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Default, Transition, and Recovery: The Pace Of Defaults In 2022 Is Likely To Pick Up

The global corporate default tally increased by one this past week after a confidential default was added to the tally. With just 32 defaults year to date, and only four in May, the pace is considerably slower than previous years (see chart 1).

By region, U.S. defaults are 40% lower than the previous year, with only 15 defaults so far in 2022, compared with 25 in 2021 and 66 in 2020 (see chart 2). However, the U.S. distress ratio nearly doubled over the last month to 4.3% from 2.4%. The U.S. distress ratio is the proportion of speculative-grade (rated 'BB+' or lower) issues with option-adjusted composite spreads of more than 1,000 basis points relative to U.S. Treasuries. Although the distress ratio is low compared with historical averages, the month-over-month change is the highest since March 2020, indicating we could begin to see defaults rise in the region (see "Highest Month-Over-Month Change Since March 2020 As U.S. Distress Ratio Rises To 4.3%," June 13, 2022).

This Week's Observations

Table 1

Global Corporate Defaults Total 32 So Far in 2022
Region 12-month-trailing speculative-grade default rate (%) 2022 YTD 2021 YTD 2021 Weakest links
U.S. *1.4 15 25 40 118
Emerging markets 2.1 12 7 15 17
Europe *0.9 5 11 14 48
Other developed 1.5 0 2 3 10
Global 1.5 32 45 72 193
Note: Trailing-12-month speculative-grade default rates are from April 30, 2022-April 30, 2022. *Trailing-12-month speculative-grade default rates are from May 31, 2022-May 31, 2022, and are preliminary and subject to change. Year-to-date data as of June 8, 2022. Weakest link data is as of April 25, 2022. 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

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Chart 2

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Chart 3

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Table 2

One Confidential Issuer Was Added To The Tally This Week Due To A Reconciliation Process
Date Parent company Country/market Subsector To From Reason
1/4/2022

ION Geophysical Corp.

U.S. Oil and gas D CCC Missed principal and interest payments
1/4/2022 Confidential Confidential Utilities D NR Confidential
1/13/2022

R&F Properties (HK) Co. Ltd.

Hong Kong Homebuilders/real estate companies SD CC Distressed exchange
1/19/2022 Confidential Confidential Homebuilders/real estate companies SD CCC- Confidential
1/24/2022

Fusion Connect Inc.

U.S. Telecommunications SD CC Distressed exchange
2/1/2022

Future Retail Ltd.

India Consumer products SD CCC- Missed principal payments
2/1/2022

TPC Group Inc. (TPC Group LLC)

U.S. Health care D CCC Missed interest payments
2/4/2022 Confidential Confidential Consumer products D NR Confidential
2/9/2022 Confidential Confidential Consumer products SD CCC Confidential
2/10/2022

Credito Real, S.A.B. de C.V., SOFOM, E.N.R.

Mexico Financial institutions SD CCC- Missed principal payments
2/11/2022 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
2/17/2022

U.S. TelePacific Holdings Corp.

U.S. Telecommunications SD CCC- Distressed exchange
3/15/2022

Diamond Sports Group LLC (Sinclair Broadcast Group Inc.)

U.S. Media and entertainment SD CC Distressed exchange
3/21/2022

Mulhacen Pte. Ltd.

Singapore Financial institutions D CC Distressed exchange
3/24/2022

MHP SE

Ukraine Consumer products SD B- Missed interest payments
4/1/2022

Ruby Pipeline LLC

U.S. Utilities D CC Missed principal payments
4/7/2022

Owl Finance Ltd. (Hibu Group Ltd.)

U.K. Media and entertainment SD CC Distressed exchange
4/7/2022

PSS Industrial Group Corp.

U.S. Utilities D CCC- Missed principal and interest payments
4/8/2022

Guangzhou R&F Properties Co. Ltd.

China Homebuilders/real estate companies SD CC Distressed exchange
4/8/2022

Kernel Holding S.A.

Ukraine Consumer products SD B- Missed interest payments
4/11/2022 Confidential Cayman Islands Homebuilders/real estate companies SD CC Confidential
4/11/2022

Promotora de Informaciones S.A.

Spain Media and entertainment SD CC Distressed exchange
4/12/2022

Dunn Paper Holdings Inc.

U.S. Chemicals, packaging, and environmental services D CCC Missed interest payments
4/12/2022

Grupo Kaltex S.A. de C.V.

Mexico Consumer products D CCC- Missed principal payments
4/12/2022

Petropavlovsk PLC

U.K. Metals, mining, and steel SD CCC- Missed interest payments
4/13/2022 Confidential Confidential High technology D CCC Confidential
4/14/2022

EuroChem Group AG

Switzerland Chemicals, packaging, and environmental services SD CCC- Missed interest payments
4/22/2022 Confidential Confidential Aerospace and defense SD CCC+ Confidential
5/3/2022

Envision Healthcare Corp. (Envision Healthcare Holdings Inc.)

U.S. Health care SD CCC Distressed exchange
5/6/2022

Safari Beteiligungs Gmbh (Dice Midco Sarl)

Germany Media and entertainment SD CC Distressed exchange
5/10/2022

Talen Energy Supply LLC (Talen Energy Corporation)

U.S. Utilities D CCC Bankruptcy
5/26/2022 Confidential Confidential Financial institutions SD CCC- Confidential
Data as of June 8, 2022. NR--Not rated. SD--Selective default. 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
Patrick Drury Byrne, Dublin (00353) 1 568 0605;
patrick.drurybyrne@spglobal.com
Research Contributor:Vaishali Singh, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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