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Default, Transition, and Recovery: R&F Properties Becomes The First Emerging Markets Default Of 2022

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Default, Transition, and Recovery: R&F Properties Becomes The First Emerging Markets Default Of 2022

The 2022 global corporate default tally reached two after Hong Kong-incorporated R&F Properties (HK) Co. Ltd. (subsidiary of China-incorporated Guangzhou R&F Properties Co. Ltd.) completed a tender offer and maturity extension for its US$725 million senior unsecured notes due on Jan. 13, 2022. (See "R&F Properties (HK) Co. Ltd. Downgraded To 'SD' On Completion Of Distressed Tender And Extension," Jan. 13, 2021.)

The speculative-grade 12-month-trailing default rate fell in emerging markets in 2021 to 1.7% as of Nov. 30, 2021, from 3.1% as of Dec. 31, 2020, as many emerging market economies returned to growth and credit conditions stabilized. However, a number of preexisting weaknesses and increasing post-pandemic challenges are threatening to undermine the economic recovery and accommodative financing conditions (see "Omicron Is Fueling Uncertainty Across Inflation-Ridden Emerging Markets," Jan. 20, 2022).

Additionally, pressure in the Chinese homebuilders and real estate sector has remained a major source of global defaults in recent months. Since the beginning of fourth-quarter 2021, 43% of total global defaults (which have been low) have come from the homebuilders and real estate sector, driven by persistent issues affecting China's real estate developers.

Table 1

Global Corporate Default Summary
Region 12-month-trailing speculative-grade default rate (%) 2022 YTD 2021 YTD 2021 Weakest links
U.S. *1.5 1 3 40 135
Emerging markets 1.7 1 0 15 20
Europe *1.8 0 1 14 50
Other developed 2.2 0 0 3 11
Global 1.8 2 4 72 216
*Trailing-12-month speculative-grade default rates from Dec. 31, 2020–Dec. 31, 2021, are preliminary and subject to change. Year-to-date data as of Jan. 19. Weakest link data as of Nov. 18, 2021. Other developed region is 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®.

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Table 2

The 2022 Global Corporate Default Tally Reaches Two
Date Parent company Country/market Subsector To From Reason
1/4/22

ION Geophysical Corp.

U.S. Oil and gas D CCC Missed principal and interest payments
1/13/22

R&F Properties (HK) Co. Ltd.

Hong Kong Homebuilders/real estate companies SD CC Distressed exchange
SD--Selective default. Data as of Jan. 19, 2022. Sources: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®.

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
Secondary Contact:Patrick Drury Byrne, Dublin (00353) 1 568 0605;
patrick.drurybyrne@spglobal.com
Research Contributor:Yogesh Kumar, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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