The 2020 global corporate default tally has reached 88 after six companies defaulted this week. Missed interest and principal payments have led defaults so far in 2020, with 37. However, bankruptcy-related defaults led additions this week with three, including Illinois-based generic pharmaceutical manufacturer Akorn Inc., Oklahoma-based oil and gas exploration and production company Unit Corp. and Chile-based transportation service provider Latam Airlines Group S.A.

As we have seen in previous times of economic stress, companies facing unforeseen financial burdens do not immediately resort to bankruptcy. Rather, they look at options for out-of-court balance-sheet management, as well as ways to preserve liquidity, and often miss interest payments in the process. The majority of bankruptcy defaults we have seen so far in the second quarter of 2020 were at companies that were facing idiosyncratic challenges before the COVID-19 and oil price shock. However, both bankruptcy-related defaults and defaults due to distressed exchanges will invariably rise as the year progresses (see "Risky Credits: Hanging On The Edge," published May 26, 2020).

This Week's Observations

• The global corporate default tally is now more than double the tally at this point in 2018--At this point in 2019 and 2018, there were 49 and 43 defaults, respectively.
• Missed interest and principal payments are the leading cause of defaults in 2020 so far, with 37, followed by distressed exchanges, with 24, and bankruptcy-related defaults, with 22.
• By sector, media and entertainment leads the global default tally, with 14, followed by oil and gas and consumer products, with 13 each.
• The 12-month-trailing speculative-grade default rate has increased for the U.S. to 4.1% in April 2020 from 3.5% in March 2020, while the same rate for the European region has increased to 2.7% from 2.4% in the same period.

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Related Research

• Unit Corp. Downgraded To 'D' On Chapter 11 Filing, May 27, 2020
• Latam Airlines Group S.A. Ratings Lowered To 'D' On Chapter 11 Filing, May 27, 2020
• Downgrade Potential Rises To All-Time High On Sharp, Deep Economic Slowdown, May 27, 2020
• Travelex Holdings Ltd. Downgraded To 'SD' On Missed Interest Payment On Senior Secured Notes, May 25, 2020
• U.S.-Based Akorn Inc. Downgraded To 'D' From 'CC' On Chapter 11 Bankruptcy Filing, May 22, 2020
• Guitar Center Inc. Downgraded To 'SD' On Exchange Of Senior Unsecured Notes Resulting in Non-Payment of Cash Interest, May 22, 2020
• Centennial Resource Development Inc. Downgraded To 'SD' on Unsecured Note Exchange, May 21, 2020

Default Studies

More analysis and statistics are available in our annual default studies, published on RatingsDirect:

Corporate (financial and nonfinancial)

• 2019 Annual Global Corporate Default And Rating Transition Study
• Japanese Issuer Credit Rating Transitions Study 2019

2018 Annual Infrastructure Default And Rating Transition Study

• 2018 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
• 2018 Annual Latin American Corporate Default And Rating Transition Study
• 2018 Annual Global Financial Services Default And Rating Transition Study
• 2018 Annual Greater China Corporate Default And Rating Transition Study
• 2018 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
• 2018 Annual U.S. Corporate Default And Rating Transition Study
• 2018 Annual Asia Corporate Default And Rating Transition Study
• 2017 Annual Australia And New Zealand Corporate Default Study And Rating Transitions
• 2017 Annual Emerging Markets Corporate Default Study And Rating Transitions
• 2017 Annual European Corporate Default Study And Rating Transitions
• 2017 Annual Canadian Corporate Default Study And Rating Transitions
• 2017 Inaugural Nordic Default Study And Rating Transitions
• 2017 Annual Brazil Corporate Default Study And Rating Transitions

Structured finance

• 2019 Annual Taiwan Structured Finance Default And Rating Transition Study
• 2019 Annual Japanese Structured Finance Default And Rating Transition Study
• 2018 Annual Mexican Structured Finance Default And Rating Transition Study
• 2018 Annual European Structured Finance Default And Rating Transition Study
• 2018 Annual Global Leveraged Loan CLO Default And Rating Transition Study
• 2018 Annual Global Structured Finance Default Study And Rating Transitions

U.S. public finance

• 2018 Annual U.S. Public Finance Default Study And Rating Transitions
• 2017 Annual U.S. Public Finance Not-For-Profit Health Care Default Study And Rating Transitions
• 2017 U.S. Public Finance Utility Default Study And Rating Transitions
• 2017 U.S. Public Finance Transportation Default Study And Rating Transitions
• 2017 Annual U.S. Public Finance Housing Default Study And Rating Transitions
• 2017 Annual U.S. Public Finance Charter School Default Study And Rating Transitions
• 2017 Annual U.S. Public Finance Higher Education And Nonprofit Organization Default Study And Rating Transitions

Sovereign and international public finance

• 2019 Annual Sovereign Default And Rating Transition Study
• 2018 Annual International Public Finance Default And Rating Transition Study