articles Ratings /ratings/en/research/articles/220808-default-transition-and-recovery-overall-stable-corporate-default-trends-camouflage-pockets-of-vulnerabilit-12465947 content esgSubNav
In This List
COMMENTS

Default, Transition, and Recovery: Overall Stable Corporate Default Trends Camouflage Pockets Of Vulnerability

COMMENTS

SF Credit Brief: U.S. CMBS Delinquency Rate Increased 3 Bps To 2.5% In September

COMMENTS

Weekly European CLO Update

NEWS

Financial Fragility Indicator Deteriorates Rapidly As Balance Sheet Weakness Approaches Historical Average, Report Says

COMMENTS

Default, Transition, and Recovery: 2021 Annual International Public Finance Default And Rating Transition Study


Default, Transition, and Recovery: Overall Stable Corporate Default Trends Camouflage Pockets Of Vulnerability

image

S&P Global Ratings' 2022 global corporate default tally has increased to 43 after five companies defaulted in July:

With just six defaults in June and five defaults in July, the pace of defaults so far in 2022 is showing no sign of picking up. We estimate that the U.S. and Europe 12-month-trailing speculative-grade default rates will both decrease further in July to 1.3% and 0.8% from 1.4% and 0.9% in June, respectively (see table 1).

We see a clear divergence in regional and sector default trends. With only 18 defaults so far this year, the percentage of U.S. defaults is at a historical low of 37% as U.S.-based issuers have thus far been largely resilient to cost pressures from rising inflation and increasingly restrictive financing conditions. However, downgrade risk is increasing for issuers rated 'B-' as their negative bias (the proportion of issuers with negative rating outlooks or CreditWatch implications) ticked up to 7.8% in June from 6.2% in May. The consumer products and capital goods sectors have the highest numbers of 'B-' rated issuers with negative outlooks or CreditWatch implications, many of which are facing inflationary cost pressures that weigh on margins (see "Risky Credits: U.S. And Canadian Companies Show Resilience To Market Pressures," July 26, 2022).

Emerging markets currently account for a very high proportion of 2022 defaults at 40% (see chart 2). This is due to an uptick in China-based homebuilder defaults as the sector continues to be hit by weaker sales and delays to housing construction and delivery (see "Sector Roundup Asia-Pacific Q3 2022: Inflation And China: Rough Ride Ahead," July 4, 2022). The homebuilders and real estate sector currently leads the 2022 default tally with nine defaults--an increase of 125% year-over-year (see chart 3 and chart 4).

Chart 1

image

Table 1

Global Corporate Default Summary
Region 12-Month-Trailing Speculative-Grade Default Rate (%) Weakest Links
U.S. *1.3 127
Emerging markets 2.0 19
Europe *0.8 46
Other developed 0.7 10
Global 1.4 202
Note: *Trailing-12-month speculative-grade default rates from July 31, 2022-July 31, 2022 are preliminary and subject to change. Year-to-date data as of July 31, 2022. Weakest link data is as of June 27, 2022. Other developed 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®.

Chart 2

image

Chart 3

image

Chart 4

image

Chart 5

image

Table 2

Global Corporate Defaults, So Far In 2022
Date Parent company Country/Market Subsector To From Reason
01/04/22

ION Geophysical Corp.

U.S. Oil and gas D CCC Missed principal and interest payments
01/04/22 Confidential Confidential Utilities D NR Confidential
01/13/22

R&F Properties (HK) Co. Ltd.

Hong Kong Homebuilders/real estate companies SD CC Distressed exchange
01/19/22 Confidential Confidential Homebuilders/real estate companies SD CCC- Confidential
01/24/22

Fusion Connect Inc.

U.S. Telecommunications SD CC Distressed exchange
02/01/22

Future Retail Ltd.

India Consumer Products SD CCC- Missed principal payments
02/01/22

TPC Group Inc. (TPC Group LLC)

U.S. Health care D CCC Missed interest payments
02/04/22 Confidential Confidential Consumer Products D NR Confidential
02/09/22 Confidential Confidential Consumer Products SD CCC Confidential
02/10/22

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

Mexico Financial Institutions SD CCC- Missed principal payments
02/11/22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
02/17/22

U.S. TelePacific Holdings Corp.

U.S. Telecommunications SD CCC- Distressed exchange
03/15/22

Diamond Sports Group LLC (Sinclair Broadcast Group Inc.)

U.S. Media and Entertainment SD CC Distressed exchange
03/21/22

Mulhacen Pte. Ltd.

Singapore Financial Institutions D CC Distressed exchange
03/24/22

MHP SE

Ukraine Consumer Products SD B- Missed interest payments
04/01/22

Ruby Pipeline LLC

U.S. Utilities D CC Missed principal payments
04/07/22

Owl Finance Ltd. (Hibu Group Ltd.)

U.K. Media and entertainment SD CC Distressed exchange
04/07/22

PSS Industrial Group Corp

U.S. Utilities D CCC- Missed principal and interest payments
04/08/22

Guangzhou R&F Properties Co. Ltd.

China Homebuilders/real estate companies SD CC Distressed exchange
04/08/22

Kernel Holding S.A.

Ukraine Consumer products SD B- Missed interest payments
04/11/22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
04/11/22

Promotora de Informaciones S.A.

Spain Media and entertainment SD CC Distressed exchange
04/12/22

Dunn Paper Holdings Inc.

U.S. Chemicals, packaging, and environmental services D CCC Missed interest payments
04/12/22

Grupo Kaltex S.A. de C.V.

Mexico Consumer products D CCC- Missed principal payments
04/12/22

Petropavlovsk PLC

U.K. Metals, mining, and steel SD CCC- Missed interest payments
04/13/22 Confidential Confidential High technology D CCC Confidential
04/14/22

EuroChem Group AG

Switzerland Chemicals, packaging, and environmental services SD CCC- Missed interest payments
04/22/22 Confidential Confidential Aerospace and defense SD CCC+ Confidential
05/03/22

Envision Healthcare Corp. (Envision Healthcare Holdings Inc.)

U.S. Health Care SD CCC Distressed exchange
05/06/22

Safari Beteiligungs Gmbh (Dice Midco Sarl)

Germany Media & Entertainment SD CC Distressed exchange
05/10/22

Talen Energy Supply LLC (Talen Energy Corp.)

U.S. Utilities D CCC Bankruptcy
05/26/22 Confidential Confidential Financial institutions SD CCC- Confidential
06/01/22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
06/10/22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
06/13/22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
06/16/22

Revlon Inc.

U.S. Consumer products D CCC- Bankruptcy
06/21/22

Greenland Holding Group Co. Ltd.

China Homebuilders/real estate companies SD CC Distressed exchange
06/30/22

Rite Aid Corp.

U.S. Retail/restaurants SD CC Distressed exchange
07/06/22

Canopy Growth Corp.

Canada Consumer products SD CCC Distressed exchange
07/07/22

SAS AB

Sweden Transportation D CC Bankruptcy
07/14/22

SK HoldCo LLC

U.S. Automotive SD CC Distressed exchange
07/18/22

Sawit Sumbermas Sarana Tbk. PT

Indonesia Forest products and building materials SD CC Distressed exchange
07/28/22

Mountain Province Diamonds Inc.

Canada Metals, mining, and steel SD CCC- Distressed exchange
Data as of July 31, 2022. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

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

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.


Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back