On May 21, 2020, S&P Global Ratings withdrew its ratings on the issuer. Measured on a dollar volume basis, Moody's global speculative-grade bond default rate ended 2009 at 15.6%, up from 5.9% at the end of 2008. On Nov. 2, 2020, Tennessee-based real estate company CBL & Associates Properties Inc. defaulted after the issuer filed for protection under Chapter 11 of the U.S. Bankruptcy Code. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. All rating changes that took place are reflected in the newly formed 1982 static pool through the ratings on these entities as of 12:00:01 a.m. on Jan. 1, 1982. The issuer is still under high execution risk after its Chapter 11 filing in 2019. Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. For example, 10 companies rated 'A' at any point in their lifetimes (excluding initial ratings) defaulted within one year of receiving this rating. On Oct. 30, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' following the completion of the distressed exchange. Since 1981, the 'B' rating category has accounted for 1,735 defaults (56% of the total from initial rating), well more than double the number of defaulters from the 'BB' category (see tables 10 and 12). On Aug. 28, 2020, we withdrew our ratings on the company. The company extended the maturity on its revolving credit facility of US$135 million by one week. Earlier, on June 6, 2020, we lowered our issuer credit rating on SMLP to 'CCC' from 'B'. The company entered into a forbearance agreement with its senior debt lenders and is expected to pursue a debt restructuring. On Oct. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Sweden-based passenger flight transportation services company SAS AB to 'SD' from 'CC' after the issuer completed a distressed debt restructuring of its SEK2,250 million senior unsecured bond due 2022 into about 547 million common shares, at SEK1.16 per share. For example, the share of speculative-grade ratings increased in the U.S. beginning in 2002. On July 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based frac-sand and logistics company Hi-Crush Inc. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11 and entered into a restructuring support agreement with noteholders who control 94% of the company's senior unsecured notes due in 2026. The average number of notches for an upgrade moved to 1.19 in 2020, while downgrades remained at an average of 1.46 notches--the highest rate since 2010 (when the average was 1.52 notches) (see chart 8). For instance, in the three years ended Dec. 31, 2020, 402 nonfinancial companies defaulted, while only 24 financials did. This transaction was viewed as distressed because the exchange was at a much discounted rate, of about 70 cents on a dollar. On Feb. 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based newspaper publisher The McClatchy Co. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11. Financial services had some defaults, but at a lower rate than in 2019 (see table 16). The company had a $135 million interest payment due in mid-July and a $208 million debt maturity in August 2020, and its bonds traded at less than $0.10 on the dollar. On April 12, 2020, Pace Industries Inc. filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. On Nov. 16, 2020, Libbey announced that it had successfully emerged from Chapter 11 by completing its financial restructuring. 0 ratings 0% found this document useful (0 votes) 2 views. *This table compares the net change in ratings from the first to the last day of each year. While the one-year default rate for nonfinancial companies has climbed above 3.5% in four cyclical peaks (1991, 2001-2002, 2009, and 2020), the annual default rate for financial services has remained below 2% since 1990 and below 1% for the past 11 years (see chart 18). Distressed exchanges (which are typically selective defaults) accounted for 37.6% of all defaults, the same as missed interest or principal payments (37.6%). An issuer that remained rated for more than one year was counted as many times as the number of years it was rated. On July 9, 2020, S&P Global Ratings withdrew its issuer credit rating at the company's request. Document Information click to expand document information . On Dec. 10, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' following the company's debt repurchase. On Nov. 4, 2020, S&P Global Ratings withdrew its ratings on the issuer. The downgrade came after the issuer failed to make the term loan principal and interest payment due March 31 and subsequently decided to enter into a forbearance agreement with lenders on April 6. On March 17, 2020, we withdrew our issuer credit rating at the issuer's request. On June 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based oil and gas exploration and production company SM Energy Co. to 'SD' from 'CC' after the issuer announced the results of its previous exchange offer. Its rating history after the default event is included in all calculations as entirely separate from its experience leading up to its earlier default. The Gini coefficient is defined as area B divided by the total of area A plus area B. On Jan. 15, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. On Aug. 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based oil field service and drilling service provider UTEX Industries Inc. to 'D' from 'CCC' after the issuer opted for missing interest payments on its first-lien and second-lien notes. On Dec. 16, 2020, S&P Global Ratings withdrew the issuer credit ratings at the issuer's request. The transaction was viewed as distressed because the remaining US$42 million will now become subordinated, while the noteholders who agreed to the exchange will receive US$850 per US$1,000 principal amount. Earlier, on May 1, 2020, we lowered our issuer credit rating on Chesapeake Energy to 'CC' from 'CCC'. Selective defaults accounted for just over half of all defaults in 2020. Affected debt amounts also rose (see chart 15). We included such subsidiaries for the period during which they had a distinct and separate risk of default. Earlier, on Feb. 9, 2020, we lowered the issuer credit rating on Speedcast to 'CCC' from 'B-' after the issuer announced lower 2019 earnings, which intensified pressure on the group's liquidity. The issuer was also planning for a comprehensive debt restructuring involving debt-for-equity swaps. On Oct. 30, 2020, Luxembourg-based offshore drilling contractor Pacific Drilling S.A. filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, which S&P Global Ratings considers a default. For both axes of the Lorenz curve, the observations are ordered from the low end of the ratings scale ('CCC'/'C') to the high end ('AAA'). In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit quality declined in 2020, with increasing default and downgrade rates, while the upgrade rate fell to an all-time low of 2.8%. The key model inputs Moody's uses in its analysis, such as par, rating factor, and the recovery rate assumptions, are based on its published methodology and could differ from the trustee's reported numbers. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. As in most recovery periods, defaults fell relative to the prior year, with the S&P Global Ratings global speculative-grade corporate default rate falling below 2% for only the eighth time in the past 41 . Although dollar amounts provide information about the portion of the market that is affected by defaults or rating changes, issuer-weighted averages are more useful measures of the performance of ratings. Investment-grade-rated issuers globally tend to exhibit greater ratings stability (as measured by the frequency of rating transitions) than those rated speculative grade (see table 20). These include industrials, utilities, financial institutions, and insurance companies around the world with long-term local currency ratings. In addition, on March 13, 2020, the issuer's license was suspended by the Kazakh insurance regulator due to breach of the regulatory ratios. On May 11, 2020, we withdrew the ratings at the issuer's request. All companies included in the study are assigned to one or more static pools. This report does not constitute a rating action. On April 14, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. Earlier in the month, on Feb. 5, 2020, American Commercial Lines Inc. announced it would execute a restructuring, after which S&P Global Ratings lowered the long-term issuer credit rating to 'CC' from 'CCC'. Finally, PD estimates should also be compared across banks (EBA 2020). In table 13, the times to default are from the date that each entity received each unique rating in its path to default. After beginning with heightened credit market stress and a 45-plus-day stretch without any speculative-grade issuance in the U.S. and Europe, 2019 ultimately saw only marginally higher default and downgrade rates than 2018. 3Q 2021 . Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. The issuer entered into an agreement with the majority of its lenders for recapitalization of its funded debt. On March 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Georgia-based data center operator Internap Corp. to 'D' from 'CCC+' after the issuer, along with its subsidiaries, filed for Chapter 11 bankruptcy with the Southern District of New York. Only in longer time frames do companies with higher original ratings surface among the defaulters. 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. The company separately raised a bridge loan in April 2020 that required it to file a restructuring support agreement by June 15, 2020. In its base case, Moody's analyzed the underlying collateral pool as having a performing par (after treating deferring securities as performing if they meet certain criteria) of $260.9 million, defaulted/deferring par of $0 million, a weighted average default probability of 12.33% (implying a WARF of 1527), and a weighted average recovery rate . It is important to note that S&P Global Ratings' credit ratings do not imply a specific probability of default. All default rates that appear in this study are based on the number of issuers rather than the dollar amounts affected by defaults or rating changes. In this case, however, the 'AA+' figure was derived from a much smaller sample than that for the 'AA' rating. 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 gap becomes even wider over longer time horizons, such as three years and 10 years (see chart 19). With these liquidity supports from central banks in place, market volatility eased after the spring. Australia, Canada, Japan, and New Zealand. Second-lien lenders agreed to convert scheduled cash interest payments to payment-in-kind (PIK) interest for three quarters (starting Sept. 30, 2020). Earlier on Feb. 13, 2020, we withdrew the ratings at the issuer's request. The transaction reduced the company's annual interest payments by about US$19.25 million. Sources: StepStone Group, CS HY Index, Barclays US IG, Moody's, Cliffwater, Refinitiv LPC as of December 2022. Data provided in table 13 also differ from default rates in table 24 owing to the use of the static pool methodology. esgSubNav, Discover more about S&P Globals offerings. Earlier, on April 16, 2020, we lowered our long-term issuer credit rating on Diamond Offshore Drilling to 'CC' from 'CCC+' after the issuer missed an interest payment due on April 15 on the senior notes due 2039, and hired advisers to evaluate alternatives for its capital restructuring. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. We combined these percentages to obtain cumulative default rates for the 40 years the study covers (see tables 24-26 and 30-32). On July 31, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on the basis of increased liquidity. The issuer was also in talks with its lenders and noteholders for a comprehensive financial restructuring. *This total does not match table 1 because it excludes confidentially rated defaults. On June 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Houston-based Summit Midstream Partners L.P. (SMLP) to 'SD' from 'CCC'. On June 18, 2020, we raised the issuer credit rating on Forum to 'CCC-' from 'SD', reflecting our forward-looking opinion on its creditworthiness. For these counts of large downgrades, we include movements to 'D' (default) along with what we normally report as downgrades (that is, downward movements between active ratings). The one-year Gini ratio remained high in 2020, at 86.1% (see chart 3). It is expected that North American and international markets are likely to contract up to 50% and 20%, respectively. Amid the fast and robust economic rebound, the speculative-grade rating bias has rapidly recovered, but the number of upgrades has not yet matched the magnitude of downgrades seen last year. On Nov. 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Florida-based health care service provider CDRH Parent Inc. to 'SD' from 'CCC+' because of the distressed nature of its credit agreement amendment, where the issuer amended its credit agreement to provide covenant relief and improve liquidity. The issuer missed the interest and principal payment on its term loan of outstanding value of US$557 million, which was originally US$600 million. On Dec. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based financial products and services provider Populus Financial Group Inc. to 'SD' from 'CC'. The performance of Moody's corporate debt ratings - Q4 2022 - Excel supplement MOODY'S . On Sept. 14, 2020, we withdrew the issuer credit ratings on the company at its request. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. On Sept. 17, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. On Jan. 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based shoes and accessories seller TOMS Shoes LLC to 'D' (default) from 'CCC' after the company restructured substantially all of its debt and its term loan lenders took ownership of the company. Of the 226 defaults in 2020, 198 were from companies rated as of the beginning of the year. S&P reserves the right to disseminate its opinions and analyses. 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. On Oct. 7, 2020, Tennessee-based casual dining operator Ruby Tuesday Inc. filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, which S&P Global Ratings considers a default. S&P Global Ratings considered this a distressed transaction because of the discounted trading levels and noteholders receiving less than the original promise of the securities. For example, for the entire pool of defaulters in this study (1981-2020), the average times to default for issuers originally rated in the 'A' and 'B' categories were 14.1 years and 5.1 years, respectively, from the initial rating (or from Dec. 31, 1980, the start date of the study), whereas issuers in the 'CCC' rating category or lower had an average time to default of only 2.2 years. As . *Fallen angels that survived to Jan. 1 of the year after they were downgraded. If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate entities and the cumulative share of all entities at each rating would be nearly the same, producing a Gini ratio of zero. Note: Descriptive statistics for regions other than U.S. calculated from 1996 to 2020 due to sample size considerations. The transaction was approved by 100% of lenders, and it provided the issuer with additional liquidity. 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 May 25, 2020, S&P Global Ratings withdrew its credit ratings on the issuer. On Aug. 26, 2020, S&P Global Ratings raised the issuer credit rating to 'B-' from 'SD'. According to S&P, at the end of 2020, their 12-month trailing default rates amounted to 6.6% for U.S. speculative-grade.