative-grade default rate for the U.S. is estimated to decrease to 6.4% in February 2021 from 6.6% in January 2021, whereas the same for the European region is estimated to increase to 5.4% in February 2021 from 5.0% in January 2021 (see table 1).
  • Distressed-exchange-related defaults lead the tally so far in 2021, with 12, followed by bankruptcies, and missed interest and principal payment-related defaults, with two each (see chart 4).

Chart 2

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Chart 3

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Chart 4

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Chart 5

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Table 1

European 12-Month-Trailing Speculative-Grade Default Rate Estimated To Rise To 5.4% In February 2021
12-month-trailing speculative-grade default rate (%) 2021 2020 2019 Weakest links
U.S. 6.4* 12 146 78 322
Emerging market 3.1 1 28 22 35
Europe 5.4* 4 42 15 84
Other developed 6.0 0 10 3 25
Global 5.4 17 226 118 466
Note: *Trailing-12-month default rates from Feb. 29, 2020, to Feb. 28, 2021, are preliminary and subject to change. Year-to-date data as of March 3, 2021. Weakest link data is as of Jan. 31, 2021. 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

The 2021 Global Corporate Default Tally Rises To 17
Date Parent company Country Subsector To From Reason
1/5/2021

HGIM Corp.

U.S. Oil and gas SD CC Distressed exchange
1/6/2021

Promotora de Informaciones S.A.

Spain Media and entertainment SD CC Distressed exchange
1/8/2021

Burger BossCo Intermediate Inc.

U.S. Retail/restaurants SD CCC Distressed exchange
1/8/2021

Riverbed Parent Inc.

U.S. High technology SD CC Distressed exchange
1/21/2021

AMC Entertainment Holdings Inc.

U.S. Media and entertainment SD CC Distressed exchange
1/25/2021

Awesome Acquisition Co. L.P.

U.S. Retail/restaurants D NR Chapter 11
1/25/2021

Alpha Media LLC

U.S. Media and entertainment D NR Bankruptcy
1/27/2021

Imagine Group LLC (The)

U.S. Media and entertainment D CCC Distressed exchange
2/2/2021

Belk Inc.

U.S. Retail/restaurants D CC Missed interest payments
2/3/2021

Peabody Energy Corp.

U.S. Metals, mining, and steel SD CC Distressed exchange
2/11/2021 Confidential Confidential Automotive D CCC- Confidential
2/11/2021

Vallourec

France Oil and gas SD CC Missed principal payments
2/19/2021

Renfro Corp.

U.S. Consumer products SD CCC- Distressed exchange
2/22/2021

CatLuxe Sarl (CatLuxe Acquistion Sarl)

Luxembourg Consumer products SD CCC+ Distressed exchange
2/22/2021

Form Technologies LLC

U.S. Capital goods SD CC Distressed exchange
2/26/2021

YPF S.A

Argentina Oil and gas SD CC Distressed exchange
3/2/2021

Sunshine 100 China Holdings Ltd.*

Cayman Islands Homebuilders/real estate companies SD CCC- Distressed exchange
NR--Not rated. SD--Selective default. Data as of March 3, 2021. Sources: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®. *Sunshine 100 China Holdings Ltd. is incorporated in the Cayman Islands but invests, develops, and manages real estate properties in the People’s Republic of China. Companies incorporated in the Cayman Islands are included in the U.S. default rate computation due to the location as a U.S. tax haven.

Related Research

Default Studies

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

Corporate (financial and nonfinancial)
Structured finance
U.S. public finance
Sovereign and international public finance

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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