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Default, Transition, and Recovery: The Pace Of Global Corporate Defaults Slows

COMMENTS

This Month In Credit: 2024 Data Companion

COMMENTS

Credit Trends: Risky Credits: U.S. And Canadian Risky Credits Drop For Third Straight Quarter Amid Sector Divergences

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Credit Trends: Risky Credits: Defaults Have Driven A Decline In European Risky Credits

COMMENTS

Credit Trends: Risky Credits: Emerging Markets: Issuance Activity And Deleveraging Plans


Default, Transition, and Recovery: The Pace Of Global Corporate Defaults Slows

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S&P Global Ratings' 2024 global corporate default tally has reached 109 after the following defaults in September:

  • U.S.-based salt mining company American Rock Salt Co. LLC
  • U.S.-based home discount retailer Big Lots Inc.
  • U.S.-based plastic packaging manufacturer Poseidon Investment Intermediate L.P.
  • U.S.-based reusable packaging solutions manufacturer Tosca Services LLC
  • Germany-based chemical producer SK Mohawk Holdings S.a.r.l.
  • U.S.-based auto part manufacturer and distributer Wheel Pros Inc.
  • Mexico-based leasing company Operadora de Servicios Mega, S.A. de C.V. SOFOM, E.R.
  • U.S.-based digital solution provider Digital Media Solutions Inc.
  • U.K.-based telecom provider TalkTalk Telecom Group Ltd.
  • U.K.-based health care equipment company Carestream Dental Technology Parent Ltd.
  • U.S.-based energy transition company Vertex Energy Inc.

Europe Recorded A Rise In Defaults In September

Although monthly default totals remained consistent, with 11 defaults each in September and August, the pace of quarterly defaults has slowed. With 31 defaults in the third quarter, quarterly defaults were at their lowest level since 2022 (see chart 1). The decrease resulted mainly from a quarter-over-quarter decline in defaults in the U.S. by five entities or 20%.

Chart 1

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Europe is the only region globally where the number of defaults increased in September. Year-to-date defaults, which exceed 2023 levels by 43%, amount to 30, the highest number since 2008.

We expect the default rate will decline, but at a slower pace than it rose, due to residual strain for the lowest-rated borrowers. We forecast a 12-month trailing speculative-grade corporate default rate of 4.25% for Europe and 3.75% for the U.S. by June 2025, down from 4.40% and 4.60%, respectively, as of Aug. 31, 2024 (see chart 2).

Chart 2

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Monthly Defaults Increased In The Chemicals and Packaging Services Sectors

European chemicals and U.S. packaging services companies led monthly defaults in September with three, bringing these sectors' year-to-date tally to eight. Most defaults in these sectors occurred in the past four months. European speculative-grade chemical companies are still dealing with weak free cash flows in a tough industry environment and high interest rates, which make it difficult to service debt. Across the pond, U.S. packaging services issuers are contending with a low-growth economy, the aftermath of previously high inflation, lower consumer purchasing power, and a decrease in consumer confidence. Additionally, borrowing costs remain elevated, which significantly impairs the lowest-rated issuers.

Similar to 2023, most year-to-date defaults are concentrated on three sectors. Media and entertainment (17 defaults), consumer products (16), and health care (14) account for 43% of the year-to-date default tally, compared with close to 45% over the same period last year.

We observed that the weakest links--issuers rated at 'B-' and below, with a negative outlook or a CreditWatch negative placement--are most prone to defaults. Although the global weakest link tally has been declining, close to 40% of these issuers are highly concentrated on the consumer products, health care, and media and entertainment sectors. This makes these sectors more likely to continue leading the default tally. Consumer-facing sectors, chemicals and packaging companies, and issuers with a high proportion of floating-rate debt remain most vulnerable to defaults as they suffer from an extended period of negative cash flows and have unsustainable capital structures (see chart 3).

Chart 3

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Monthly Defaulted Debt Decreased By 50%

While the number of defaults remained steady over August and September, monthly defaulted debt halved to $7.45 billion in September, following a decline in the amount of defaulted debt in the U.S.

U.S. defaulters had lower amounts of debt outstanding, meaning the share of U.S. defaulted debt declined. The U.S. contributed to 66% of total defaulted debt in September, from 95% in August.

Year to date, September recorded the third-lowest monthly defaulted debt amount in the U.S., after January and July (see chart 4). In contrast, the amount of defaulted debt in Europe slightly increased in September, to $2.5 billion or 34.4% of total defaulted debt. Even so, it remains below the year-to-date high of 40% in June.

Chart 4

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Unlike in August, when most defaulted debt came from the telecommunication sector, the automotive and chemicals and packaging sectors were the main contributors to defaulted debt volumes in September, with $3.06 billion and $3.02 billion, respectively (see chart 5). 75% of defaulted companies in these sectors opted for distressed exchanges since they would likely have faced meaningful liquidity challenges in 2024 otherwise.

Chart 5

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Distressed Exchanges Account For 54% Of Year-To-Date Defaults

Distressed exchanges remain the leading cause of defaults year to date, accounting for 54% of total defaults or 59 defaults so far in 2024 (see chart 6). This is the highest year-to-date tally of distressed exchanges since 2008. While distressed exchanges were the primary reason of defaults in September, they only contributed to five defaults (45% of the total share), compared with nine in August (82%). This is in line with our expectations that the decline in interest rates may ease the pace of distressed exchanges as some lower-rated issuers are using distressed exchanges to alleviate near-term debt burdens and reduce financing costs amid weaker cash flows.

Chart 6

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After four U.S. bankruptcies in September--the second-highest monthly count in 2024, after six in April--the number of U.S. bankruptcies increased to 24 year to date. Most bankruptcies were Chapter 11 filings, with issuers entering into restructuring agreements with existing term loan lenders to commence proceedings.

Table 1

U.S. estimated default rate decreased to 4.29% in September
Region 12-month trailing speculative-grade default rate (%) Weakest links
U.S. 4.29 186
Emerging markets 1.60 11
Europe 4.75 42
Other developed 4.48 10
Global 3.85 249
Trailing-12-month speculative-grade default rates are from Aug. 31, 2023, to Aug. 31, 2024, except for the U.S. and Europe. For these two regions, they are from Sept. 30, 2023, to Sept. 30, 2024, preliminary, and subject to change. Weakest link data as of Aug. 31, 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

2024 global corporate default tally reached 109
Date Parent company Country/market Subsector To From Reason
Jan. 02, 2024

Resolute Investment Managers Inc.

U.S. Financial institutions D CC Distressed exchange
Jan. 04, 2024

Toro Private Holdings I Ltd.

U.K. Transportation D CC Distressed exchange
Jan. 05, 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. 05, 2024

Cano Health Inc.

U.S. Health care D CCC- Bankruptcy
Feb. 06, 2024

Astro Intermediate Holding II Corp.

U.S. Consumer products SD CCC Missed payments
Feb. 08, 2024

Pluto Acquisition I Inc.

U.S. Health care SD CC Distressed exchange
Feb. 09, 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
March 05, 2024

Curo Group Holdings Corp.

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

Hurtigruten Group AS

Norway Media and entertainment SD CC Distressed exchange
March 19, 2024

JOANN Inc.

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

Lumen Technologies Inc.

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

Samhallsbyggnadsbolaget i Norden AB (publ)

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

Atlas Midco Inc.

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

Aventiv Technologies LLC

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

La Financiere Atalian SAS

France Consumer products D CC Distressed exchange
April 01, 2024

Wom S.A.

Chile Telecommunications D CCC Bankruptcy
April 03, 2024

Rackspace Technology Global Inc.

U.S. High technology SD CCC- Distressed exchange
April 04, 2024

Never Slip Topco Inc.

U.S. Consumer products D CCC- Bankruptcy
April 05, 2024

Arvos LuxCo S.a.r.l.

Luxembourg Capital goods D CC Distressed exchange
April 05, 2024

Baffinland Iron Mines Corp.

Canada Metals, mining, and steel SD CCC Distressed exchange
April 05, 2024

Casa Systems Inc.

U.S. High technology D CCC+ Bankruptcy
April 05, 2024

ConvergeOne Holdings Inc.

U.S. Media and entertainment D CCC+ Bankruptcy
April 08, 2024

Loparex Midco B.V.

Netherlands Forest products and building materials SD CCC+ Distressed exchange
April 09, 2024 Confidential Confidential Media and entertainment D CCC- Confidential
April 10, 2024

99 cents only stores LLC

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

Express Inc.

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

City Brewing Company LLC (Blue Ribbon Holdings LLC)

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

EyeCare Partners LLC

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

Digital Media Solutions Inc.

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

Keter Group B.V.

Netherlands Consumer products SD CC Distressed exchange
April 29, 2024

Xplore Inc.

Canada Telecommunications D CCC- Missed payments
April 29, 2024 Confidential Confidential Retail/restaurants SD CCC+ Confidential
May 06, 2024

Cumulus Media Inc.

U.S. Media and entertainment SD CC Distressed exchange
May 06, 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. (B)

U.S. Media and entertainment SD CCC+ Distressed exchange
June 03, 2024

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

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

Valcour Packaging LLC

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

Vyaire Medical Inc.

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

Premier Dental Services Inc.

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

OQ Chemicals International Holding GmbH

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

Office Properties Income Trust

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

Adler Group S.A.

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

Pro.Gest SpA

Italy Forest products and building materials SD CCC Missed payments
July 03, 2024

Samhallsbyggnadsbolaget i Norden AB (publ)(B)

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

DTEK Renewables B.V.

Netherlands Utility SD CCC- Distressed exchange
July 18, 2024

Rodan & Fields LLC

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

Hunkemoller International B.V.

Netherlands Consumer products SD CCC+ Distressed exchange
July 23, 2024

AMC Entertainment Holdings Inc. (C)

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

Conn's Inc.

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

Stitch Acquisition Corp.

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

Atos SE

France High technology SD CCC- Missed payments
July 29, 2024

Quincy Health LLC

U.S. Health care SD CCC- Distressed exchange
Aug. 06, 2024

Grupo Idesa S.A. de C.V.

Mexico Chemicals, packaging, and environmental services SD CC Distressed exchange
Aug. 07, 2024

Community Health Systems Inc.

U.S. Health care SD CCC+ Distressed exchange
Aug. 08, 2024

Del Monte Foods Inc.

U.S. Consumer products SD CCC- Distressed exchange
Aug. 12, 2024

HDT HoldCo Inc.

U.S. Aerospace and defense SD CCC Distressed exchange
Aug. 13, 2024

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

U.S. Consumer products D BB- Bankruptcy
Aug. 15, 2024

Connect Holding LLC

U.S. Telecommunications SD CCC Distressed exchange
Aug. 15, 2024

Pfleiderer Group B.V. & Co. KG

Germany Forest products and building materials SD CC Distressed exchange
Aug. 22, 2024

SIRVA Inc.

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

Magenta Buyer LLC

U.S. High technology SD CCC Distressed exchange
Aug. 27, 2024

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

Argentina Capital goods SD CC Missed payments
Aug. 28, 2024

PECF USS Intermediate Holding III Corp.

U.S. Chemicals, packaging, and environmental services D CCC Distressed exchange
Sep. 09, 2024

Big Lots Inc.

U.S. Retail/restaurants D NR Bankruptcy
Sep. 10, 2024

American Rock Salt Co. LLC

U.S. Metals, mining, and steel SD CCC- Missed payments
Sep. 10, 2024

Wheel Pros Inc.

U.S. Automotive D CC Bankruptcy
Sep. 11, 2024

Operadora de Servicios Mega, S.A. de C.V. SOFOM, E.R.

Mexico Financial institutions SD CC Missed payments
Sep. 12, 2024

Digital Media Solutions Inc. (B)

U.S. Media and entertainment D CCC Bankruptcy
Sep. 16, 2024

Poseidon Investment Intermediate L.P.

U.S. Chemicals, packaging, and environmental services SD CCC+ Distressed exchange
Sep. 19, 2024

TalkTalk Telecom Group Ltd.

U.K. Telecommunications D CC Distressed exchange
Sep. 20, 2024

Carestream Dental Technology Parent Ltd.

U.K. Health care SD CCC- Distressed exchange
Sep. 20, 2024

SK Mohawk Holdings S.a.r.l.

Germany Chemicals, packaging, and environmental services D CCC Distressed exchange
Sep. 24, 2024

Tosca Services LLC

U.S. Chemicals, packaging, and environmental services SD CC Distressed exchange
Sep. 26, 2024

Vertex Energy Inc.

U.S. Utility D CCC- Bankruptcy
Data as of Sept. 30, 2024. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro.

Related Research

Default Studies

More analyses 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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