Key Takeaways
- R&F Properties (HK) Co. Ltd. is the first default from the emerging markets this year after completing a distressed exchange.
- Emerging markets defaults decreased 46% year over year in 2021 as economic and credit conditions stabilized in most regions.
- Distressed exchanges accounted for the largest proportion of defaults in 2021.
- Since the beginning of fourth-quarter 2021, 43% of total global defaults have come from the homebuilders and real estate sector.
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®. |
Chart 1
Chart 2
Chart 3
Chart 4
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
- R&F Properties (HK) Co. Ltd. Downgraded To 'SD' On Completion Of Distressed Tender And Extension, Jan. 13, 2021
- ION Geophysical Corp. Downgraded To 'D' On Missed Interest And Principal Payments, Jan. 5, 2022
- Asia-Pacific Credit Outlook 2022 China Decelerates, Fed Deliberates, Dec. 6, 2021
- Global Credit Outlook 2022: Aftershocks, Future Shocks, And Transitions, Dec. 1, 2021
- Asia-Pacific Financial Institutions Monitor 4Q 2021: Evergrande, Southeast Asia Risks, And The Digital Dilemma, Oct. 19, 2021
- The Economic Impact Of Default Is Falling As Selective Defaults Rise, Sept. 16, 2021
Default Studies
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (financial and nonfinancial)
- 2020 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study
- 2020 Annual Australia And New Zealand Corporate Default And Rating Transition Study
- 2020 Annual Infrastructure Default And Rating Transition Study
- 2020 Annual Global Financial Services Default And Rating Transition Study
- 2020 Annual Latin American Corporate Default And Rating Transition Study
- 2020 Annual Greater China Corporate Default And Rating Transition Study
- 2020 Annual European Corporate Default And Rating Transition Study
- 2020 Annual Asia Corporate Default And Rating Transition Study
- 2020 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2020 Annual U.S. Corporate Default And Rating Transition Study
- 2020 Annual Global Corporate Default And Rating Transition Study
- 2020 Annual Japanese Issuer Credit Rating Transition Study
- 2019 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
Structured finance
- 2020 Annual Mexican Structured Finance Default And Rating Transition Study
- 2020 Annual European Structured Finance Default And Rating Transition Study
- 2020 Annual Global Leveraged Loan CLO Default And Rating Transition Study
- 2020 Annual Taiwan Structured Finance Default And Rating Transition Study
- 2020 Annual Global Structured Finance Default And Rating Transition Study
- 2020 Annual Japanese Structured Finance Default And Rating Transition Study
U.S. public finance
Sovereign and international public finance
- 2020 Annual International Public Finance Default And Rating Transition Study
- 2020 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 |
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 |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.