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Default, Transition, and Recovery: Monthly Defaulted Debt More Than Doubled To $14.9 Billion In August

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Default, Transition, and Recovery: Monthly Defaulted Debt More Than Doubled To $14.9 Billion In August

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S&P Global Ratings' 2024 global corporate default tally has reached 98 after the following defaults in August:

  • U.S. based provider of portable sanitation and related services and products PECF USS Intermediate Holding III Corp.
  • Argentina based company that engages in construction, providing environmental engineering services and public transportation CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.
  • U.S.-based cyber-security software solutions developer Magenta Buyer LLC
  • U.S.-based relocation and moving services provider SIRVA Worldwide Inc.
  • Germany-based processed wood products manufacturer Pfleiderer Group Spólka Akcyjna
  • U.S.-based telecommunications service provider Connect Holding II LLC
  • U.S.-based provider of highly engineered solutions for military, government, and commercial customers HDT Holdco Inc.
  • U.S.-based manufacturer of products in the packaged vegetables and fruit categories Del Monte Foods Inc.
  • U.S.-based owner and operator of general acute care hospitals Community Health Systems Inc.
  • Mexico-based petrochemicals producer Grupo Idesa S.A. de C.V.
  • U.S.-based manufacturer of cosmetics products Avon Products Inc.

Total Defaulted Debt More Than Doubled

While the number of defaults grew by only two issuers this month, the defaulted debt amount has increased considerably to $14.9 billion from $6.4 billion in July, mostly because of U.S. defaults. European defaulted debt decreased to $0.68 billion, from $2.3 billion in July. So far this year, the monthly defaulted debt amount has only been higher once--in March when it hit $16.3 billion (see chart 1). The share of U.S. defaulted debt has increased to 95.4% of total defaulted debt from 63.9% in July.

Unlike in July, when most defaulted debt came from the media and entertainment sector, the U.S. high technology ($4.3 billion) and telecommunication ($3.6 billion) sectors were the main contributors to defaulted debt volumes in August (see chart 2). The defaulted companies in these sectors opted for distressed exchanges, without which they would likely have faced meaningful liquidity challenges throughout 2024. Overall, 98% of defaulted debt in August was from distressed exchanges.

Chart 1

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Chart 2

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The U.S. Accounted For More Than 70% Of Defaults In August

After a slight lull in defaults in June and July, defaults in August increased by two from the previous month to 11. The global corporate default tally has now reached 98 compared to 107 for the same period in 2023. It is now just above its five-year average of 96 and is the fifth highest tally year-to-date since 2008 (see chart 3).

For the first time since May, the U.S. experienced a month-on-month increase in defaults with more than 70% of total defaults in August mostly due to a rise in distressed exchanges. However, the U.S. tally of 60 is still well below the 2023 year-to-date level of 69.

In Europe, monthly defaults slowed in August, with only one default compared to four defaults in July. This is the lowest monthly default count in Europe since July 2023, which may be an early indicator of what is to come. Despite the limited number of defaults this month the total tally is now 27, which is 42% higher than the previous year-to-date tally and the highest year-to-date count since 2008.

Global corporate defaults are still elevated but our base case is that U.S. and European speculative-grade default rates will fall to 3.75% and 4.25%, respectively, by June 2025. This baseline projection is in line with the general trajectory of our previous forecasts, in which we noted that defaults could begin to gradually decline later this year.

Chart 3

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Chart 4

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Distressed exchanges comprise 55% of defaults so far in 2024

Distressed exchanges accounted for 82% of defaults in August compared to 67% in July and represented 55% of year-to-date defaults. With 54 defaults, distressed exchanges remain at their highest since 2009. Some lower-rated issuers are using distressed exchanges as a way to ease near-term debt burdens and financing costs amid weaker cash flows. This has arguably pushed the default rate higher than its long-term average, but the pace of distressed exchanges should ease as interest rates decline (see chart 5).

Chart 5

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Consumer Facing Sectors Led Year-to-Date Defaults

Most defaults continue to be in consumer-facing sectors such as media and entertainment and consumer products. These were the leading sectors in year-to-date defaults with 16 each, followed by health care with 13 (see chart 6). Close to 30% of 'CCC' rated issuers are in consumer-facing sectors, which make them prone to potential default. These issuers remain vulnerable, primarily due to weak operating metrics, weak liquidity, high leverage, and negative free cash flows. That said, the consumer products sector accounted for 27% of defaults in August, with three issuers. Lower-rated issuers in this sector continue to suffer from high borrowing costs, reduced spending among lower-income consumers, the cumulative effects of inflation since mid-2023, and higher promotional spending to aid margin recovery. Stronger expected growth in 2025 could help offset existing debt burdens. Factors supporting solid consumer demand should benefit lower-rated issuers in the near term.

The health care sector also stands out given its relatively large share of issuers, and elevated proportion of weakest links (issuers rated 'B-' or lower and with a negative outlook or on CreditWatch negative). Credit quality has deteriorated in this sector amid prolonged supply-chain bottlenecks. We anticipate a reallocation of investment toward increasing capacity and a stronger supply chain, as growth investments have largely been in mergers and acquisitions. This sector has also been challenged by persistent, albeit shrinking, inflation and unfavorable pricing.

Chart 6

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Table 1

U.S. estimated default rate is expected to increase to 4.55% in August
Region 12-Month trailing speculative-grade default rate (%) Weakest links
U.S. 4.55* 193
Emerging market 1.7 13
Europe 4.44* 44
Other developed 4.4 11
Global 3.9 261
Note:* Trailing-12-month speculative grade default rates for from Aug. 31, 2023- Aug. 31, 2024 are preliminary and subject to change.Trailing-12-month speculative grade default rates for from Jul. 31, 2023- Jul. 31, 2024. Year-to-date data as of Aug. 31, 2024. Weakest link data is as of Jul. 31, 2024. Other developed region includes 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 98
Date Parent company Country/Market Subsector To From Reason
02/01/2024

Resolute Investment Managers Inc.

U.S. Financial institutions D CC Distressed exchange
04/01/2024

Toro Private Holdings I Ltd.

U.K. Transportation D CC Distressed exchange
05/01/2024

AMT TopCo LLC

U.S. Health care D CCC Missed Payments
10/01/2024

Ignition Topco B.V.

Netherlands Chemicals, packaging, and environmental services D CCC Missed Payments
11/01/2024

Amphora Intermediate II Ltd.

U.K. Consumer products SD CCC+ Missed Payments
11/01/2024

Confidential

Confidential Metals, mining, & steel SD CC Confidential
16/01/2024

Covis Finco S.a r.l

Switzerland Health care SD CCC- Distressed exchange
17/01/2024

TMK Hawk Parent Corp.

U.S. Consumer products SD CC Distressed exchange
18/01/2024

KNS Holdco LLC

U.S. Consumer products SD B- Distressed exchange
19/01/2024

System1 Inc.

U.S. Media & entertainment SD CCC Distressed exchange
24/01/2024

New Trojan Parent Inc.

U.S. Consumer products D CCC- Bankruptcy
26/01/2024

Gol Linhas Aereas Inteligentes S.A.

Brazil Transportation D CCC- Bankruptcy
31/01/2024

AMC Entertainment Holdings Inc. (A)

U.S. Media & entertainment SD CCC+ Distressed exchange
31/01/2024

Enjoy S.A.

Chile Media & entertainment D CCC- Bankruptcy
05/02/2024

Cano Health Inc.

U.S. Health Care D CCC- Bankruptcy
06/02/2024

Astro Intermediate Holding II Corp

U.S. Consumer Products SD CCC Missed Payments
08/02/2024

Pluto Acquisition I Inc.

U.S. Health Care SD CC Distressed exchange
09/02/2024

Confidential

Confidential Telecommunications D CC Confidential
14/02/2024

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

Argentina Capital Goods SD CC Distressed exchange
14/02/2024

GoTo Group Inc.

U.S. High Technology SD CCC+ Distressed exchange
15/02/2024

AFE S.A. SICAV-RAIF

U.K. Financial Institutions SD CC Distressed exchange
16/02/2024

Enviva Inc.

U.S. Utility D CCC- Missed Payments
16/02/2024

Range Parent Inc.

U.S. Capital Goods D CCC- Bankruptcy
20/02/2024

Vue Entertainment International Ltd.

U.K. Media & Entertainment SD CC Distressed exchange
21/02/2024

Hornblower HoldCo LLC

U.S. Media & Entertainment D CCC- Bankruptcy
21/02/2024

Tribe Buyer LLC

U.S. Media & Entertainment D CCC- Missed Payments
23/02/2024

Avison Young (Canada) Inc.

Canada Financial Institutions SD CCC Missed Payments
26/02/2024

Apex Tool Group LLC

U.S. Forest Products & Building Materials SD CCC+ Distressed exchange
26/02/2024

Radiology Partners Holdings LLC

U.S. Health Care SD CC Distressed exchange
05/03/2024

Curo Group Holdings Corp.

U.S. Financial Institutions SD CCC- Missed Payments
18/03/2024

Hurtigruten Group AS

Norway Media & Entertainment SD CC Distressed exchange
19/03/2024

JOANN Inc.

U.S. Retail/Restaurants D CCC Bankruptcy
22/03/2024

Lumen Technologies Inc.

U.S. Telecommunications SD CC Distressed exchange
27/03/2024

Samhallsbyggnadsbolaget i Norden AB (publ)

Sweden Homebuilders/real estate companies SD CCC+ Distressed exchange
29/03/2024

Atlas Midco Inc.

U.S. High Technology D CCC+ Distressed exchange
29/03/2024

Aventiv Technologies LLC

U.S. Telecommunications SD CC Distressed exchange
29/03/2024

La Financiere Atalian SAS

France Consumer Products D CC Distressed exchange
01/04/2024

Wom S.A.

Chile Telecommunications D CCC Bankruptcy
03/04/2024

Rackspace Technology Global Inc.

U.S. High Technology SD CCC- Distressed Exchange
04/04/2024

Never Slip Topco Inc.

U.S. Consumer Products D CCC- Bankruptcy
05/04/2024

Arvos LuxCo S.a.r.l.

Luxembourg Capital Goods D CC Distressed Exchange
05/04/2024

Baffinland Iron Mines Corp.

Canada Metals, mining, & steel SD CCC Distressed exchange
05/04/2024

Casa Systems Inc.

U.S. High Technology D CCC+ Bankruptcy
05/04/2024

ConvergeOne Holdings Inc.

U.S. Media & entertainment D CCC+ Bankruptcy
08/04/2024

Loparex Midco B.V.

Netherlands Forest Products & Building Materials SD CCC+ Distressed Exchange
09/04/2024

Confidential

Confidential Media & entertainment D CCC- Confidential
10/04/2024

99 cents only stores LLC

U.S. Retail/Restaurants D CCC Bankruptcy
22/04/2024

Express Inc.

U.S. Consumer Products D NR Bankruptcy
23/04/2024

City Brewing Company LLC, (Blue Ribbon Holdings LLC)

U.S. Consumer Products SD CCC Distressed Exchange
24/04/2024

EyeCare Partners LLC

U.S. Health care SD CCC Distressed Exchange
25/04/2024

Confidential

Confidential Homebuilders/real estate companies SD CCC+ Confidential
29/04/2024

Digital Media Solutions Inc.

U.S. Media & entertainment SD CCC Distressed Exchange
29/04/2024

Keter Group B.V.

Netherlands Consumer Products SD CC Distressed Exchange
29/04/2024

Xplore Inc.

Canada Telecommunications D CCC- Missed Payments
29/04/2024

Confidential

Confidential Retail/Restaurants SD CCC+ Confidential
06/05/2024

Cumulus Media Inc.

U.S. Media & entertainment SD CC Distressed exchange
06/05/2024

Steward Health Care System LLC

U.S. Health care D NR Bankruptcy
10/05/2024

Farfetch Ltd.

U.K. Retail/Restaurants D CC Missed Payments
16/05/2024

Credivalores - Crediservicios SAS

Colombia Financial institutions D NR Bankruptcy
17/05/2024

Petrofac Ltd.

Jersey Oil & Gas SD CCC- Missed payments
20/05/2024

Global Medical Response Inc. (Air Medical Holdings LLC)

U.S. Health care SD CC Distressed exchange
21/05/2024

Compact Bidco B.V.

Netherlands Forest Products & Building Materials SD CCC- Missed payments
21/05/2024

Zachry Holdings Inc.

U.S. Capital Goods D NR Bankruptcy
22/05/2024

Confidential

Confidential Retail/Restaurants D CCC Confidential
22/05/2024

New Insight Holdings Inc.

U.S. Media & entertainment D NR Bankruptcy
23/05/2024

Astra Acquisition Corp.

U.S. High Technology SD CCC Distressed exchange
28/05/2024

Safari Beteiligungs Gmbh

Germany Media & entertainment D CCC+ Distressed exchange
28/05/2024

Maverick Gaming LLC

U.S. Media & entertainment D CCC Distressed exchange
30/05/2024

AMC Entertainment Holdings Inc.(B)

U.S. Media & entertainment SD CCC+ Distressed exchange
03/06/2024

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

U.S. Health care D CC Distressed Exchange
11/06/2024

Valcour Packaging LLC

U.S. Chemicals, packaging, and environmental services SD CCC- Distressed Exchange
12/06/2024

Vyaire Medical Inc.

U.S. Health care D CCC Bankruptcy
14/06/2024

Confidential

Confidential Forest Products & Building Materials D CCC Confidential
18/06/2024

Premier Dental Services Inc.

U.S. Health care SD CC Distressed Exchange
19/06/2024

OQ Chemicals International Holding GmbH

Germany Chemicals, packaging, and environmental services D CCC- Missed Payments
21/06/2024

Office Properties Income Trust

U.S. Homebuilders/Real Estate Co. SD CC Distressed Exchange
24/06/2024

Adler Group S.A.

Luxembourg Homebuilders/Real Estate Co. SD CCC- Distressed Exchange
25/06/2024

Pro.Gest SpA

Italy Forest Products & Building Materials SD CCC Missed Payments
03/07/2024

Samhallsbyggnadsbolaget i Norden AB (publ)

Sweden Homebuilders/Real Estate Co. SD CCC Distressed Exchange
18/07/2024

DTEK Renewables B.V.

Netherlands Utility SD CCC- Distressed Exchange
18/07/2024

Rodan & Fields LLC

U.S. Consumer Products D CCC- Missed Payments
22/07/2024

Hunkemoller International B.V.

Netherlands Consumer Products SD CCC+ Distressed Exchange
23/07/2024

AMC Entertainment Holdings Inc.(C)

U.S. Media & entertainment SD CCC+ Distressed Exchange
23/07/2024

Conn's Inc.

U.S. Retail/Restaurants D NR Bankruptcy
24/07/2024

Stitch Acquisition Corp.

U.S. Consumer Products SD CCC- Distressed Exchange
26/07/2024

Atos SE

France High Technology SD CCC- Missed Payments
29/07/2024

Quincy Health LLC

U.S. Health Care SD CCC- Distressed Exchange
06/08/2024

Grupo Idesa S.A. de C.V.

Mexico Chemicals, packaging, and environmental services SD CC Distressed Exchange
07/08/2024

Community Health Systems Inc.

U.S. Health Care SD CCC+ Distressed Exchange
08/08/2024

Del Monte Foods Inc.

U.S. Consumer Products SD CCC- Distressed Exchange
12/08/2024

HDT HoldCo Inc.

U.S. Aerospace & Defense SD CCC Distressed Exchange
13/08/2024

Avon Products Inc. (Natura & Co Holding S.A.

U.S. Consumer Products D BB- Bankruptcy
15/08/2024

Connect Holding LLC

U.S. Telecommunications SD CCC Distressed Exchange
15/08/2024

Pfleiderer Group B.V. & Co. KG

Germany Forest Products & Building Materials SD CC Distressed Exchange
22/08/2024

SIRVA Inc.

U.S. Consumer Products SD CCC Distressed Exchange
26/08/2024

Magenta Buyer LLC

U.S. High Technology SD CCC Distressed Exchange
27/08/2024

CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.(B)

Argentina Capital Goods SD CC Missed Payments
28/08/2024

PECF USS Intermediate Holding III Corp.

U.S. Chemicals, packaging, and environmental services D CCC Distressed Exchange
Data as of Aug. 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 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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