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Default, Transition, and Recovery: Distressed Exchanges Reached Their Highest Level Since 2009

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Default, Transition, and Recovery: Distressed Exchanges Reached Their Highest Level Since 2009

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S&P Global Ratings' 2024 global corporate default tally reached 87 after the following defaults in July:

  • Sweden-based real estate company Samhällsbyggnadsbolaget i Norden AB (publ)
  • Ukrainian electricity producer DTEK Renewables B.V.
  • U.S.-based skincare company Rodan & Fields LLC
  • Dutch fashion retailer Hunkemöller International B.V.
  • U.S.-based motion picture exhibitor AMC Entertainment Holdings Inc.
  • U.S.-based sewing machine and accessories company Stitch Acquisition Corp.
  • France-based IT services group Atos SE
  • U.S.-based hospital and outpatient services provider Quincy Health LLC
  • U.S.-based durable consumer goods and services provider Conn's Inc.

Europe Accounted For Almost Half Of All Defaults

Nine companies defaulted in July, the same number as in June and compared with seven in July 2023. However, the global year-to-date corporate default tally is still elevated at 87, which is just above the five-year average of 86 and only slightly below the 2023 year-to-date count of 91 (see chart 1).

Defaults in Europe continued to rise and accounted for 44% of total defaults in July. Europe is the only region where defaults have exceeded 2023 levels, with 26 defaults recorded--a significant increase of 86%, compared with the 2023 year-to-date count, and the highest number since 2008.

We expect a 12-month trailing speculative-grade corporate default rate for Europe of 3.75% by March 2025, down from 4.7% as of June 30, 2024 (see chart 2). In our pessimistic scenario, we forecast that slower-than-expected economic growth, higher-than-expected interest rates, and a higher acceptance of distressed exchanges could keep the default rate elevated over the medium term.

Chart 1

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Chart 2

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Distressed Exchanges Are At Their Highest Level Since 2009

Distressed exchanges led defaults in July and accounted for two-thirds of total defaults. They remain a leading cause of defaults in 2024, with 45 distressed exchanges in the first seven months of 2024. The total count, which is 18% higher than in the same period last year, is at the highest level since 2009 (see chart 3). The increase in distressed exchanges partly results from a growing number of repeat defaulters, which are companies that have already defaulted at least once. Repeat defaulters accounted for close to one-third of year-to-date defaults (see chart 4).

The number of repeat defaulters increased in recent years, not least due to the fact that more companies become comfortable with high leverage levels in their capital structures, many of which were set up during--and in anticipation of--sustained periods of low interest rates (see "The Rise of Repeat Defaulters," published on April 11, 2024).

Chart 3

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Chart 4

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Total Defaulted Debt Decreased By More Than One-Fifth

Although the number of defaults remained the same over June and July, with nine defaults in each month, the defaulted debt amount decreased over the same period, both in Europe and the U.S. Year to date, the monthly defaulted debt amount has only been lower in January (see chart 5). The share of U.S. defaulted debt slightly increased to 63.9% of total defaulted debt but remains below the year-to-date high of 98.2% in February.

Chart 5

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Consumer Products Led Defaults In July

The media and entertainment sector recorded most defaults year to date, totaling 16, with 62.5% resulting from distressed exchanges (see chart 6). Many speculative-grade issuers in this and other sectors remain vulnerable, primarily due to high leverage, negative free cash flows, or looming refinancing needs over the next 12-18 months, which could potentially cause more defaults. The media and entertainment sector has the most speculative-grade debt maturing through 2025, at $65.7 billion as of July 1, 2024.

That said, the consumer products sector accounted for one-third of defaults in July. Lower-rated issuers in this sector continue to suffer from higher interest rates, low-income consumers' reduced spending, the cumulative effect of inflation since mid-2023, and higher promotional spending in margin recovery.

Chart 6

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Table 1

Weakest links decreased in July but estimated default rates are elevated
Region 12-month trailing speculative-grade default rate (%) Weakest links
U.S. 4.42* 194
Emerging markets 1.9 13
Europe 4.81* 46
Other developed 4.4 12
Global 4.0 265
*12-month trailing speculative-grade default rates are from July 31, 2023 to July 31, 2024, preliminary, and subject to change. Other 12-month trailing data as of July 31, 2024. Weakest link data as of June 30, 2024. Other developed includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Credit Research, S&P Global Market Intelligence's CreditPro®.

Table 2

Year-to-date global corporate defaults
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. (A)

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 & 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.(B)

U.S. Media and entertainment SD CCC+ Distressed exchange
Jun. 3, 2024

Sound Inpatient Physicians Inc. (Sound Inpatient Physicians Holdings LLC)

U.S. Health care D CC Distressed exchange
Jun. 11, 2024

Valcour Packaging LLC

U.S. Chemicals, packaging, and environmental services SD CCC- Distressed exchange
Jun. 12, 2024

Vyaire Medical Inc.

U.S. Health care D CCC Bankruptcy
Jun. 14, 2024 Confidential Confidential Forest products and building materials D CCC Confidential
Jun. 18, 2024

Premier Dental Services Inc.

U.S. Health care SD CC Distressed exchange
Jun. 19, 2024

OQ Chemicals International Holding GmbH

Germany Chemicals, packaging, and environmental services D CCC- Missed payments
Jun. 21, 2024

Office Properties Income Trust

U.S. Homebuilders/real estate companies SD CC Distressed exchange
Jun. 24, 2024

Adler Group S.A.

Luxembourg Homebuilders/real estate companies SD CCC- Distressed exchange
Jun. 25, 2024

Pro.Gest SpA

Italy Forest products and building materials SD CCC Missed payments
Jul. 3, 2024

Samhallsbyggnadsbolaget i Norden AB (publ) (B)

Sweden Homebuilders/real estate companies SD CCC Distressed exchange
Jul. 18, 2024

DTEK Renewables B.V.

Netherlands Utility SD CCC- Distressed exchange
Jul. 18, 2024

Rodan & Fields LLC

U.S. Consumer products D CCC- Missed payments
Jul. 22, 2024

Hunkemoller International B.V.

Netherlands Consumer products SD CCC+ Distressed exchange
Jul. 23, 2024

AMC Entertainment Holdings Inc. (C)

U.S. Media and entertainment SD CCC+ Distressed exchange
Jul. 23, 2024

Conn's Inc.

U.S. Retail/restaurants D NR Bankruptcy
Jul. 24, 2024

Stitch Acquisition Corp.

U.S. Consumer products SD CCC- Distressed exchange
Jul. 26, 2024

Atos SE

France High technology SD CCC- Missed payments
Jul. 29, 2024

Quincy Health LLC

U.S. Health care SD CCC- Distressed exchange
Data as of July 31, 2024. SD--Selective default. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights, 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 non-financial)
Structured finance
Public finance
Sovereign and international public finance

This report does not constitute a rating action.

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

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