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Default, Transition, and Recovery: An Increase In Distressed Exchanges Drives Defaults In Europe

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S&P Global Ratings' 2024 global corporate default tally has reached 69 after 14 defaults in May (see table 2).

Although down from the previous month, defaults in May remained elevated, and the tally is five higher than its three-year monthly average (see chart 1). Defaults in May dropped across most regions, apart from Europe, which remains at its highest year-to-date default tally since 2008.

In Europe, persistently high market rates are making it more difficult for lower-rated issuers to service their debt. Although the European Central Bank started to cut rates by 25 basis points on June 6, persistently high inflation and still uncertain economic growth across the region's major economies are keeping defaults elevated. In addition, the rate-cutting cycle may be slower or include fewer cuts than we had anticipated at the start of this year.

Furthermore, an increase in the number of distressed exchanges in the region, over a quarter of which were from issuers with at least one previous default (re-defaulters), seems to be a key reason for the pickup in defaults in the region (see charts 2 and 3). This is likely due to a higher number of 'B-' and below rated issuers--given a larger number of negative rating actions since the onset of the COVID-19 pandemic--coupled with wider use of distressed exchanges by distressed issuers.

Although default rates will remain higher in the short to medium term, we expect the European trailing-12-month speculative-grade corporate default rate to level out around 3.75% by March 2025, only slightly below the 4.1% default rate for the 12 months ended April 2024 (see chart 4) (see "The European Speculative-Grade Default Rate Should Level Out At 3.75% By March 2025," May 22, 2024).

Chart 1

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Chart 2

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Chart 3

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Chart 4

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Media And Entertainment Led Defaults In May

The media and entertainment sector led defaults in May with five, increasing its year-to-date total by 50% (see chart 5). Defaults were spread across a variety of subsectors, including media, gaming, and leisure as capital market conditions remain challenging for many lower-rated issuers. Most media and entertainment defaults in May were distressed exchanges.

Although the sector leads defaults so far in 2024, the total is one lower than at this point in 2023.

Meanwhile, high technology leads with the greatest increase in defaults from the previous year, with five defaults so far in 2024, compared with only one at this point in 2023 (see chart 6). All five defaults in the sector this year have been U.S.-based issuers rated 'CCC+' and below.

Chart 5

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Chart 6

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Table 1

The U.S. default rate is expected to fall in May
Region 12-month-trailing speculative-grade default rate (%) Weakest links (count)
U.S. 4.66* 199
Emerging markets 2.0 13
Europe 4.30* 52
Other developed 5.8 10
Global 4.1 274
Note: Trailing-12-month speculative-grade default rates are from April 30, 2023, to April 30, 2024. *Trailing-12-month speculative-grade default rates are from May 31, 2023, to May 31, 2024, and are preliminary and subject to change. Year-to-date data as of May 31, 2024. Weakest link data is as of April 30, 2024. Other developed regions include Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Credit Research and S&P Global Market Intelligence’s CreditPro®.

Table 2

2024 global corporate default tally reaches 69
Date Parent company Country/market Subsector To From Reason
Jan. 2, 2024

Resolute Investment Managers Inc.

U.S. Financial institutions D CC Distressed exchange
Jan. 4, 2024

Toro Private Holdings I Ltd.

U.K. Transportation D CC Distressed exchange
Jan. 5, 2024

AMT TopCo LLC

U.S. Health care D CCC Missed payments
Jan. 10, 2024

Ignition Topco B.V.

Netherlands Chemicals, packaging, and environmental services D CCC Missed payments
Jan. 11, 2024

Amphora Intermediate II Ltd.

U.K. Consumer products SD CCC+ Missed payments
Jan. 11, 2024 Confidential Confidential Metals, mining, and steel SD CC Confidential
Jan. 16, 2024

Covis Finco S.a r.l.

Switzerland Health care SD CCC- Distressed exchange
Jan. 17, 2024

TMK Hawk Parent Corp.

U.S. Consumer products SD CC Distressed exchange
Jan. 18, 2024

KNS Holdco LLC

U.S. Consumer products SD B- Distressed exchange
Jan. 19, 2024

System1 Inc.

U.S. Media and entertainment SD CCC Distressed exchange
Jan. 24, 2024

New Trojan Parent Inc.

U.S. Consumer products D CCC- Bankruptcy
Jan. 26, 2024

Gol Linhas Aereas Inteligentes S.A.

Brazil Transportation D CCC- Bankruptcy
Jan. 31, 2024

AMC Entertainment Holdings Inc.

U.S. Media and entertainment SD CCC+ Distressed exchange
Jan. 31, 2024

Enjoy S.A.

Chile Media and entertainment D CCC- Bankruptcy
Feb. 5, 2024

Cano Health Inc.

U.S. Health care D CCC- Bankruptcy
Feb. 6, 2024

Astro Intermediate Holding II Corp.

U.S. Consumer products SD CCC Missed payments
Feb. 8, 2024

Pluto Acquisition I Inc.

U.S. Health care SD CC Distressed exchange
Feb. 9, 2024 Confidential Confidential Telecommunications D CC Confidential
Feb. 14, 2024

CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.

Argentina Capital goods SD CC Distressed exchange
Feb. 14, 2024

GoTo Group Inc.

U.S. High technology SD CCC+ Distressed exchange
Feb. 15, 2024

AFE S.A. SICAV-RAIF

U.K. Financial institutions SD CC Distressed exchange
Feb. 16, 2024

Enviva Inc.

U.S. Utility D CCC- Missed payments
Feb. 16, 2024

Range Parent Inc.

U.S. Capital goods D CCC- Bankruptcy
Feb. 20, 2024

Vue Entertainment International Ltd

U.K. Media and entertainment SD CC Distressed exchange
Feb. 21, 2024

Hornblower HoldCo LLC

U.S. Media and entertainment D CCC- Bankruptcy
Feb. 21, 2024

Tribe Buyer LLC

U.S. Media and entertainment D CCC- Missed payments
Feb. 23, 2024

Avison Young (Canada) Inc.

Canada Financial institutions SD CCC Missed payments
Feb. 26, 2024

Apex Tool Group LLC

U.S. Forest products and building materials SD CCC+ Distressed exchange
Feb. 26, 2024

Radiology Partners Holdings LLC

U.S. Health care SD CC Distressed exchange
Mar. 5, 2024

Curo Group Holdings Corp.

U.S. Financial institutions SD CCC- Missed payments
Mar. 18, 2024

Hurtigruten Group AS

Norway Media and entertainment SD CC Distressed exchange
Mar. 19, 2024

JOANN Inc.

U.S. Retail/restaurants D CCC Bankruptcy
Mar. 22, 2024

Lumen Technologies Inc.

U.S. Telecommunications SD CC Distressed exchange
Mar. 27, 2024

Samhallsbyggnadsbolaget i Norden AB (publ)

Sweden Homebuilders/real estate companies SD CCC+ Distressed exchange
Mar. 29, 2024

Atlas Midco Inc.

U.S. High technology D CCC+ Distressed exchange
Mar. 29, 2024

Aventiv Technologies LLC

U.S. Telecommunications SD CC Distressed exchange
Mar. 29, 2024

La Financiere Atalian SAS

France Consumer products D CC Distressed exchange
Apr. 1, 2024

Wom S.A.

Chile Telecommunications D CCC Bankruptcy
Apr. 3, 2024

Rackspace Technology Global Inc.

U.S. High technology SD CCC- Distressed exchange
Apr. 4, 2024

Never Slip Topco Inc.

U.S. Consumer products D CCC- Bankruptcy
Apr. 5, 2024

Arvos LuxCo S.a.r.l.

Luxembourg Capital goods D CC Distressed exchange
Apr. 5, 2024

Baffinland Iron Mines Corp.

Canada Metals, mining, and steel SD CCC Distressed exchange
Apr. 5, 2024

Casa Systems Inc.

U.S. High technology D CCC+ Bankruptcy
Apr. 5, 2024

ConvergeOne Holdings Inc.

U.S. Media and entertainment D CCC+ Bankruptcy
Apr. 8, 2024

Loparex Midco B.V.

Netherlands Forest products and building materials SD CCC+ Distressed exchange
Apr. 9, 2024 Confidential Confidential Media and entertainment D CCC- Confidential
Apr. 10, 2024

99 cents only stores LLC

U.S. Retail/restaurants D CCC Bankruptcy
Apr. 22, 2024

Express Inc.

U.S. Consumer products D NR Bankruptcy
Apr. 23, 2024

City Brewing Company LLC (Blue Ribbon Holdings LLC)

U.S. Consumer products SD CCC Distressed exchange
Apr. 24, 2024

EyeCare Partners LLC

U.S. Health care SD CCC Distressed exchange
Apr. 25, 2024 Confidential Confidential Homebuilders/real estate companies SD CCC+ Confidential
Apr. 29, 2024

Digital Media Solutions Inc.

U.S. Media and entertainment SD CCC Distressed exchange
Apr. 29, 2024

Keter Group B.V.

Netherlands Consumer products SD CC Distressed exchange
Apr. 29, 2024

Xplore Inc.

Canada Telecommunications D CCC- Missed payments
Apr. 29, 2024 Confidential Confidential Retail/restaurants SD CCC+ Confidential
May 6, 2024

Cumulus Media Inc.

U.S. Media and entertainment SD CC Distressed exchange
May 6, 2024

Steward Health Care System LLC

U.S. Health care D NR Bankruptcy
May 10, 2024

Farfetch Ltd.

U.K. Retail/restaurants D CC Missed payments
May 16, 2024

Credivalores - Crediservicios SAS

Colombia Financial institutions D NR Bankruptcy
May 17, 2024

Petrofac Ltd.

Jersey Oil and gas SD CCC- Missed payments
May 20, 2024

Global Medical Response Inc. (Air Medical Holdings LLC)

U.S. Health care SD CC Distressed exchange
May 21, 2024

Compact Bidco B.V.

Netherlands Forest products and building materials SD CCC- Missed payments
May 21, 2024

Zachry Holdings Inc.

U.S. Capital goods D NR Bankruptcy
May 22, 2024 Confidential Confidential Retail/restaurants D CCC Confidential
May 22, 2024

New Insight Holdings Inc.

U.S. Media and entertainment D NR Bankruptcy
May 23, 2024

Astra Acquisition Corp.

U.S. High technology SD CCC Distressed exchange
May 28, 2024

Safari Beteiligungs Gmbh

Germany Media and entertainment D CCC+ Distressed exchange
May 28, 2024

Maverick Gaming LLC

U.S. Media and entertainment D CCC Distressed exchange
May 30, 2024

AMC Entertainment Holdings Inc.

U.S. Media and entertainment SD CCC+ Distressed exchange
Data as of May 31, 2024. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights 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
Public finance
Sovereign

This report does not constitute a rating action.

Credit Research & Insights:Nicole Serino, New York + 1 (212) 438 1396;
nicole.serino@spglobal.com
Ekaterina Tolstova, Frankfurt +49 173 6591385;
ekaterina.tolstova@spglobal.com
Research Contributor:Vaishali Singh, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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