The odds of default in three U.S. industries climbed in the final quarter of 2022 but declined in many others.

Healthcare, communication services and real estate saw their higher median market signal one-year probability of default scores rise sequentially in the fourth quarter of 2022, according to S&P Global Market Intelligence data. The scores, which represent the odds of default within a year, are based primarily on the volatility of share prices for public companies in the sector and account for country- and industry-related risks.

Equity markets across the board were hammered in 2022 as inflation, rising interest rates and fears of a recession contributed to the S&P 500's worst annual showing since 2008. The prospect of recession in 2023 also contributed to S&P Global Ratings' projection that the U.S. trailing 12-month speculative-grade corporate default rate will reach 3.75% by September, up from 1.6% a year earlier.

Most vulnerable sectors

Healthcare was the sector with the highest one-year probability of default at 7.7% as of Dec. 30, 2022. That figure was up from 6.4% at the end of the third quarter of 2022.

Communication services had the second-highest median market signal at 6.0%, inching up from 5.9% at the end of the previous quarter. Consumer discretionary was third at 3.4%, down from 3.8% a quarter earlier.

Health subsectors troubled

Healthcare technology and healthcare facilities had the highest probability of default scores in the fourth quarter of 2022 at 25.2% and 20.2%, respectively. Broadcasting followed close behind at 17.5%.

Asset management and custody banks, financial exchanges and data, and railroads were the least vulnerable industries by median market signal one-year probability of default.

Biggest increases, decreases

Healthcare technology had the largest increase in the probability of default during the quarter, up 6.6 percentage points to 25.2%, according to Market Intelligence data.

Healthcare facilities recorded the second-largest increase, up 4.7 percentage points in the period to 20.2%. Mortgage REITs followed in third, up three percentage points to 9.7%.

Housewares and specialties, department stores, and security and alarm services were the industries with the largest decrease in probability of default scores during the quarter.