On Nov. 17, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on lower refinancing risk. On June 29, 2020, S&P Global Ratings withdrew its ratings on Intelsat. On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Missouri-based propane distributor Ferrellgas Partners L.P. to 'SD' from 'CC' after the issuer decided to not make the final maturity payment on its US$357 million unsecured notes and entered into a forbearance agreement with its debtholders until July 31, 2020. Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages. On Aug. 7, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD'. The principal liquidity sources for the issuer involves US$48 million cash on hand and about US$35 million to US$55 million available in revolving credits. With an increase in the proportion of downgrades during the year, the number of large rating changes (which we define as more than six notches) increased in 2020. We included such subsidiaries for the period during which they had a distinct and separate risk of default. On April 24, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. At that point, LetterOne owned 89.7% of 2023 notes. On Dec. 9, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Tennessee-based health care services provider Community Health Systems Inc. to 'SD' from 'CC'. Trends in the one-year Gini ratio emerge during periods of both high and low default rates, which reflects the natural relationship between the two extremes. On Aug. 19, 2020, we raised the issuer credit rating to 'CCC-' from 'SD' after the issuer resumed interest payments on senior secured notes issued by its subsidiary. Earlier, on May 29, 2020, we lowered our ratings on BLY from 'CCC+' to 'CC' and placed them on CreditWatch with negative implications following the company's announcement of a proposal to convert the interest payments due on its senior secured notes in 2020 to PIK interest payments. On Feb. 4, 2020, S&P Global Ratings lowered its ratings on Lecta S.A. to 'D' from 'SD', on completion of restructuring of its debt obligation, and subsequently withdrew the ratings. On Aug. 17, 2020, we withdrew the rating on the company at its request. This page provides a central resource for Moody's research on default risks, impairment and loss rates, . The Default & Recovery Database provides access to the most comprehensive default dataset in the market. The issuer's business had been suffering and further deteriorated due to the coronavirus pandemic. S&P Global Ratings had previously withdrawn its ratings on Techniplas. On Nov. 20, 2020, S&P Global Ratings withdrew its ratings on the issuer. On July 2, 2020, we withdrew our ratings on the issuer after it filed for reorganization under Chapter 11. prior to May 2014, Kathrin was a lead analyst in Moody's EMEA Corporate Finance Group in Frankfurt, Germany, covering a diverse set of heavy industrial corporations across . This caused high liquidity constraints for Hertz. On Nov. 23, 2020, S&P Global Ratings withdrew its rating on the issuer. The largest gap between the two was in financial institutions, which had a five-notch difference: The 233 financial institutions that defaulted had a median original rating of 'B+', compared with a sector median of 'BBB'. 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. On Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC', with a negative outlook, considering the company's ability to improve its liquidity. This nonpayment was considered a general default, and the company was not expected to be able to pay most of its obligations. On Feb. 25, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Canada-based oilfield services provider Calfrac Well Services Ltd. to 'SD' from 'CC' after the company completed a distressed exchange on the U.S. dollar unsecured notes due in 2026. On Dec. 22, 2020, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'SD'. For the purposes of this study, if an issuer defaults, we end its rating history at 'D'. 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. On Aug. 5, 2020, S&P Global Ratings raised the issuer credit ratings to 'CCC+' from 'D', as the company completed a distressed restructuring and amended its first-and second-lien credit agreements. We view the nonpayment of interest as akin to default on the senior secured notes. Export PDF Export CSV Email . Performance of project finance bank loans during the pandemic-fueled default cycle in 2020; Key findings for the power, infrastructure, and oil and gas industry sectors . The company emerged from Chapter 11 bankruptcy protection on Oct. 16, 2020, with a new capital structure and name, TNT Crane & Rigging LLC. This is slightly higher than the post-Lehman Bros. default (2009 onward) annual average of $1.4 billion. In table 13, the times to default are from the date that each entity received each unique rating in its path to default. Earlier, on May 15, 2020, S&P Global Ratings withdrew the issuer credit ratings at the issuer's request. Earlier, on April 14, 2020, we lowered the issuer credit ratings on the company to 'CCC-' from 'CCC' as it was contending with the disruption and recessionary conditions stemming from the coronavirus pandemic, the challenging trends facing department stores, and an unsustainable capital structure. On March 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based business parks developer and operator Yida China Holdings Ltd. to 'SD' from 'CC' after the issuer completed a distressed exchange. Note: Numbers in parentheses are standard deviations. Earlier, on March 20, 2020, we lowered the issuer credit rating to 'CCC' from 'B' because the gaming operator and gaming equipment sectors were facing an unprecedented decline in revenue resulting from the temporary closures of casinos across the U.S. On May 20, 2020, S&P Global Ratings lowered its issuer credit rating on New York-based fitness club operator Equinox Holdings Inc. to 'SD' from 'CCC' after the issuer completed an amendment to its partial guarantee on affiliate company SoulCycle Inc.'s credit facility that will allow it to delay a mandatory payment, which we view as tantamount to a default. Later, on Dec. 10, 2020, we raised the issuer credit rating to 'CCC+' from 'SD' after the company completed debt repurchases on favorable terms. This study limits the reporting of default rates to the 15-year time horizon. On Oct. 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based transportation company Toro Private Holdings I Ltd. to 'SD' from 'CC' after the company completed the announced debt exchange and restructuring, which we view as distressed and tantamount to default, as lenders receive less than the original promise of the debt instruments. On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Alta-based frac sand producer and supplier Source Energy Services Ltd. to 'D' from 'CCC-' after the issuer missed the interest payment due on June 15, and we believed the company was unlikely to make the interest payment within the 60-day grace period. Earlier, on April 15, 2020, we lowered our issuer credit rating on CEC to 'CC' from 'CCC' following the company's announcement that it formed a restructuring committee to explore various strategic alternatives, including an out-of-court or in-court restructuring. This influx of new speculative-grade issuers has contributed to the growing share of speculative-grade ratings globally, with the U.S. and European regions accounting for roughly two-thirds of the total since 2010. to 'SD' from 'CCC+' after the company missed interest payment on its 510 million senior secured notes due November 2023. On Aug. 19, 2020, we withdrew our issuer credit ratings on the company at its request. On Nov. 3, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'D' on the completed exchange offer. On May 26, 2020, S&P Global Ratings lowered its issuer credit rating on Oklahoma-based oil and gas exploration and production company Unit Corp. to 'D' from 'CC' after the issuer reorganized under Chapter 11 of the U.S. Bankruptcy Code. Investment-grade ratings are proportionately more prevalent among financial services companies as well (relative to nonfinancials). The company exchanged $315 million of its existing unsecured notes for new 9% convertible secured notes due 2025, which we considered less than the original promise and tantamount to default. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated entities, the curve would capture all of the area above the diagonal on the graph (the ideal curve), and its Gini coefficient would be 1 (see chart 31). However, since 2008, speculative-grade ratings in Europe have surged, with the share more than doubling to 44.5% at the end of 2020. We believe this bankruptcy filing is due to the combined effect of the coronavirus pandemic and the company's weak performance in 2019. On March 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Singapore-based Geo Energy Resources Ltd. to 'SD' from 'B-' after the issuer completed debt buybacks. The company extended the maturity on its revolving credit facility of US$135 million by one week. These tables can also be constructed for each rating category. Outerstuff reached an agreement with its lenders to extend its term loan maturity to December 2023 and paid its lenders the principal and interest it missed in March, June, and September 2020. de C.V. to 'D' from 'B-' after the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Multiplying 92.81% by 96.77% results in a 89.82% survival rate to the end of the third year, which results in a three-year average cumulative default rate of 10.18%. On Jan. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Virginia-based aerospace and defense service provider Constellis Holdings LLC to 'SD' (selective default) from 'CC' after the company failed to make a mandatory principal payment on its $872 million first-lien term loan. On April 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based oilfield services company KCA DEUTAG Alpha Ltd. to 'SD' from 'CCC+' after the issuer announced it would use the grace period for interest payments. The gap becomes even wider over longer time horizons, such as three years and 10 years (see chart 19). On Sept, 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Switzerland-based automobiles and components manufacturing company Garrett Motion Inc. to 'D' from 'B' after the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Globally, speculative-grade issuers constituted 50.3% of rated corporate issuers at the end of 2020, whereas at the end of 2019, speculative-grade ratings represented 49.9% of global ratings (see chart 22). Sovereign Default and Recovery Rates - Moody's Analytics If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal. In the transaction, the issuer raised another US$200 million notes due in 2026. On Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' because the issuer had enough liquidity to pay the remainder of the bond's maturity. In both cases, the standard deviation of the times to default generally shrinks progressively as the rating gets lower. This compares with a Gini of 88.3% and a default rate of 2.5% in 2019. Later, on Aug. 11, 2020, we withdrew our issuer credit ratings on the company at its request. The issuer, doing business as Elara Caring, completed the exchange of its US$195 million second-lien debt for US$186 million new junior 1.5-lien debt. Ratings stability decreased in 2020, to 69.2%, largely the result of the downgrade rate of 18.5%, which was the highest since 2009. Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. At the time of the withdrawal, our 'D' rating reflected the nonpayment of the coupon on the $350 million Eurobond in April 2020 followed by a nonpayment of its mezzanine loan. Credit quality declined in 2020, with increasing default and downgrade rates, while the upgrade rate fell to an all-time low of 2.8%. On Feb. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Italy-based maritime transportation services Moby SpA to 'SD' from 'CCC-' after the company entered into a standstill agreement to not pay scheduled payments in mid-February. Default, Transition, and Recovery: 2020 Annual Global Corporate Default And Rating Transition Study, China's Local Governments Are Shedding Their Ties To Struggling SOEs, Instant Insights: Key Takeaways From Our Research, Research Update: Dexus Wholesale Property Fund Outlook Revised To Stable From Positive On Merger Completion; 'A' Ratings Affirmed, Scenario Analysis: Higher Rates Threaten The Credit Quality Of 13 EMEA Retail And Restaurant Companies. On April 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chilean casino operator Enjoy S.A. to 'D' from 'B-' after the company announced suspension of its shareholder meeting to treat a capital increase while the board decided to file for judicial reorganization. On July 20, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Marshall Islands-based offshore driller Seadrill Partners LLC, a subsidiary of Seadrill Ltd., to 'SD' from 'CCC' after the issuer announced that it would use the 30-day grace period for interest payment. We treated this as distressed because the issuer did not meet its contractual obligation to pay principal and interest in a timely manner, and did not adequately compensate lenders for agreeing to temporarily waive their rights. The issuer agreed with certain majority debtholders to convert US$2.2 billion of existing debt into new equity. The latter are companies with obligations that are not legally guaranteed by a parent but that have operating or financing activities that are so inextricably entwined with those of the parent that it would be impossible to imagine the default of one and not the other. Furthermore, weak liquidity supports our view of O1 Properties' general default. Normally, recessions include, or are followed shortly by, marked increases in corporate defaults. The company's credit quality deteriorated with the pressure on airlines' cash flows and liquidity due to the coronavirus pandemic. The COVID-19 pandemic and lockdowns in 2020 led to one of the deepest recessions since the Great Depression roughly 90 years ago. The one-year Gini in 2020 was well above the one-year weighted average (since 1981) Gini ratio of 82.8% and was higher than the median annual Gini ratio over the last 40 years of 85.7% (see table 2 and chart 30). Source: Moody's Investors Service, "Moody's Corporate Default & Recovery Rates Study 2019" Senior Secured Loans Equity Unsecured Debt (ie, high yield bonds) Subordinated Bonds Senior Unsecured Bonds Loans 28.0% 47.0% 80.0% Recovery Rate 100% 80% 60% 40% 20% 0% 1 Source: S&P Global Market Intelligence, Wells Fargo, March 31, 2020 On April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based telecom service provider Speedcast International Ltd. to 'D' from 'CCC' after the issuer missed interest payments on its US$600 million term loan, due on March 31, 2020. The links between transition matrices and average cumulative default rates are best illustrated through tables 30-32. Each static pool can be interpreted as a buy-and-hold portfolio. On Feb. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based home dcor and furniture retailer Pier 1 Imports Inc. to 'D' from 'CCC-' after the issuer filed for Chapter 11 bankruptcy. Difference between last four quarters and weighted average, Largest corporate defaulters by outstanding debt amount, Texas Competitive Electric Holdings Co. LLC. In a year marked by the worst economic contraction since the Great Depression, our ratings performed well, with all rated defaults in 2020 beginning the year with speculative-grade ratings. On June 25, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pittsburgh-based retailer of health and wellness products GNC Holding Inc. to 'D' from 'CC' as the company commenced a voluntary prearranged Chapter 11 bankruptcy filing on June 23, 2020. On April 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Zealand-based nonbank financier FE Investments Ltd. to 'D' from 'CCC'. On May 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based Guitar Center Inc. to 'SD' from 'CCC'. /ratings/en/research/articles/210407-default-transition-and-recovery-2020-annual-global-corporate-default-and-rating-transition-study-11900573 The group issued a US$450 million senior secured term loan and US$111 million senior secured term loan due in May 2024 and refinanced the US$111 million additional RCF that was maturing in December 2020. Meanwhile, the downgrade rate more than doubled, to 18.5% from 9.0% in 2019. The Content shall not be used for any unlawful or unauthorized purposes. to 'D' from 'CC' after the issuer completed a distressed debt exchange for both its US$115 million notes due in April 2021 and US$370 million notes due in April 2022. Various forms of bankruptcy accounted for just over 24% of all defaults. The default rate for all Moody's-rated corporate issuers rose to 5.4% at the end of 2009 from 2.0% at year-end 2008. This transactions increased available liquidity and reduced cash interest for the short term. The two-year default rates in table 24 are calculated in the same way as those in the cumulative average section for the two-year column in table 32, while those in the 'D' column of table 34 are equivalent to adding up all the defaults behind the two-year column's annual default rates in table 32, divided by the sum of all the issuers in table 32 for the years 1981-2020. 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. On April 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based hamburger restaurant chain Steak n Shake Inc. to SD from 'CCC-' after the issuer completed a distressed exchange by retiring a portion of its term loan. On April 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Utah-based credit report repair service provider PGX Holdings Inc. to 'D' from 'CCC'. The share of newly assigned issuer credit ratings that are speculative grade has remained elevated in 2020: 78% of newly assigned issuer credit ratings globally were speculative grade. Moody's optimistic scenario entails a strong recovery leading to a default rate forecast of just 2% for the year-end and maintaining around the 2% area for the initial months of 2022. We use the static pool methodology to avoid certain pitfalls in estimating default rates, such as by ensuring that default rates account for rating migration and allowing for default rates to be calculated across multiperiod time horizons. On April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Tennessee-based health care service provider Quorum Health Corp. to 'D' from 'CCC-'. 1Great Financial Crisis 2008/2009. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com. S&P Global Ratings does not require all issuers with rated debt to have an issuer credit rating. The regions covered in this study are: U.S. and tax havens: On May 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Jersey-based vehicle renting and leasing service provider Hertz Global Holdings Inc. to 'SD' from 'CCC-' after the issuer missed lease payments on some of its asset-backed securities. Earlier, on March 31, 2020, we lowered our issuer credit rating on Global Knowledge to 'CC' from 'CCC-' as the company's liquidity remained very weak and it faced substantial near-term debt maturities, as well as needed to address its unsustainable capital structure. On Nov. 26, 2020, S&P Global Ratings lowered the long-term issuer credit rating on Spain-based real estate debt and property management company Haya Real Estate S.A.U. On May 27, 2020, S&P Global Ratings withdrew its ratings on the issuer. An analysis of transition rates for 2020 suggests that ratings behavior continues to exhibit consistency with long-term trends. On April 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based airline company Virgin Australia Holdings Ltd. to 'D' from 'CC' after the company filed for Chapter 15 bankruptcy and announced it would not pay the coupon on its US$425 million senior unsecured notes because of a moratorium on all creditor payments. On Oct. 9, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD'. A key consideration when analyzing transition matrices that present averages computed over multiple static pools is that the standard deviations associated with each transition point in the matrix are large relative to the averages (outside of stability rates). To compute one-year rating transition rates by rating category, we compared the rating on each entity at the end of a particular year with the rating at the beginning of the same year. Over the long term, defaults in nonfinancial sectors have tended to be more cyclical than defaults in the financial sectors. The notable exception was Europe, which continued to see historically elevated defaults through the third and fourth quarters. On March 9, 2020, Bluestem Brands Inc. defaulted, having filed for Chapter 11 bankruptcy to restructure its debt. A missed or delayed disbursement of a contractually-obligated interest or principal payment (excluding missed payments cured within a contractually allowed grace period), as defined in credit agreements and indentures; 2. Earlier, on April 22, 2020, we lowered our issuer credit rating on Takko to 'CCC+' from 'B-', reflecting our view that the group's ability to service its financial commitments could be further strained. Earlier, on Feb. 7, 2020, we lowered the long-term issuer credit rating to 'CCC-' from 'CCC' after it reported some operational missteps, resulting in a covenant violation. The transaction, which was settled on Oct. 14, was considered distressed, as opposed to opportunistic. On May 15, 2020, S&P Global Ratings lowered the issuer credit rating on Texas-based oilfield products and services provider Forum Energy Technologies Inc. to 'SD' from 'CC'. In line with expectations, the majority of companies that defaulted within one year of the original rating are from the lowest speculative-grade rating categories, 'B' and lower. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. Defaulted issuers initially rated 'BB' show a similar pattern but peak a little later, in the fourth year. The issuer was engaged in discussions with creditors for a debt restructuring. Noteholders validly tendered about 69% of the total outstanding principal amount of the notes through the exchange. The company entered into a forbearance agreement with its senior debt lenders and is expected to pursue a debt restructuring. In the seven-year Lorenz curve, speculative-grade issuers constituted 88.3% of defaulters and only 36.7% of the entire sample (see chart 29).
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