Key Takeaways
- Nine companies rated by S&P Global Ratings, including two confidential issuers, defaulted in Asia in 2020, compared with 10 defaults the prior year.
- Asia's speculative-grade default rate increased to 4.4% in 2020 from 2.6% in 2019. Globally, the 2020 speculative-grade default rate was 5.5%, up from 2.5% in 2019.
- We use Gini coefficients to measure the correspondence between ratings and defaults, with 100% meaning all defaults occur only among the lowest-rated issuers. The one-year weighted average Gini coefficient for Asia was 88.6%, the three-year was 83.6%, and the five-year was 77.8%.
Credit markets in 2020 largely focused on three things:
- The ramifications of the COVID-19 pandemic on solvency and credit risk,
- Swift central bank actions to boost investor confidence in response to the sharpest decline into economic recession in history, and
- Potentially frothy asset prices despite the backdrop of an uneven economic recovery.
In Asia, there were nine companies rated by S&P Global Ratings that defaulted, including two confidential issuers, compared with 10 defaults the prior year. The total number of rated issuers in Asia decreased to 866 by end-2020 from 886 as of end-2019. Newly rated issuers in the region decreased by more than 25% to 65 in 2020 from 87 in 2019. Asia generally has fewer rated issuers in the weakest rating categories of 'B' and 'CCC', which are substantially more likely to default than their higher-rated peers. However, this belies some disparity across certain economies within Asia--China and Indonesia have a comparably larger share of 'B'-category issuers than Japan and Korea, for example.
The long-term path to recovery was clouded by uncertainties surrounding the spread of COVID-19 and the potential damage to employment, capital, and productivity. COVID-19 and the extraordinary measures taken to shore up economies led to higher debt, weaker balance sheets, and less appetite for spending. Investor sentiment remained edgy, especially toward weaker issuers in the cyclical commodities, real estate, retail, and transportation sectors, heightening refinancing risk (see "Asia-Pacific Credit Conditions Stay Tight As Pandemic Hits Western Economies," April 22, 2020). Meanwhile, social distancing in response to the COVID-19 pandemic drove the digitalization in various industries in the region.
Despite central banks worldwide focusing on meaningful economic recovery, the pandemic and the global recession were the major dampers for global economic growth in 2020. Some economies in the region saw progress with COVID controls through various phases, while others are still suffering from new waves.
For this study, Asia consists of Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, Fiji, Hong Kong Special Administrative Region (SAR) of China, India, Indonesia, Japan, Republic of Korea, Macao SAR of China, Malaysia, Marshall Islands, Mongolia, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, the market of Taiwan, Thailand, and Vietnam. The statistics in this study refer only to corporate ratings and include financial and nonfinancial entities.
Asia's speculative-grade default rate increased to 4.4% in 2020 from 2.6% in 2019. Globally, the 2020 speculative-grade default rate was 5.5%, up from 2.5% in 2019. I the U.S., this number increased to 6.6% from 3.1% the prior year, in Europe to 5.3% from 2.2%, and in emerging markets (see Appendix I for details on the countries included) to 3.1% from 1.8% (see chart 1).
Global corporate defaults in 2020 totaled 226, up 91% from the previous year's 118, which was largely attributed to the COVID-19 pandemic and its knock-on effects on global economic growth in 2020 (see "The 2020 Global Corporate Default Tally Reached 226," Jan. 8, 2021). While default risk is less apparent in Asia, with its higher balance of investment-grade ('BBB-' and higher) issuers, riskier borrowers in Asia are still vulnerable to global shocks.
Speculative-grade (rated 'BB+' or lower) issuers account for 43.1% of the newly rated companies in Asia in 2020. Nevertheless, investment-grade issuers still dominate newly rated issuers for 2020. Over half of the 2020 newly rated pool (56.9%) was investment grade, higher than the newly rated investment grade portion in 2019 (50.6%) and 2018 (43.9%). While this does not mark a trend, it is illustrative of higher quality borrowers' access to credit in Asia compared with their riskier, speculative-grade counterparts.
Chart 1
Market Conditions In Asia
Overall credit conditions are strengthening with the improving economic backdrop and COVID-19 situation across the region. However, this improvement is uneven across sectors and borrower profiles. The main risks are sluggish rebounds in revenues and rising debt. A potential U.S.- China confrontation, slow vaccine rollouts, or new infection waves and subsequent policy responses are high risk scenarios. Elevated risks include market repricing, climate-change policies, and technology change. Credit quality has steadied, but meaningful downgrade risk remains (for more detail on risk scenarios and definitions see "Credit Conditions Asia-Pacific Q2 2021: Uneven Recovery," March 30, 2021).
Rebounding revenues and profits across South and Southeast Asia are not yet enough to stabilize the credit trajectory of speculative-grade issuers. Capital markets and investor sentiment are likely to stay volatile until there is clear progress on vaccination rollouts in the region. If uneven access to funding for refinancing persists beyond the next six months, we could see a spike in corporate defaults in South and Southeast Asia (see "Corporate Credit Recovery In Southeast Asia Lacks One Key Ingredient: Liquidity," April 12, 2021).
US$ bond issuance is booming in Asia as issuers rushed for the last low rates window, but issuance by Chinese corporates is slowing to the lowest in years due to government efforts to rein in leverage post-COVID. Sectors that are directly required or guided by the central government to reduce leverage slowed issuance, while those that are not behaved more like their regional peers. These policies are timely, as excessive leverage can make issuers more vulnerable when they refinance lower-cost, longer-term debt from earlier in the cycle with higher-cost, shorter-term debt later in the cycle (see "China's Corporate Debt Slowdown Is Timely As Rate Cycle Turns," April 13, 2021).
The Regional Default Trends
The nine defaults in the region in 2020 were a small part of the global total of 226. Since 1993, the regional average number of annual defaults is 3.8 (2.3% of the speculative-grade population on average since 1993), compared with a global average (since 1981) of 77.5 (about 4.0% of the speculative-grade population on average). Moreover, 78.4% of ratings in Asia remained unchanged between Jan. 1, 2020, and year-end, demonstrating the relative stability of the majority of credit ratings in the region. Only 1.5% of rated entities from Asia were upgraded during the year, and 10.0% were downgraded (excluding defaults).
The stability of total rated issuers in Asia owes partially to its high proportion of investment-grade issuers--at 78.4% as of year-end 2020. Part of the reason for this could be that despite Asia's large domestic debt market, the majority of debt is held in the form of loans. Over 49.7% of rated issuers globally were investment-grade in 2020. Investment-grade ratings have markedly lower transition and default risk than their speculative-grade counterparts, and thus the much higher credit stability in the region is not unexpected.
Gini ratios
Like our global corporate default and transition study, this study illustrates that ratings are effective indicators of relative credit risk. S&P Global Ratings Research has found a clear negative correspondence between ratings and defaults: The higher the issuer rating, the lower the observed default frequency.
We use Gini coefficients to measure the correspondence between ratings and defaults. Gini coefficients measure the rank-ordering power of ratings over a given time horizon and compare the ratio of actual rank-ordering performance with theoretically perfect rank ordering. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the Gini coefficient would be 100%. The one-year weighted average (1993-2020) Gini coefficient for rated Asian corporate issuers is 88.6%. This metric is based on ratings one year prior to default rather than those immediately preceding default (see Appendix II for details).
The weighted averages in this report use the issuer counts at the beginning of the year as the weights. Unless otherwise noted, the statistics in this study refer to S&P Global Market Intelligence's Credit Pro® corporate local currency global-scale ratings universe. They include financial and nonfinancial Asian companies but exclude sovereigns, public finance, and project finance issuers. (For more details and definitions of the terms used, see Appendix I.)
Market Opportunities And Risks
Asia-Pacific sovereign rating outlooks are mostly stable despite setbacks from COVID-19. The pandemic remains the key risk factor facing Asia-Pacific sovereigns in the next six to 12 months. S&P Global Ratings expects most Asia-Pacific sovereign credit ratings to remain unchanged over the next two years despite the continued pressures posed by COVID-19 (see "Asia-Pacific Sovereign Rating Trends 2021," Jan. 27, 2021). The relative stability of the sovereign rating actions reflect the comparatively strong macro backdrop, which could mean a reduction in corporate defaults.
Table 1
2020 Asia Sovereign Rating And Outlook Changes | |||||
---|---|---|---|---|---|
Sovereign | Date | Rating/outlook (to) | Rating/outlook (from) | Reason | Article with link |
Thailand | 4/13/2020 | BBB+/Stable | BBB+/Positive | The stable outlook reflects our view that the COVID-19-induced economic uncertainty and the subsequent state of emergency declaration could delay political transitions expected under the civilian government over the next 12 months. | Thailand Outlook Revised To Stable On COVID-19 Uncertainty; 'BBB+/A-2' Ratings Affirmed |
Indonesia | 4/17/2020 | BBB/Negative | BBB/Stable | The negative outlook reflects our expectation that Indonesia faces additional fiscal and external risks related to the COVID-19 pandemic in the next 24 months. | Indonesia Outlook Revised To Negative As COVID-19 Hits Fiscal, External Metrics; 'BBB/A-2' Ratings Affirmed |
Papua New Guinea (PNG) | 4/29/2020 | B-/Stable | B/Stable | Increasing debt levels and limited fiscal maneuverability leave PNG vulnerable to a volatile global backdrop. We expect the COVID-19 pandemic to further weaken PNG's economic growth prospects and fiscal metrics. | Papua New Guinea Ratings Lowered To 'B-/B' As COVID-19 Pressures Metrics; Outlook Stable |
Japan | 6/9/2020 | A+/Stable | A+/Positive | The outlook revision reflects increased uncertainty that Japan's general government debt could stabilize against nominal GDP in the next one to two years as fiscal performance deteriorates. | Japan Outlook Revised To Stable On Increased Uncertainty Around Debt Stabilization; 'A+/A-1' Ratings Affirmed |
Fiji | 6/19/2020 | BB-/Negative | BB-/Stable | The negative outlook reflects uncertainty around the duration of the pandemic and its effect on Fiji's crucial tourism sector. We consider economic and fiscal risks to be tilted to the downside. | Fiji Outlook Revised To Negative On COVID-19-Induced Fiscal Deterioration; 'BB-/B' Ratings Affirmed |
Malaysia | 6/26/2020 | A-/Negative | A-/Stable | The negative outlook reflects our expectation that Malaysia faces heightened risks of a further deterioration in its fiscal settings, related to the COVID-19 pandemic, over the next 24 months. | Malaysia Outlook Revised To Negative; 'A-/A-2' Foreign Currency And 'A/A-1' Local Currency Ratings Affirmed |
Sri Lanka | 1/14/2020 | B/Negative | B/Stable | The negative outlook reflects our view that a larger-than-expected fiscal deficit will increase the government's financing needs and concerns over debt sustainability. | Sri Lanka Outlook Revised To Negative On Fiscal Deterioration; Ratings Affirmed At 'B/B' |
5/20/2020 | B-/Stable | B/Negative | We are lowering our long-term sovereign credit ratings on Sri Lanka to 'B-' from 'B' to reflect the fiscal deterioration, which would further weaken the sustainability of Sri Lanka's debt profile. The stable outlook reflects our view that Sri Lanka still has access to sufficient resources, including from multilateral and bilateral partners, to meet its debt obligations over the next 12 months. | Sri Lanka Rating Lowered To 'B-' On COVID-19-Induced Fiscal Deterioration; Outlook Stable | |
12/11/2020 | CCC+/Stable | B-/Stable | We lowered our ratings on Sri Lanka based on our assessment that risks to debt servicing capacity have risen, as the government's access to external financing has become increasingly dependent on favorable business, economic, and financial conditions. The downgrade stems in part from the impact of COVID-19, which has significantly narrowed the government's fiscal space and its capacity to generate earnings through sectors such as tourism. The latest expansionary budget measures are likely to further weaken the government's fiscal position. High fiscal deficits and excessive domestic liquidity will put downward pressure on the exchange rate and worsen the risks associated with the government's already-high debt burden. | Sri Lanka Downgraded To 'CCC+/C' On Increasing External Financing Risks And Fiscal Deterioration; Outlook Stable |
Ratings Performance For Asia
We reached the following key conclusions regarding Asia's corporate ratings performance in 2020:
- The average time to default from initial rating for defaulters in Asia in 2020 was 3.9 years, lower than the global average of 5.9 years (from 1981-2020).
- In 2020, 93.5% of 'A' rated issuers in Asia retained that rating, and 63.9% of the region's 'B' rated issuers retained that rating.
- None of the issuers lost their 'AAA' ratings in 2020.
- The Asia default rate in the 'CCC'/'C' rating category was 54.5%, higher than the 47.5% rate globally, though the low number of defaults in Asia creates volatility in the average statistics (see table 12).
- At the end of 2020, more than three-quarters of the total ratings in Asia were investment-grade. Only 49.7% of all global ratings were investment-grade.
Chart 2
Chart 3
Table 2
Asia Corporate Default Summary | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year | Total defaults* | Investment-grade defaults | Speculative-grade defaults | Default rate (%) | Investment-grade default rate (%) | Speculative-grade default rate (%) | Total debt defaulting (bil. $) | |||||||||
1993 | 0 | 0 | N/A | 0.00 | 0.00 | N/A | 0.0 | |||||||||
1994 | 0 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.0 | |||||||||
1995 | 0 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.0 | |||||||||
1996 | 0 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.0 | |||||||||
1997 | 1 | 1 | 0 | 0.76 | 0.90 | 0.00 | 2.8 | |||||||||
1998 | 9 | 2 | 7 | 4.86 | 1.65 | 10.94 | 8.4 | |||||||||
1999 | 7 | 0 | 5 | 2.55 | 0.00 | 5.95 | 5.1 | |||||||||
2000 | 5 | 0 | 3 | 1.29 | 0.00 | 2.97 | 2.0 | |||||||||
2001 | 7 | 0 | 5 | 2.06 | 0.00 | 5.00 | 4.4 | |||||||||
2002 | 2 | 0 | 0 | 0.00 | 0.00 | 0.00 | 1.2 | |||||||||
2003 | 2 | 0 | 2 | 0.60 | 0.00 | 1.47 | 0.4 | |||||||||
2004 | 3 | 0 | 2 | 0.37 | 0.00 | 1.08 | 0.0 | |||||||||
2005 | 2 | 0 | 1 | 0.16 | 0.00 | 0.51 | 0.3 | |||||||||
2006 | 1 | 0 | 1 | 0.15 | 0.00 | 0.53 | 0.0 | |||||||||
2007 | 1 | 0 | 1 | 0.15 | 0.00 | 0.60 | 0.0 | |||||||||
2008 | 7 | 0 | 6 | 1.05 | 0.00 | 4.00 | 1.3 | |||||||||
2009 | 15 | 2 | 10 | 2.11 | 0.45 | 7.75 | 10.0 | |||||||||
2010 | 3 | 0 | 3 | 0.62 | 0.00 | 3.03 | 1.6 | |||||||||
2011 | 0 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.0 | |||||||||
2012 | 5 | 0 | 2 | 0.39 | 0.00 | 1.82 | 2.9 | |||||||||
2013 | 3 | 0 | 2 | 0.38 | 0.00 | 1.80 | 0.0 | |||||||||
2014 | 3 | 0 | 1 | 0.18 | 0.00 | 0.80 | 1.0 | |||||||||
2015 | 4 | 0 | 4 | 0.64 | 0.00 | 2.94 | 2.7 | |||||||||
2016 | 3 | 0 | 2 | 0.29 | 0.00 | 1.45 | 1.1 | |||||||||
2017 | 2 | 0 | 2 | 0.26 | 0.00 | 1.18 | 1.6 | |||||||||
2018 | 3 | 0 | 1 | 0.12 | 0.00 | 0.49 | 0.4 | |||||||||
2019 | 10 | 0 | 6 | 0.66 | 0.00 | 2.56 | 0.8 | |||||||||
2020 | 9 | 0 | 9 | 1.02 | 0.00 | 4.39 | 5.9 | |||||||||
Average | 4 | 0 | 3 | 0.74 | 0.11 | 2.27 | 1.92 | |||||||||
Median | 3 | 0 | 2 | 0.38 | 0.00 | 1.45 | 1.05 | |||||||||
Std. dev. | 4 | 1 | 3 | 1.06 | 0.36 | 2.67 | 2.62 | |||||||||
Min | 0 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
Max | 15 | 2 | 10 | 4.86 | 1.65 | 10.94 | 10.00 | |||||||||
N/A--Not applicable. *This column includes companies that were no longer rated at the time of default. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 3
Global Corporate Default Summary | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year | Total defaults* | Investment-grade defaults | Speculative-grade defaults | Default rate (%) | Investment-grade default rate (%) | Speculative-grade default rate (%) | Total debt defaulting (bil. $) | |||||||||
1981 | 2 | 0 | 2 | 0.15 | 0.00 | 0.63 | 0.1 | |||||||||
1982 | 18 | 2 | 15 | 1.22 | 0.19 | 4.46 | 0.9 | |||||||||
1983 | 12 | 1 | 10 | 0.77 | 0.09 | 2.98 | 0.4 | |||||||||
1984 | 14 | 2 | 12 | 0.93 | 0.17 | 3.31 | 0.4 | |||||||||
1985 | 19 | 0 | 18 | 1.13 | 0.00 | 4.37 | 0.3 | |||||||||
1986 | 34 | 2 | 30 | 1.74 | 0.15 | 5.75 | 0.5 | |||||||||
1987 | 19 | 0 | 19 | 0.95 | 0.00 | 2.83 | 1.6 | |||||||||
1988 | 32 | 0 | 29 | 1.39 | 0.00 | 3.88 | 3.3 | |||||||||
1989 | 44 | 3 | 35 | 1.79 | 0.22 | 4.70 | 7.3 | |||||||||
1990 | 70 | 2 | 56 | 2.74 | 0.14 | 8.12 | 21.2 | |||||||||
1991 | 93 | 2 | 65 | 3.26 | 0.14 | 11.05 | 23.7 | |||||||||
1992 | 39 | 0 | 32 | 1.50 | 0.00 | 6.12 | 5.4 | |||||||||
1993 | 26 | 0 | 14 | 0.60 | 0.00 | 2.51 | 2.4 | |||||||||
1994 | 21 | 1 | 15 | 0.63 | 0.05 | 2.12 | 2.3 | |||||||||
1995 | 35 | 1 | 29 | 1.05 | 0.05 | 3.54 | 9.0 | |||||||||
1996 | 20 | 0 | 16 | 0.51 | 0.00 | 1.81 | 2.7 | |||||||||
1997 | 23 | 2 | 20 | 0.63 | 0.08 | 2.01 | 4.9 | |||||||||
1998 | 56 | 4 | 48 | 1.28 | 0.14 | 3.67 | 11.3 | |||||||||
1999 | 109 | 5 | 92 | 2.15 | 0.17 | 5.57 | 39.4 | |||||||||
2000 | 136 | 7 | 109 | 2.48 | 0.24 | 6.24 | 43.3 | |||||||||
2001 | 229 | 7 | 173 | 3.79 | 0.23 | 9.90 | 118.8 | |||||||||
2002 | 226 | 13 | 159 | 3.60 | 0.42 | 9.50 | 190.9 | |||||||||
2003 | 119 | 3 | 89 | 1.93 | 0.10 | 5.07 | 62.9 | |||||||||
2004 | 56 | 1 | 38 | 0.78 | 0.03 | 2.03 | 20.7 | |||||||||
2005 | 40 | 1 | 31 | 0.60 | 0.03 | 1.51 | 42.0 | |||||||||
2006 | 30 | 0 | 26 | 0.48 | 0.00 | 1.19 | 7.13 | |||||||||
2007 | 24 | 0 | 21 | 0.37 | 0.00 | 0.91 | 8.15 | |||||||||
2008 | 127 | 14 | 89 | 1.80 | 0.42 | 3.71 | 429.63 | |||||||||
2009 | 268 | 11 | 224 | 4.19 | 0.33 | 9.95 | 627.70 | |||||||||
2010 | 83 | 0 | 64 | 1.21 | 0.00 | 3.02 | 97.48 | |||||||||
2011 | 53 | 1 | 44 | 0.80 | 0.03 | 1.85 | 84.30 | |||||||||
2012 | 83 | 0 | 66 | 1.14 | 0.00 | 2.59 | 86.70 | |||||||||
2013 | 81 | 0 | 64 | 1.06 | 0.00 | 2.31 | 97.29 | |||||||||
2014 | 60 | 0 | 45 | 0.69 | 0.00 | 1.44 | 91.55 | |||||||||
2015 | 113 | 0 | 94 | 1.36 | 0.00 | 2.78 | 110.31 | |||||||||
2016 | 163 | 1 | 143 | 2.09 | 0.03 | 4.24 | 239.79 | |||||||||
2017 | 95 | 0 | 83 | 1.21 | 0.00 | 2.47 | 104.57 | |||||||||
2018 | 82 | 0 | 72 | 1.03 | 0.00 | 2.10 | 131.65 | |||||||||
2019 | 118 | 2 | 92 | 1.30 | 0.06 | 2.54 | 183.21 | |||||||||
2020 | 226 | 0 | 198 | 2.74 | 0.00 | 5.50 | 353.43 | |||||||||
Average | 77 | 2 | 62 | 1.48 | 0.09 | 4.01 | 81.70 | |||||||||
Median | 56 | 1 | 45 | 1.21 | 0.03 | 3.17 | 22.40 | |||||||||
Std. dev. | 67 | 4 | 54 | 0.98 | 0.12 | 2.63 | 131.22 | |||||||||
Min | 2 | 0 | 2 | 0.15 | 0.00 | 0.63 | 0.06 | |||||||||
Max | 268 | 14 | 224 | 4.19 | 0.42 | 11.05 | 627.70 | |||||||||
*This column includes companies that were no longer rated at the time of default. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Globally, corporate defaults increased to 226 in 2020 where the U.S.-based issuers accounted for the bulk of the defaults. Corporate defaults affected debt worth $353.4 billion in 2020 globally, significantly higher than the $183.2 billion in 2019, but less than the record $627.7 billion in 2009, after the 2008 global financial crisis (see table 3).
Table 4
Summary of Asia Net Annual Rating Activity (%)* | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year | Issuers as of Jan. 1 | Upgrades (%) | Downgrades (%)§ | Defaults (%) | Withdrawn ratings (%) | Changed ratings (%) | Unchanged ratings (%) | Downgrade/upgrade ratio | ||||||||||
1993 | 59 | 0.00 | 27.12 | 0.00 | 1.69 | 28.81 | 71.19 | |||||||||||
1994 | 69 | 0.00 | 21.74 | 0.00 | 0.00 | 21.74 | 78.26 | |||||||||||
1995 | 84 | 4.76 | 17.86 | 0.00 | 1.19 | 23.81 | 76.19 | 3.75 | ||||||||||
1996 | 96 | 4.17 | 6.25 | 0.00 | 3.13 | 13.54 | 86.46 | 1.50 | ||||||||||
1997 | 132 | 3.03 | 21.21 | 0.76 | 3.03 | 28.03 | 71.97 | 7.00 | ||||||||||
1998 | 185 | 3.78 | 54.05 | 4.86 | 7.03 | 69.73 | 30.27 | 14.29 | ||||||||||
1999 | 196 | 3.06 | 19.90 | 2.55 | 9.69 | 35.20 | 64.80 | 6.50 | ||||||||||
2000 | 233 | 10.30 | 4.72 | 1.29 | 6.87 | 23.18 | 76.82 | 0.46 | ||||||||||
2001 | 243 | 7.41 | 13.17 | 2.06 | 7.00 | 29.63 | 70.37 | 1.78 | ||||||||||
2002 | 265 | 11.32 | 19.25 | 0.00 | 8.68 | 39.25 | 60.75 | 1.70 | ||||||||||
2003 | 334 | 6.59 | 5.69 | 0.60 | 7.49 | 20.36 | 79.64 | 0.86 | ||||||||||
2004 | 534 | 20.22 | 2.43 | 0.37 | 3.56 | 26.59 | 73.41 | 0.12 | ||||||||||
2005 | 624 | 29.01 | 2.40 | 0.16 | 5.61 | 37.18 | 62.82 | 0.08 | ||||||||||
2006 | 650 | 10.46 | 2.62 | 0.15 | 12.62 | 25.85 | 74.15 | 0.25 | ||||||||||
2007 | 648 | 20.22 | 3.70 | 0.15 | 22.38 | 46.45 | 53.55 | 0.18 | ||||||||||
2008 | 574 | 7.14 | 6.79 | 1.05 | 10.10 | 25.09 | 74.91 | 0.95 | ||||||||||
2009 | 570 | 2.81 | 10.70 | 2.11 | 17.72 | 33.33 | 66.67 | 3.81 | ||||||||||
2010 | 487 | 12.53 | 2.46 | 0.62 | 6.98 | 22.59 | 77.41 | 0.20 | ||||||||||
2011 | 491 | 9.78 | 10.59 | 0.00 | 8.15 | 28.51 | 71.49 | 1.08 | ||||||||||
2012 | 507 | 6.11 | 8.28 | 0.39 | 7.50 | 22.29 | 77.71 | 1.35 | ||||||||||
2013 | 521 | 8.45 | 5.37 | 0.38 | 5.37 | 19.58 | 80.42 | 0.64 | ||||||||||
2014 | 565 | 7.43 | 5.84 | 0.18 | 5.49 | 18.94 | 81.06 | 0.79 | ||||||||||
2015 | 622 | 5.79 | 10.77 | 0.64 | 6.91 | 24.12 | 75.88 | 1.86 | ||||||||||
2016 | 682 | 7.18 | 9.24 | 0.29 | 7.18 | 23.90 | 76.10 | 1.29 | ||||||||||
2017 | 761 | 5.65 | 7.88 | 0.26 | 7.36 | 21.16 | 78.84 | 1.40 | ||||||||||
2018 | 828 | 6.64 | 5.80 | 0.12 | 7.00 | 19.57 | 80.43 | 0.87 | ||||||||||
2019 | 904 | 5.09 | 5.97 | 0.66 | 10.73 | 22.46 | 77.54 | 1.17 | ||||||||||
2020 | 886 | 1.47 | 10.05 | 1.02 | 9.03 | 21.56 | 78.44 | 6.85 | ||||||||||
Weighted average | 8.88 | 8.23 | 0.63 | 8.75 | 26.49 | 73.51 | 1.78 | |||||||||||
Average | 7.87 | 11.50 | 0.74 | 7.48 | 27.59 | 72.41 | 2.34 | |||||||||||
Median | 6.61 | 8.08 | 0.38 | 7.02 | 24.01 | 75.99 | 1.23 | |||||||||||
Std. dev. | 6.39 | 10.73 | 1.06 | 4.62 | 10.84 | 10.84 | 3.18 | |||||||||||
Min | 0.00 | 2.40 | 0.00 | 0.00 | 13.54 | 30.27 | 0.08 | |||||||||||
Max | 29.01 | 54.05 | 4.86 | 22.38 | 69.73 | 86.46 | 14.29 | |||||||||||
*This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. §Excludes downgrades to 'D', shown separately in the default column. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
S&P Global Ratings assigned ratings to 65 new issuers in Asia in 2020, a decrease from 87 in 2019. Of the 65 new issuers, 28 (43.1%) were rated speculative grade (see table 5). Despite the increase in the share of new speculative-grade issuers in recent years, the total ratings pool in Asia remains heavily weighted toward investment-grade. The proportion of speculative-grade ratings for Asia remains low, at just 21.6% at the end of 2020 (see chart 4).
Table 5
Rating Classification Of New Corporate Issuers* In Asia | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--First rating-- | ||||||||||||||||||||||
Year | AAA | AA | A | BBB | BB | B | CCC/C | Total | % investment-grade | % speculative grade | ||||||||||||
1993 | 1 | 3 | 1 | 2 | 2 | 1 | 10 | 70.0 | 30.0 | |||||||||||||
1994 | 1 | 6 | 3 | 2 | 1 | 1 | 14 | 71.4 | 28.6 | |||||||||||||
1995 | 2 | 7 | 3 | 1 | 13 | 92.3 | 7.7 | |||||||||||||||
1996 | 1 | 10 | 12 | 11 | 4 | 38 | 60.5 | 39.5 | ||||||||||||||
1997 | 1 | 3 | 6 | 18 | 14 | 16 | 58 | 48.3 | 51.7 | |||||||||||||
1998 | 1 | 4 | 7 | 8 | 7 | 5 | 32 | 62.5 | 37.5 | |||||||||||||
1999 | 5 | 6 | 14 | 19 | 18 | 62 | 40.3 | 59.7 | ||||||||||||||
2000 | 2 | 2 | 6 | 5 | 4 | 7 | 1 | 27 | 55.6 | 44.4 | ||||||||||||
2001 | 7 | 10 | 18 | 2 | 7 | 44 | 79.5 | 20.5 | ||||||||||||||
2002 | 3 | 10 | 25 | 22 | 38 | 1 | 99 | 38.4 | 61.6 | |||||||||||||
2003 | 1 | 13 | 54 | 82 | 44 | 27 | 5 | 226 | 66.4 | 33.6 | ||||||||||||
2004 | 1 | 6 | 28 | 38 | 23 | 8 | 3 | 107 | 68.2 | 31.8 | ||||||||||||
2005 | 2 | 9 | 17 | 19 | 12 | 1 | 60 | 46.7 | 53.3 | |||||||||||||
2006 | 4 | 15 | 18 | 22 | 25 | 84 | 44.0 | 56.0 | ||||||||||||||
2007 | 2 | 15 | 21 | 11 | 20 | 1 | 70 | 54.3 | 45.7 | |||||||||||||
2008 | 2 | 21 | 20 | 13 | 5 | 61 | 70.5 | 29.5 | ||||||||||||||
2009 | 1 | 8 | 8 | 3 | 5 | 5 | 30 | 56.7 | 43.3 | |||||||||||||
2010 | 4 | 4 | 15 | 4 | 11 | 1 | 39 | 59.0 | 41.0 | |||||||||||||
2011 | 3 | 6 | 12 | 17 | 18 | 56 | 37.5 | 62.5 | ||||||||||||||
2012 | 1 | 13 | 12 | 6 | 20 | 52 | 50.0 | 50.0 | ||||||||||||||
2013 | 2 | 12 | 28 | 17 | 13 | 72 | 58.3 | 41.7 | ||||||||||||||
2014 | 25 | 27 | 13 | 17 | 2 | 84 | 61.9 | 38.1 | ||||||||||||||
2015 | 5 | 26 | 34 | 16 | 14 | 1 | 96 | 67.7 | 32.3 | |||||||||||||
2016 | 18 | 48 | 37 | 11 | 114 | 57.9 | 42.1 | |||||||||||||||
2017 | 4 | 18 | 22 | 28 | 45 | 2 | 119 | 37.0 | 63.0 | |||||||||||||
2018 | 1 | 18 | 42 | 30 | 45 | 3 | 139 | 43.9 | 56.1 | |||||||||||||
2019 | 14 | 30 | 26 | 14 | 3 | 87 | 50.6 | 49.4 | ||||||||||||||
2020 | 2 | 7 | 28 | 13 | 11 | 4 | 65 | 56.9 | 43.1 | |||||||||||||
Total | 8 | 82 | 380 | 610 | 426 | 418 | 34 | 1,958 | 55.2 | 44.8 | ||||||||||||
*Includes issuers that are assigned a new rating after default as well as those companies that receive a rating for the first time. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Chart 4
For comparison, when including Australia and New Zealand in the calculation, the proportion of speculative-grade issuers for Asia-Pacific was 20.3% in 2020. Conversely, emerging markets overall have a greater concentration of speculative-grade ratings, with 50.2% of all issuers rated 'BB+' or lower. Globally, the proportion of speculative-grade ratings is about 50.3%, with the U.S. accounting for the bulk of them.
The number of total rated corporate issuers from Asia decreased as of Jan. 1, 2020, compared to the prior year. The total number of downgrades in the region increased to 89 in 2020 from 54 in 2019 as the globe suffered from the economic recession and struggled with the COVID-19 pandemic. Meanwhile, upgrades in the region decreased by 71.7% to 13, from 46 upgrades in 2019.
Most newly rated corporate issuers from Asia were rated in the 'BBB' category in 2020 (as was also true in 2019), followed by the 'BB' category. Of the region's newly rated issuers in 2020, 43.1% were rated speculative grade, down from 49.4% in 2019 and 56.1% in 2018 (see table 5).
A Closer Look At Asia's Defaulters
Of the seven publicly rated Asian defaulters in 2020, Marshall Islands-based, U.K.-incorporated Seadrill Partners LLC had the highest amount of debt outstanding at the time of default with $2.9 billion as the company announced on July 1, 2020, that it would use its 30-day grace period to delay paying the interest on its $2.6 billion term loan B due June 30, 2020.
Together, these nine Asian defaults accounted for about 1.7% of the $353.4 billion in debt globally affected by defaults in 2020. Two public issuers in Asia defaulted through a distressed exchange in 2020. Note that some of the defaulted issuers did not have cross-border debt outstanding at the time of default, limiting the default impact on capital to domestic investors.
Table 6
Itemized 2020 Asia Corporate Defaults | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company name | Reason for default | Country | Industry | Debt amount (mil. $) | Default date | Next-to-last rating | Date of next-to-last rating | First rating | Date of first rating | |||||||||||
Qinghai Provincial Investment Group Co. Ltd. | Missed interest | China | Energy and natural resources | 850 | 1/14/2020 | CCC- | 8/30/2019 | BB- | 2/7/2017 | |||||||||||
Tunghsu Group Co. Ltd. | Missed principal/interest | China | High tech/computers/office equipment | 390 | 2/21/2020 | CCC- | 11/19/2019 | B+ | 5/31/2017 | |||||||||||
Geo Energy Resources Ltd. | Distressed exchange | Singapore | Energy and natural resources | 300 | 3/19/2020 | B- | 7/5/2019 | B | 7/7/2017 | |||||||||||
Yihua Enterprise (Group) Co. Ltd. | Missed interest | China | Consumer/service sector | 0 | 5/11/2020 | CCC | 7/26/2019 | B | 9/11/2017 | |||||||||||
PT Modernland Realty Tbk. | Missed principal/interest | Indonesia | Real estate | 390 | 7/8/2020 | CCC- | 7/2/2020 | B | 7/28/2013 | |||||||||||
Seadrill Partners LLC | Missed interest | Marshall Islands | Energy and natural resources | 2,900 | 7/17/2020 | CCC | 11/8/2019 | BB- | 6/9/2014 | |||||||||||
PT Alam Sutera Realty Tbk. | Distressed exchange | Indonesia | Real estate | 545 | 10/28/2020 | CC | 9/29/2020 | B | 3/12/2012 | |||||||||||
Total | 5,375 | |||||||||||||||||||
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Higher Ratings Are Consistent With Fewer Defaults
From 1993-2020, corporate defaults total 107 in Asia, a fraction of the 3,098 recorded globally from 1981-2020. The small sample size introduces some challenges in the analysis. The average time to default (the average number of years between the initial rating date and the default date) for the nine Asian defaulters in 2020 was 3.9 years. This is in line with global trends but slightly longer than 3.8 years, the average for the entire long-term pool of Asian defaults (compared with 5.9 years for long-term global defaults).
By and large, higher ratings take a longer time to default, though this trend is less evident in Asia because of the paucity of investment-grade defaults (see chart 5). For example, Asian issuers rated 'B' took an average of 3.4 years to default--less than the 4.1 years for 'BB' rated issuers (see table 7). Also, the 1997-1998 Asian financial crisis accelerated the time to default for many issuers as compared with global norms.
The average times to default from original rating for Asian issuers are shorter across all rating categories than they are for the global pool. This is true regardless of whether the times to default are calculated from original rating (see table 7) or from subsequent ratings (see table 8). This discrepancy in the average timing (and the associated standard deviation) results partly from the significantly smaller volume of defaults in every rating category in Asia. For example, of the global pool of issuers in the 'BBB' category, 221 defaulted from 1981-2020, whereas the comparable number for Asia (from 1993-2020) was only 10.
Table 7
Time To Default From Original Rating Among Corporate Defaulters (Asia Versus Global) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Original rating | Defaults | Average years from original rating* | Median years from original rating | Standard deviation of years from original rating | ||||||
Asia (1993-2020) | ||||||||||
AAA | N/A | N/A | N/A | N/A | ||||||
AA | 1.0 | 14.4 | 14.4 | N/A | ||||||
A | 2.0 | 11.7 | 11.7 | 1.2 | ||||||
BBB | 10.0 | 4.2 | 3.3 | 3.8 | ||||||
BB | 31.0 | 4.1 | 4.5 | 2.3 | ||||||
B | 54.0 | 3.4 | 2.7 | 2.9 | ||||||
CCC/C | 9.0 | 1.2 | 0.6 | 1.7 | ||||||
Total | 107.0 | 3.8 | 3.1 | 3.2 | ||||||
Global (1981-2020) | ||||||||||
AAA | 8.0 | 18.0 | 18.5 | 11.4 | ||||||
AA | 32.0 | 17.4 | 19.6 | 10.6 | ||||||
A | 101.0 | 14.1 | 10.9 | 9.1 | ||||||
BBB | 221.0 | 9.2 | 7.3 | 6.7 | ||||||
BB | 650.0 | 7.1 | 5.4 | 5.9 | ||||||
B | 1,735.0 | 5.1 | 3.7 | 4.3 | ||||||
CCC/C | 351.0 | 2.2 | 1.3 | 2.7 | ||||||
Total | 3,098.0 | 5.9 | 4.1 | 5.7 | ||||||
*Or Dec. 31, 1980, whichever is later. N/A--Not applicable. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 8
Time To Default From Post Ratings For Asia Corporate Defaulters | ||||||||
---|---|---|---|---|---|---|---|---|
Rating path to default | Average years from rating category | Median years from rating category | Standard deviation of years from rating category | |||||
Asia (1993-2020) | ||||||||
AAA | N/A | N/A | N/A | |||||
AA | N/A | N/A | N/A | |||||
A | 6.0 | 6.1 | 1.5 | |||||
BBB | 3.1 | 2.9 | 1.6 | |||||
BB | 2.6 | 2.2 | 1.9 | |||||
B | 1.9 | 1.4 | 1.8 | |||||
CCC/C | 0.5 | 0.2 | 0.7 | |||||
Total | 1.7 | 0.8 | 1.9 | |||||
Global (1981-2020) | ||||||||
AAA | 27.4 | 27.7 | 10.0 | |||||
AA | 14.9 | 15.8 | 9.4 | |||||
A | 11.5 | 9.9 | 8.3 | |||||
BBB | 8.3 | 6.5 | 6.9 | |||||
BB | 6.1 | 4.2 | 5.8 | |||||
B | 3.3 | 1.9 | 3.9 | |||||
CCC/C | 0.9 | 0.3 | 1.7 | |||||
Total | 3.4 | 1.3 | 5.0 | |||||
N/A--Not applicable. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Chart 5
The breakout of default rates by modifier shows that historically, lower rating categories experience higher default rates on average, though variability is possible in any given year (see table 9). Nevertheless, the data from past default cycles indicates that most defaults stemmed from the lowest rungs of the ratings ladder.
Table 9
Asia Corporate Default Rates By Rating Modifier (%) | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
AAA | AA+ | AA | AA- | A+ | A | A- | BBB+ | BBB | BBB- | BB+ | BB | BB- | B+ | B | B- | CCC/C | ||||||||||||||||||||
1993 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | 0.00 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||
1994 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | N/A | 0.00 | N/A | 0.00 | N/A | N/A | N/A | |||||||||||||||||||
1995 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | N/A | N/A | 0.00 | |||||||||||||||||||
1996 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | N/A | N/A | 0.00 | |||||||||||||||||||
1997 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11.11 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | N/A | |||||||||||||||||||
1998 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 8.70 | 7.14 | 7.14 | 0.00 | 13.33 | 10.00 | 40.00 | N/A | |||||||||||||||||||
1999 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 16.67 | 0.00 | 25.00 | |||||||||||||||||||
2000 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 9.52 | 0.00 | 0.00 | 9.09 | |||||||||||||||||||
2001 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 12.50 | 57.14 | |||||||||||||||||||
2002 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
2003 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4.00 | 0.00 | 14.29 | |||||||||||||||||||
2004 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2.86 | 0.00 | 0.00 | 10.00 | |||||||||||||||||||
2005 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 10.00 | |||||||||||||||||||
2006 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2.56 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
2007 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 50.00 | |||||||||||||||||||
2008 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4.00 | 4.00 | 0.00 | 15.00 | 12.50 | 0.00 | |||||||||||||||||||
2009 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.51 | 0.00 | 0.00 | 0.00 | 15.00 | 22.22 | 22.22 | 100.00 | |||||||||||||||||||
2010 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 37.50 | |||||||||||||||||||
2011 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
2012 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.70 | 0.00 | 16.67 | 0.00 | |||||||||||||||||||
2013 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.45 | 0.00 | 25.00 | N/A | |||||||||||||||||||
2014 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 100.00 | |||||||||||||||||||
2015 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5.56 | 6.25 | 0.00 | 100.00 | |||||||||||||||||||
2016 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4.35 | 0.00 | 4.35 | 0.00 | 0.00 | |||||||||||||||||||
2017 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 7.14 | 25.00 | |||||||||||||||||||
2018 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 20.00 | |||||||||||||||||||
2019 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5.13 | 2.27 | 4.35 | 22.22 | |||||||||||||||||||
2020 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.23 | 12.50 | 54.55 | |||||||||||||||||||
Average | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.40 | 0.47 | 0.29 | 0.41 | 0.42 | 2.25 | 3.50 | 6.65 | 27.60 | |||||||||||||||||||
Median | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 14.29 | |||||||||||||||||||
Std. dev. | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2.10 | 1.81 | 1.43 | 1.55 | 1.21 | 4.25 | 6.23 | 10.70 | 33.88 | |||||||||||||||||||
Min | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Max | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 11.11 | 8.70 | 7.14 | 7.14 | 4.35 | 15.00 | 22.22 | 40.00 | 100.00 | |||||||||||||||||||
N/A--Not applicable. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Defaults By Industry
When combining all nonfinancial industries, the 2020 aggregate one-year default rate is 1.7%, which is more than the 1993-2020 long-term average of 1.2% (see table 10). Meanwhile, no issuers in the Asian financial sector have defaulted in recent years.
Table 10
Cumulative Asia Corporate Default Rates By Sector (%) | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--All Financials-- | --All Nonfinancials-- | |||||||||||||
Year | One-year | Three-year | 10-year | One-year | Three-year | 10-year | ||||||||
1993 | 0.00 | N/A | N/A | 0.00 | N/A | N/A | ||||||||
1994 | 0.00 | N/A | N/A | 0.00 | N/A | N/A | ||||||||
1995 | 0.00 | 0.00 | N/A | 0.00 | 0.00 | N/A | ||||||||
1996 | 0.00 | 0.00 | N/A | 0.00 | 0.00 | N/A | ||||||||
1997 | 1.43 | 0.00 | N/A | 0.00 | 0.00 | N/A | ||||||||
1998 | 1.18 | 2.04 | N/A | 8.00 | 0.00 | N/A | ||||||||
1999 | 0.00 | 4.29 | N/A | 4.85 | 8.06 | N/A | ||||||||
2000 | 0.78 | 2.35 | N/A | 1.92 | 13.00 | N/A | ||||||||
2001 | 0.00 | 2.15 | N/A | 4.72 | 10.68 | N/A | ||||||||
2002 | 0.00 | 0.78 | 3.03 | 0.00 | 5.77 | 0.00 | ||||||||
2003 | 0.54 | 0.73 | 5.41 | 0.67 | 4.72 | 6.25 | ||||||||
2004 | 0.00 | 0.67 | 4.88 | 0.61 | 0.86 | 9.30 | ||||||||
2005 | 0.00 | 0.54 | 4.08 | 0.25 | 0.67 | 8.51 | ||||||||
2006 | 0.00 | 0.00 | 7.14 | 0.24 | 0.61 | 9.68 | ||||||||
2007 | 0.00 | 0.00 | 4.71 | 0.22 | 0.49 | 18.00 | ||||||||
2008 | 0.00 | 0.00 | 4.30 | 1.70 | 0.72 | 10.68 | ||||||||
2009 | 1.65 | 1.50 | 2.33 | 2.45 | 2.23 | 6.73 | ||||||||
2010 | 0.43 | 1.35 | 1.46 | 0.78 | 4.55 | 5.66 | ||||||||
2011 | 0.00 | 1.65 | 1.34 | 0.00 | 3.06 | 1.72 | ||||||||
2012 | 0.00 | 0.43 | 1.62 | 0.72 | 1.56 | 2.01 | ||||||||
2013 | 0.00 | 0.00 | 0.98 | 0.71 | 1.53 | 2.12 | ||||||||
2014 | 0.00 | 0.00 | 1.38 | 0.32 | 1.44 | 2.46 | ||||||||
2015 | 0.00 | 0.00 | 1.73 | 1.18 | 2.48 | 3.10 | ||||||||
2016 | 0.00 | 0.00 | 1.50 | 0.53 | 1.93 | 3.57 | ||||||||
2017 | 0.00 | 0.00 | 1.35 | 0.48 | 2.35 | 5.97 | ||||||||
2018 | 0.00 | 0.00 | 1.65 | 0.21 | 1.32 | 5.20 | ||||||||
2019 | 0.00 | 0.00 | 0.43 | 1.12 | 0.96 | 3.13 | ||||||||
2020 | 0.00 | 0.00 | 0.00 | 1.74 | 2.52 | 3.44 | ||||||||
Average | 0.21 | 0.71 | 2.60 | 1.19 | 2.75 | 5.66 | ||||||||
Median | 0.00 | 0.00 | 1.65 | 0.57 | 1.54 | 5.20 | ||||||||
Std. Dev. | 0.47 | 1.07 | 1.93 | 1.84 | 3.32 | 4.23 | ||||||||
Min | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||
Max | 1.65 | 4.29 | 7.14 | 8.00 | 13.00 | 18.00 | ||||||||
N/A--Not applicable. "All financials" refers to financial institutions and insurance combined. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
More specifically, out of nine defaulted Asian issuers in 2020, four came from the energy and natural resources sector, three were from the real estate sector, and one each from the high tech/computers/office equipment and consumer/service sectors.
The default rates for 2020 exceeded their long-term averages in four sectors--consumer/service, energy and natural resources, high tech/computers/office equipment, and real estate (see table 11), though these sector statistics are based on a limited history with a small number of defaults.
Table 11
Annual Asia Corporate Default Rates by Industry (%) | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year | Aerospace/automotive/capital goods/metal | Consumer/service sector | Energy and natural resources | Financial institutions | Forest and building products/homebuilders | Health care/chemicals | High technology/computers/office equipment | |||||||||
1993 | 0.00 | 0.00 | N/A | 0.00 | N/A | N/A | 0.00 | |||||||||
1994 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | 0.00 | |||||||||
1995 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | 0.00 | |||||||||
1996 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | N/A | 0.00 | |||||||||
1997 | 0.00 | 0.00 | 0.00 | 1.75 | 0.00 | 0.00 | 0.00 | |||||||||
1998 | 5.88 | 9.09 | 0.00 | 1.41 | 11.11 | 40.00 | 0.00 | |||||||||
1999 | 11.11 | 8.33 | 0.00 | 0.00 | 14.29 | 33.33 | 0.00 | |||||||||
2000 | 0.00 | 7.69 | 0.00 | 0.00 | 0.00 | 100.00 | 0.00 | |||||||||
2001 | 0.00 | 7.14 | 0.00 | 0.00 | 100.00 | 0.00 | 0.00 | |||||||||
2002 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2003 | 0.00 | 0.00 | 0.00 | 0.69 | 0.00 | N/A | 4.17 | |||||||||
2004 | 2.67 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2005 | 1.04 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2006 | 1.01 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2007 | 0.96 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2008 | 0.00 | 4.88 | 6.90 | 0.00 | 0.00 | 0.00 | 3.23 | |||||||||
2009 | 7.41 | 2.94 | 3.45 | 2.37 | 0.00 | 0.00 | 0.00 | |||||||||
2010 | 2.86 | 0.00 | 0.00 | 0.63 | 0.00 | 0.00 | 0.00 | |||||||||
2011 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2012 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5.88 | 0.00 | |||||||||
2013 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5.88 | 0.00 | |||||||||
2014 | 0.00 | 0.00 | 2.27 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2015 | 0.00 | 3.23 | 2.38 | 0.00 | 11.11 | 0.00 | 3.70 | |||||||||
2016 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.85 | |||||||||
2017 | 0.00 | 0.00 | 2.27 | 0.00 | 0.00 | 0.00 | 3.70 | |||||||||
2018 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
2019 | 2.15 | 0.00 | 0.00 | 0.00 | 7.69 | 2.50 | 0.00 | |||||||||
2020 | 0.00 | 2.22 | 5.71 | 0.00 | 0.00 | 0.00 | 2.78 | |||||||||
Weighted average | 1.18 | 1.14 | 1.43 | 0.20 | 3.24 | 1.67 | 0.94 | |||||||||
Average | 1.25 | 1.63 | 0.85 | 0.24 | 5.34 | 8.16 | 0.77 | |||||||||
Median | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
Std. dev. | 2.67 | 2.96 | 1.85 | 0.60 | 19.36 | 22.62 | 1.51 | |||||||||
Min | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
Max | 11.11 | 9.09 | 6.90 | 2.37 | 100.00 | 100.00 | 4.17 | |||||||||
Insurance | Leisure time/media | Real estate | Telecommunications | Transportation | Utility | |||||||||||
1993 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
1994 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
1995 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
1996 | 0.00 | N/A | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
1997 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
1998 | 0.00 | 25.00 | 10.00 | 0.00 | 11.11 | 0.00 | ||||||||||
1999 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2000 | 3.85 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2001 | 0.00 | 0.00 | 0.00 | 12.50 | 0.00 | 0.00 | ||||||||||
2002 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2003 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2004 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2005 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2006 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2007 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2008 | 0.00 | 0.00 | 0.00 | 3.45 | 0.00 | 0.00 | ||||||||||
2009 | 0.00 | 0.00 | 0.00 | 4.17 | 2.50 | 0.00 | ||||||||||
2010 | 0.00 | 0.00 | 0.00 | 0.00 | 4.00 | 0.00 | ||||||||||
2011 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2012 | 0.00 | 0.00 | 0.00 | 0.00 | 4.00 | 0.00 | ||||||||||
2013 | 0.00 | 0.00 | 0.00 | 4.76 | 0.00 | 0.00 | ||||||||||
2014 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2015 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2016 | 0.00 | 0.00 | 0.00 | 0.00 | 2.33 | 0.00 | ||||||||||
2017 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2018 | 0.00 | 11.11 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
2019 | 0.00 | 0.00 | 0.00 | 3.57 | 0.00 | 0.00 | ||||||||||
2020 | 0.00 | 0.00 | 4.84 | 0.00 | 0.00 | 0.00 | ||||||||||
Weighted average | 0.06 | 0.95 | 0.49 | 1.04 | 0.68 | 0.00 | ||||||||||
Average | 0.14 | 1.50 | 0.53 | 1.02 | 0.85 | 0.00 | ||||||||||
Median | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
Std. dev. | 0.73 | 5.49 | 2.07 | 2.67 | 2.33 | 0.00 | ||||||||||
Min | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||
Max | 3.85 | 25.00 | 10.00 | 12.50 | 11.11 | 0.00 | ||||||||||
N/A--Not applicable. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Transition Tables And Cumulative Default Rates
An analysis of rating transitions in 2020 suggests that ratings behavior in Asia continues to be consistent with global trends, which have shown a negative correspondence between credit rating and default probability. Investment-grade issuers in Asia tend to exhibit greater credit stability (as measured by the frequency of rating transitions) than their speculative-grade counterparts (see table 12).
For instance, 93.5% of Asian issuers rated 'A' as of Jan. 1, 2020, were still rated 'A' as of Dec. 31, 2020, whereas the comparable share for issuers rated 'BB' was only 73.0%. 54.5% of Asia 'CCC'/'C' transitioned to 'D' in 2020, compared with 47.5% for global issuers (see table 12). Although, when interpreting the low stability rates associated with the 'CCC'/'C' rating category, it's important to take into account the small sample size in Asia as the number of issuers rated speculative-grade in Asia is relatively small, thus issuer-specific factors may influence the default trends more than they do on a global scale.
Table 12
2020 Corporate Transition Rates: Asia Versus Global (%) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
From/to | AAA | AA | A | BBB | BB | B | CCC/C | D | NR | |||||||||||
Asia | ||||||||||||||||||||
AAA | 100.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||
AA | 0.00 | 81.13 | 15.09 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.77 | |||||||||||
A | 0.00 | 0.00 | 93.48 | 3.11 | 0.00 | 0.00 | 0.00 | 0.00 | 3.42 | |||||||||||
BBB | 0.00 | 0.00 | 0.33 | 90.13 | 2.63 | 0.00 | 0.00 | 0.00 | 6.91 | |||||||||||
BB | 0.00 | 0.00 | 0.00 | 0.00 | 72.97 | 7.21 | 0.00 | 0.00 | 19.82 | |||||||||||
B | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 63.86 | 8.43 | 3.61 | 24.10 | |||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 9.09 | 54.55 | 36.36 | |||||||||||
Global | ||||||||||||||||||||
AAA | 100.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||
AA | 0.00 | 87.27 | 9.63 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.11 | |||||||||||
A | 0.00 | 0.00 | 92.88 | 4.05 | 0.00 | 0.07 | 0.00 | 0.00 | 3.00 | |||||||||||
BBB | 0.00 | 0.05 | 0.59 | 90.12 | 4.48 | 0.22 | 0.00 | 0.00 | 4.53 | |||||||||||
BB | 0.00 | 0.00 | 0.00 | 0.78 | 78.15 | 11.43 | 0.86 | 0.93 | 7.85 | |||||||||||
B | 0.00 | 0.00 | 0.00 | 0.05 | 0.96 | 71.95 | 12.58 | 3.52 | 10.94 | |||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5.46 | 34.45 | 47.48 | 12.61 | |||||||||||
NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
This pattern is similar to the long-term (1981-2020) trend of ratings behavior among all global rated issuers. This study--in line with previous default studies--confirms that higher-rated companies are generally more stable than lower-rated companies. In 2020, of the Asian issuers rated 'AAA', 100% retained this rating after one year, whereas 63.9% of issuers rated 'B' retained that rating (see table 12). Nevertheless, the 1997-1998 Asian financial crisis did result in rating transitions for several rating categories exceeding the global averages (see table 13).
The smaller number of issuers and the shorter study period compared with the global pool possibly compounded volatility. Statistically, a smaller number of observations and a shorter period could contribute to a wider range in the sample mean than for the whole population. Notwithstanding the slightly higher ratings volatility, this study confirms that S&P Global Ratings' credit ratings for Asia-based issuers are generally consistent with global patterns. Based on the transition analysis for a time horizon of two years rather than one year, lower ratings also tend to display less stability than higher ratings do (see table 14).
Table 13
Average One-Year Corporate Transition Rates (%) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
From/to | AAA | AA | A | BBB | BB | B | CCC/C | D | NR | |||||||||||
Asia (1993-2020) | ||||||||||||||||||||
AAA | 83.87 | 14.19 | 0.65 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.29 | |||||||||||
(21.28) | (21.58) | (2.09) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (3.55) | ||||||||||||
AA | 0.41 | 88.96 | 7.39 | 0.00 | 0.00 | 0.08 | 0.00 | 0.00 | 3.17 | |||||||||||
(1.93) | (6.69) | (6.35) | (0.00) | (0.00) | (0.39) | (0.00) | (0.00) | (3.95) | ||||||||||||
A | 0.00 | 1.28 | 91.67 | 2.77 | 0.05 | 0.11 | 0.00 | 0.00 | 4.12 | |||||||||||
(0.00) | (1.38) | (6.52) | (4.68) | (0.46) | (0.64) | (0.00) | (0.00) | (4.64) | ||||||||||||
BBB | 0.00 | 0.00 | 4.35 | 85.48 | 2.36 | 0.21 | 0.03 | 0.13 | 7.43 | |||||||||||
(0.00) | (0.00) | (4.82) | (9.80) | (4.76) | (1.40) | (0.26) | (0.65) | (6.65) | ||||||||||||
BB | 0.00 | 0.00 | 0.00 | 5.58 | 72.79 | 4.46 | 0.64 | 0.32 | 16.21 | |||||||||||
(0.00) | (0.00) | (0.00) | (5.32) | (10.02) | (3.49) | (3.62) | (0.97) | (8.38) | ||||||||||||
B | 0.00 | 0.00 | 0.00 | 0.00 | 6.33 | 64.92 | 3.05 | 3.13 | 22.58 | |||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (7.62) | (7.95) | (3.46) | (4.39) | (8.86) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 1.65 | 12.40 | 39.67 | 23.97 | 22.31 | |||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (4.80) | (14.97) | (27.60) | (21.92) | (22.38) | ||||||||||||
Global (1981-2020) | ||||||||||||||||||||
AAA | 87.06 | 9.06 | 0.53 | 0.05 | 0.11 | 0.03 | 0.05 | 0.00 | 3.11 | |||||||||||
(7.18) | (7.22) | (0.82) | (0.24) | (0.28) | (0.17) | (0.34) | (0.00) | (2.43) | ||||||||||||
AA | 0.48 | 87.23 | 7.77 | 0.47 | 0.05 | 0.06 | 0.02 | 0.02 | 3.89 | |||||||||||
(0.53) | (5.17) | (4.14) | (0.68) | (0.19) | (0.20) | (0.06) | (0.07) | (1.81) | ||||||||||||
A | 0.03 | 1.60 | 88.58 | 5.00 | 0.26 | 0.11 | 0.02 | 0.05 | 4.35 | |||||||||||
(0.09) | (1.05) | (3.74) | (2.15) | (0.38) | (0.24) | (0.06) | (0.10) | (1.68) | ||||||||||||
BBB | 0.00 | 0.09 | 3.25 | 86.49 | 3.56 | 0.43 | 0.10 | 0.16 | 5.92 | |||||||||||
(0.03) | (0.15) | (1.62) | (3.90) | (1.57) | (0.65) | (0.21) | (0.24) | (1.54) | ||||||||||||
BB | 0.01 | 0.03 | 0.11 | 4.55 | 77.82 | 6.80 | 0.55 | 0.63 | 9.51 | |||||||||||
(0.05) | (0.08) | (0.24) | (2.01) | (4.38) | (3.09) | (0.70) | (0.81) | (2.17) | ||||||||||||
B | 0.00 | 0.02 | 0.07 | 0.15 | 4.54 | 74.59 | 4.96 | 3.34 | 12.33 | |||||||||||
(0.00) | (0.08) | (0.19) | (0.21) | (2.21) | (3.98) | (2.74) | (3.04) | (2.16) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.10 | 0.17 | 0.55 | 12.47 | 43.11 | 28.30 | 15.31 | |||||||||||
(0.00) | (0.00) | (0.40) | (0.62) | (0.88) | (7.45) | (8.48) | (11.27) | (4.97) | ||||||||||||
Numbers in parentheses are weighted average standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 14
Average Two-Year Corporate Transition Rates (%) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
From/to | AAA | AA | A | BBB | BB | B | CCC/C | D | NR | |||||||||||
Asia (1993-2020) | ||||||||||||||||||||
AAA | 70.59 | 26.14 | 1.96 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.31 | |||||||||||
(26.49) | (25.45) | (5.01) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (4.20) | ||||||||||||
AA | 0.85 | 79.22 | 13.66 | 0.00 | 0.00 | 0.17 | 0.00 | 0.00 | 6.11 | |||||||||||
(2.62) | (8.93) | (8.45) | (0.00) | (0.00) | (0.55) | (0.00) | (0.00) | (6.66) | ||||||||||||
A | 0.00 | 2.32 | 83.51 | 5.11 | 0.25 | 0.20 | 0.00 | 0.00 | 8.62 | |||||||||||
(0.00) | (1.73) | (8.92) | (6.76) | (1.81) | (0.88) | (0.00) | (0.00) | (6.66) | ||||||||||||
BBB | 0.00 | 0.00 | 8.88 | 72.86 | 3.56 | 0.35 | 0.12 | 0.23 | 13.99 | |||||||||||
(0.00) | (0.00) | (7.68) | (12.69) | (5.02) | (1.60) | (0.73) | (0.91) | (9.76) | ||||||||||||
BB | 0.00 | 0.00 | 0.06 | 10.56 | 54.79 | 5.65 | 1.08 | 0.91 | 26.94 | |||||||||||
(0.00) | (0.00) | (0.28) | (7.18) | (10.58) | (3.71) | (3.64) | (2.00) | (10.00) | ||||||||||||
B | 0.00 | 0.00 | 0.00 | 0.42 | 9.69 | 44.78 | 3.09 | 6.52 | 35.51 | |||||||||||
(0.00) | (0.00) | (0.00) | (1.08) | (8.55) | (10.50) | (3.04) | (6.73) | (9.48) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 2.73 | 18.18 | 17.27 | 26.36 | 35.45 | |||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (5.50) | (19.76) | (16.04) | (21.99) | (29.54) | ||||||||||||
Global (1981-2020) | ||||||||||||||||||||
AAA | 75.71 | 16.19 | 1.43 | 0.11 | 0.24 | 0.05 | 0.11 | 0.03 | 6.15 | |||||||||||
(10.15) | (10.60) | (1.47) | (0.30) | (0.46) | (0.23) | (0.41) | (0.17) | (4.24) | ||||||||||||
AA | 0.85 | 76.31 | 13.72 | 1.20 | 0.18 | 0.13 | 0.02 | 0.06 | 7.54 | |||||||||||
(0.70) | (8.14) | (5.90) | (1.11) | (0.33) | (0.28) | (0.06) | (0.12) | (2.90) | ||||||||||||
A | 0.04 | 2.89 | 78.62 | 8.69 | 0.68 | 0.25 | 0.04 | 0.13 | 8.66 | |||||||||||
(0.07) | (1.71) | (5.88) | (2.90) | (0.77) | (0.40) | (0.10) | (0.19) | (2.66) | ||||||||||||
BBB | 0.02 | 0.16 | 6.03 | 75.29 | 5.62 | 0.97 | 0.19 | 0.44 | 11.27 | |||||||||||
(0.07) | (0.23) | (2.45) | (6.19) | (1.99) | (1.06) | (0.29) | (0.62) | (2.51) | ||||||||||||
BB | 0.01 | 0.04 | 0.26 | 8.17 | 61.04 | 9.98 | 1.00 | 1.92 | 17.58 | |||||||||||
(0.05) | (0.10) | (0.48) | (2.97) | (6.41) | (2.73) | (0.88) | (2.14) | (2.99) | ||||||||||||
B | 0.00 | 0.03 | 0.12 | 0.36 | 7.73 | 55.84 | 5.67 | 7.79 | 22.46 | |||||||||||
(0.00) | (0.10) | (0.28) | (0.43) | (3.29) | (4.94) | (2.46) | (5.51) | (3.57) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.13 | 0.45 | 1.01 | 16.70 | 20.54 | 37.29 | 23.88 | |||||||||||
(0.00) | (0.00) | (0.45) | (1.12) | (1.10) | (7.36) | (7.35) | (11.95) | (6.85) | ||||||||||||
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Transitions at the rating modifier also display the same relationship by and large, though differences in sample size occasionally create slight variations between adjacent rating categories (see table 15).
Table 15
Average One-Year Transition Rates For Asia Corporates By Rating Modifier (1993-2020) (%) | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Rating-- | ||||||||||||||||||||||||||||||||||||||||
From/to | AAA | AA+ | AA | AA- | A+ | A | A- | BBB+ | BBB | BBB- | BB+ | BB | BB- | B+ | B | B- | CCC | D | NR | |||||||||||||||||||||
AAA | 83.87 | 10.97 | 3.23 | 0.00 | 0.00 | 0.65 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.29 | |||||||||||||||||||||
(21.28) | (20.56) | (7.70) | (0.00) | (0.00) | (2.09) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (3.55) | ||||||||||||||||||||||
AA+ | 5.32 | 70.21 | 17.02 | 5.32 | 1.06 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.06 | |||||||||||||||||||||
(23.00) | (34.13) | (22.30) | (13.90) | (3.57) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (5.17) | ||||||||||||||||||||||
AA | 0.00 | 1.12 | 78.37 | 14.33 | 2.25 | 0.00 | 0.28 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.28 | 0.00 | 0.00 | 0.00 | 0.00 | 3.37 | |||||||||||||||||||||
(0.00) | (3.31) | (22.05) | (18.74) | (4.35) | (0.00) | (1.53) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (1.11) | (0.00) | (0.00) | (0.00) | (0.00) | (5.77) | ||||||||||||||||||||||
AA- | 0.00 | 0.00 | 5.37 | 80.95 | 9.59 | 0.64 | 0.13 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.32 | |||||||||||||||||||||
(0.00) | (0.00) | (11.63) | (13.51) | (8.56) | (2.68) | (0.68) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (4.71) | ||||||||||||||||||||||
A+ | 0.00 | 0.00 | 0.09 | 4.44 | 82.59 | 7.17 | 1.62 | 0.17 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.09 | 0.00 | 0.00 | 0.00 | 0.00 | 3.84 | |||||||||||||||||||||
(0.00) | (0.00) | (0.40) | (4.74) | (11.17) | (6.10) | (4.40) | (0.82) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.72) | (0.00) | (0.00) | (0.00) | (0.00) | (3.88) | ||||||||||||||||||||||
A | 0.00 | 0.00 | 0.00 | 0.20 | 6.23 | 82.59 | 5.63 | 0.87 | 0.20 | 0.13 | 0.00 | 0.07 | 0.00 | 0.07 | 0.00 | 0.00 | 0.00 | 0.00 | 4.02 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.96) | (5.66) | (11.33) | (5.92) | (3.55) | (1.04) | (1.01) | (0.00) | (0.79) | (0.00) | (0.64) | (0.00) | (0.00) | (0.00) | (0.00) | (4.84) | ||||||||||||||||||||||
A- | 0.00 | 0.00 | 0.00 | 0.00 | 0.18 | 7.21 | 82.07 | 4.86 | 0.70 | 0.35 | 0.06 | 0.00 | 0.00 | 0.18 | 0.00 | 0.00 | 0.00 | 0.00 | 4.39 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.61) | (6.43) | (11.61) | (5.66) | (2.55) | (2.52) | (0.58) | (0.00) | (0.00) | (0.69) | (0.00) | (0.00) | (0.00) | (0.00) | (5.84) | ||||||||||||||||||||||
BBB+ | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.57 | 9.95 | 77.02 | 5.23 | 0.72 | 0.07 | 0.00 | 0.00 | 0.07 | 0.14 | 0.00 | 0.00 | 0.00 | 6.23 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (1.11) | (9.85) | (12.93) | (4.63) | (2.44) | (1.57) | (0.00) | (0.00) | (1.11) | (2.22) | (0.00) | (0.00) | (0.00) | (7.13) | ||||||||||||||||||||||
BBB | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.09 | 11.74 | 74.35 | 4.11 | 0.75 | 0.34 | 0.08 | 0.17 | 0.00 | 0.00 | 0.08 | 0.08 | 7.21 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (2.29) | (9.27) | (13.63) | (4.00) | (2.52) | (1.29) | (0.76) | (0.93) | (0.00) | (0.00) | (0.76) | (0.98) | (7.35) | ||||||||||||||||||||||
BBB- | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.18 | 1.41 | 9.32 | 72.91 | 4.93 | 1.14 | 0.35 | 0.26 | 0.00 | 0.00 | 0.00 | 0.35 | 9.15 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.81) | (2.50) | (8.44) | (13.37) | (4.03) | (4.44) | (1.14) | (1.87) | (0.00) | (0.00) | (0.00) | (1.45) | (7.55) | ||||||||||||||||||||||
BB+ | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.28 | 1.38 | 10.34 | 66.90 | 4.69 | 2.07 | 0.28 | 0.14 | 0.14 | 0.69 | 0.14 | 12.97 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.92) | (3.59) | (8.50) | (15.09) | (4.72) | (2.15) | (0.85) | (0.63) | (0.72) | (5.02) | (1.00) | (11.54) | ||||||||||||||||||||||
BB | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.17 | 0.17 | 2.27 | 10.84 | 60.84 | 6.64 | 1.40 | 0.35 | 0.35 | 0.52 | 0.35 | 16.08 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (1.05) | (0.64) | (2.82) | (10.76) | (15.95) | (5.02) | (2.41) | (1.46) | (1.21) | (3.37) | (1.38) | (11.25) | ||||||||||||||||||||||
BB- | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.18 | 0.18 | 1.41 | 8.48 | 56.18 | 9.19 | 2.65 | 0.00 | 0.71 | 0.53 | 20.49 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.74) | (1.02) | (3.22) | (7.99) | (15.87) | (7.47) | (5.72) | (0.00) | (2.37) | (1.31) | (12.63) | ||||||||||||||||||||||
B+ | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.33 | 2.99 | 7.97 | 55.65 | 8.14 | 1.83 | 1.50 | 2.33 | 19.27 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (1.29) | (6.83) | (6.98) | (11.92) | (7.00) | (2.73) | (2.71) | (3.93) | (9.04) | ||||||||||||||||||||||
B | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.44 | 1.98 | 7.71 | 52.20 | 7.49 | 2.42 | 3.08 | 24.67 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (1.76) | (5.35) | (5.66) | (14.03) | (7.46) | (5.05) | (5.62) | (11.87) | ||||||||||||||||||||||
B- | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.45 | 0.45 | 2.23 | 7.14 | 48.66 | 8.48 | 5.36 | 27.23 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (1.84) | (1.84) | (4.83) | (9.20) | (21.73) | (9.39) | (8.73) | (18.05) | ||||||||||||||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.83 | 0.83 | 2.48 | 1.65 | 8.26 | 39.67 | 23.97 | 22.31 | |||||||||||||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (4.07) | (2.82) | (8.45) | (5.17) | (12.41) | (27.60) | (21.92) | (22.38) | ||||||||||||||||||||||
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
That higher ratings correspond with lower frequency of default--and vice versa--remains true over time, as illustrated by the cumulative average default rates in tables 16 and 17 and in chart 6. As noted earlier (chart 5), no defaults have ever occurred in the 'AAA' category in Asia. On average, from 1993-2020, 'BBB' rated issuers in Asia had a less than 0.2% default rate in the first year after they were rated and a more than 0.2% default rate in the second year. Issuers rated 'B' had an average default rate of 3.1% in the first year and 6.5% in the second year (see table 16).
Our findings are qualified by the small number of issuers in the pool and the short period of the study. Although the study period for Asia is 1993-2020, almost 86.0% of the total issuer ratings were assigned since 2000. Therefore, a significant portion of the pool is not as seasoned as its global counterparts.
Table 16
Comparison Of Corporate Cumulative Average Default Rates (%) | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Time horizon (years)-- | ||||||||||||||||||||||
Asia (1993-2020) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||
AAA | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
AA | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
A | 0.00 | 0.00 | 0.00 | 0.03 | 0.09 | 0.16 | 0.28 | 0.36 | 0.45 | 0.56 | ||||||||||||
BBB | 0.13 | 0.22 | 0.35 | 0.49 | 0.64 | 0.72 | 0.72 | 0.72 | 0.72 | 0.72 | ||||||||||||
BB | 0.32 | 0.89 | 1.69 | 2.74 | 3.80 | 4.39 | 4.86 | 5.11 | 5.11 | 5.11 | ||||||||||||
B | 3.13 | 6.55 | 8.83 | 10.43 | 11.38 | 12.18 | 12.92 | 13.71 | 14.14 | 14.29 | ||||||||||||
CCC/C | 23.97 | 29.21 | 32.04 | 34.01 | 35.03 | 35.03 | 35.03 | 35.03 | 35.03 | 35.03 | ||||||||||||
Investment-grade | 0.05 | 0.09 | 0.14 | 0.20 | 0.29 | 0.35 | 0.40 | 0.44 | 0.48 | 0.52 | ||||||||||||
Speculative grade | 2.30 | 4.16 | 5.61 | 6.90 | 7.92 | 8.56 | 9.11 | 9.55 | 9.71 | 9.76 | ||||||||||||
All rated | 0.63 | 1.13 | 1.54 | 1.93 | 2.26 | 2.48 | 2.66 | 2.81 | 2.88 | 2.93 | ||||||||||||
Global (1981-2020) | ||||||||||||||||||||||
AAA | 0.00 | 0.03 | 0.13 | 0.24 | 0.34 | 0.45 | 0.51 | 0.59 | 0.64 | 0.70 | ||||||||||||
AA | 0.02 | 0.06 | 0.11 | 0.21 | 0.30 | 0.41 | 0.49 | 0.56 | 0.63 | 0.70 | ||||||||||||
A | 0.05 | 0.13 | 0.22 | 0.33 | 0.46 | 0.60 | 0.76 | 0.90 | 1.05 | 1.20 | ||||||||||||
BBB | 0.16 | 0.43 | 0.75 | 1.14 | 1.54 | 1.94 | 2.27 | 2.61 | 2.93 | 3.24 | ||||||||||||
BB | 0.63 | 1.93 | 3.46 | 4.99 | 6.43 | 7.75 | 8.89 | 9.90 | 10.82 | 11.64 | ||||||||||||
B | 3.34 | 7.81 | 11.75 | 14.89 | 17.35 | 19.37 | 20.99 | 22.32 | 23.51 | 24.62 | ||||||||||||
CCC/C | 28.30 | 38.33 | 43.42 | 46.36 | 48.58 | 49.61 | 50.75 | 51.49 | 52.16 | 52.76 | ||||||||||||
Investment-grade | 0.09 | 0.24 | 0.41 | 0.63 | 0.86 | 1.09 | 1.30 | 1.50 | 1.69 | 1.88 | ||||||||||||
Speculative grade | 3.71 | 7.19 | 10.18 | 12.63 | 14.64 | 16.30 | 17.68 | 18.83 | 19.86 | 20.81 | ||||||||||||
All rated | 1.53 | 3.00 | 4.27 | 5.35 | 6.25 | 7.01 | 7.65 | 8.18 | 8.67 | 9.12 | ||||||||||||
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Chart 6
Table 17
Asia Corporate Cumulative Average Default Rates by Rating Modifier (1993-2020) (%) | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Time horizon (years)-- | ||||||||||||||||||||||
Rating | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||||||||||||
AAA | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
AA+ | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
AA | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
AA- | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
A+ | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
A | 0.00 | 0.00 | 0.00 | 0.00 | 0.10 | 0.31 | 0.54 | 0.66 | 0.80 | 0.96 | ||||||||||||
A- | 0.00 | 0.00 | 0.00 | 0.07 | 0.16 | 0.16 | 0.26 | 0.36 | 0.48 | 0.60 | ||||||||||||
BBB+ | 0.00 | 0.00 | 0.17 | 0.36 | 0.36 | 0.47 | 0.47 | 0.47 | 0.47 | 0.47 | ||||||||||||
BBB | 0.08 | 0.18 | 0.27 | 0.49 | 0.96 | 1.09 | 1.09 | 1.09 | 1.09 | 1.09 | ||||||||||||
BBB- | 0.35 | 0.54 | 0.65 | 0.65 | 0.65 | 0.65 | 0.65 | 0.65 | 0.65 | 0.65 | ||||||||||||
BB+ | 0.14 | 0.29 | 0.76 | 1.09 | 1.64 | 1.83 | 1.83 | 1.83 | 1.83 | 1.83 | ||||||||||||
BB | 0.35 | 0.72 | 1.72 | 3.20 | 4.35 | 5.31 | 6.07 | 6.33 | 6.33 | 6.33 | ||||||||||||
BB- | 0.53 | 1.84 | 2.85 | 4.38 | 5.99 | 6.73 | 7.51 | 8.07 | 8.07 | 8.07 | ||||||||||||
B+ | 2.33 | 5.69 | 7.96 | 9.36 | 9.99 | 10.67 | 10.92 | 11.46 | 11.74 | 11.74 | ||||||||||||
B | 3.08 | 5.92 | 8.79 | 11.43 | 13.33 | 14.67 | 16.10 | 16.85 | 17.26 | 17.26 | ||||||||||||
B- | 5.36 | 10.14 | 11.21 | 11.21 | 11.21 | 11.21 | 12.01 | 13.67 | 14.52 | 15.42 | ||||||||||||
CCC/C | 23.97 | 29.21 | 32.04 | 34.01 | 35.03 | 35.03 | 35.03 | 35.03 | 35.03 | 35.03 | ||||||||||||
Investment-grade | 0.05 | 0.09 | 0.14 | 0.20 | 0.29 | 0.35 | 0.40 | 0.44 | 0.48 | 0.52 | ||||||||||||
Speculative grade | 2.30 | 4.16 | 5.61 | 6.90 | 7.92 | 8.56 | 9.11 | 9.55 | 9.71 | 9.76 | ||||||||||||
All rated | 0.63 | 1.13 | 1.54 | 1.93 | 2.26 | 2.48 | 2.66 | 2.81 | 2.88 | 2.93 | ||||||||||||
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Gini Ratios And Lorenz Curves
A quantitative measure of ratings performance indicates that the relative rank ordering of ratings in Asia is consistent across various time horizons. To measure ratings performance, or ratings accuracy, the cumulative share of issuers by rating is plotted against the cumulative share of defaulters in a Lorenz curve to render the accuracy of their rank ordering visually (see charts 7-9). Our calculations indicate that the one-year weighted average (1993-2020) Gini coefficient for Asia was 88.6%, the three-year Gini was 83.6%, and the five-year was 77.8% (see table 18). By contrast, the global one-year weighted average Gini coefficient was 82.8%, the three-year was 75.3%, and the five-year was 71.5%.
If corporate ratings only randomly approximated default risk, the Gini coefficient would be zero. On the other hand, if corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the Lorenz curve would capture all of the area on the graph above the diagonal, and the Gini coefficient would be 1. For more, see Appendix II.
As expected, the Gini coefficients decline as the time horizon lengthens because longer time horizons allow for more credit degradation among higher-rated issuers (see table 18). In the one-year Asia Lorenz curve, for example, 93.8% of defaults occurred in the speculative-grade category, while speculative-grade ratings constituted only 25.6% of all Asian corporate issuers (see chart 7). In the three-year Lorenz curve, 92.6% of defaults occurred in the speculative-grade category, which was only 25.8% of all Asian corporate issuers (see chart 8). The five-year Lorenz curve shows that speculative-grade issuers constituted 89.2% of defaulters and 26.2% of the entire sample (see chart 9).
Table 18
Corporate Gini Coefficients By Region (%) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
--Time horizon-- | ||||||||||
Region | One-year | Three-year | Five-year | Seven-year | ||||||
Global | 82.84 | 75.32 | 71.54 | 69.16 | ||||||
U.S. | 80.98 | 72.88 | 69.05 | 66.64 | ||||||
Europe | 90.45 | 85.18 | 82.47 | 79.87 | ||||||
Asia | 88.65 | 83.56 | 77.81 | 73.69 | ||||||
Note: Asia figures are for the period 1993-2020. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Chart 7
Chart 8
Chart 9
Appendix I: Data Approach And Definitions
This long-term corporate default and rating transition study uses S&P Global Market Intelligence's CreditPro® database of long-term local currency issuer credit ratings. Most exhibits in this study are the direct output of the CreditPro® interface, while others reflect manipulation of the underlying database.
An issuer credit rating reflects S&P Global Ratings' forward-looking opinion of a company's overall creditworthiness. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation because it does not take into account the nature and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. It is not necessary for a company to have rated debt to have an issuer credit rating.
While an issue credit rating is an assessment of default risk, it may also incorporate an assessment of the relative seniority or ultimate recovery of the issue in the event of default. The junior obligations of a company are typically rated lower than the senior obligations to reflect their lower priority in bankruptcy and ultimate recovery expectations. Alternatively, secured debt may be rated higher than the issuer credit rating. Notching also applies to the structural subordination of debt issued by operating subsidiaries or holding companies that are part of an enterprise that we view as a single economic entity.
S&P Global Ratings Research's ongoing enhancement of the CreditPro® database used to generate this study could lead to outcomes that differ to some degree from those reported in previous studies. However, this poses no continuity problem because each study reports statistics going back to Jan. 1, 1993. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.
Issuers included in this study
For purposes of this study, Asia consists of Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, Fiji, Hong Kong, India, Indonesia, Japan, Republic of Korea, Macao Special Administrative Region of China, Malaysia, Marshall Islands, Mongolia, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, the market of Taiwan, Thailand, and Vietnam.
This study analyzes the rating histories of 1,958 Asian companies that S&P Global Ratings rated from Jan. 1, 1993-Dec. 31, 2020. These include industrials, utilities, financial institutions, and insurance companies with long-term local currency ratings. The analysis excludes public information ("pi") ratings and ratings based on the guarantee of another company. Structured finance vehicles, public-sector issuers, and sovereign issuers are the subjects of separate default and transition studies, and we excluded these from this study.
To avoid double-counting, the CreditPro® database excludes subsidiaries with debt that is fully guaranteed by a parent or with default risk that is considered identical to that of a parent. 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. At times, however, some of these subsidiaries might not yet have been covered by a parent's guarantee, or the relationship that combines the default risk of parent and subsidiary might have come to an end or might not have begun. We included such subsidiaries for the period during which they had a distinct and separate risk of default.
Issuers with withdrawn ratings
S&P Global Ratings withdraws ratings when an entity's entire debt is paid off or when the program or programs rated are terminated and the relevant debt extinguished. For the purposes of this study, a rating may be withdrawn as a result of a merger or acquisition. Others are withdrawn because of a lack of cooperation, particularly when a company is experiencing financial difficulties and refuses to provide all the information needed to continue surveillance on the ratings, or at the entity's request.
Definition of default
An obligor rated 'SD' (selective default) or 'D' (default) is in payment default on one or more of its financial obligations (rated or unrated) unless S&P Global Ratings believes that such payments will be made within five business days, irrespective of any grace period. S&P Global Ratings also lowers a rating to 'D' when an issuer files for bankruptcy or takes a similar action that jeopardizes its payments on a financial obligation.
A 'D' rating is assigned when S&P Global Ratings believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. S&P Global assigns an 'SD' rating when it believes that the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. A selective default includes the completion of a distressed exchange offer whereby one or more financial obligations are either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.
'R' (regulatory intervention) indicates that an obligor is under regulatory supervision owing to its financial condition. This does not necessarily indicate a default event, but the regulator might have the power to favor one class of obligations over another or pay some obligations and not others. Preferred stock is not considered a financial obligation, and thus a missed preferred stock dividend is not normally equated with default.
We deem 'D', 'SD', and 'R' issuer ratings to be defaults for the purposes of this study. A default is assumed to take place on the earliest of: the date S&P Global Ratings revised the rating(s) to 'D', 'SD', or 'R'; the date a debt payment was missed; the date a distressed exchange offer was announced; or the date the debtor filed for or was forced into bankruptcy.
When an issuer defaults, it is not uncommon for S&P Global Ratings to subsequently withdraw the 'D' rating. For the purposes of this study, if an issuer defaults, we end its rating history at 'D'. If any defaulting entity reemerges from bankruptcy--or otherwise restructures its defaulted debt instruments, thereby reestablishing regular, timely payment of all its debts--we reenter this issuer into the database as a new entity. Its rating history after the default event is included in all calculations, separate from its experience leading up to its earlier default.
Many practitioners use statistics from this default study to estimate "probability of default" and "probability of rating transition." S&P Global Ratings' credit ratings do not imply a specific probability of default.
Regional definitions
Within this study, tables and charts are often presented using specific geographic regions. Some countries or markets can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country or market. The regions covered in this study are:
Emerging markets:
Angola, Argentina, Armenia, Aruba, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belize, Bhutan, Bolivia, Bosnia-Herzegovina, Brazil, Brunei Darussalam, Cambodia, Chile, China, Colombia, Costa Rica, Curacao, Dominican Republic, Ecuador, Egypt, El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Honduras, Hong Kong (SAR), India, Indonesia, Israel, Jamaica, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Lebanon, Liberia, Macao (SAR), Malaysia, Marshall Islands, Mauritius, Mexico, Mongolia, Morocco, Namibia, Netherlands Antilles, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Qatar, Russian Federation, Saudi Arabia, Singapore, South Africa, Sri Lanka, Syrian Arab Republic, the market of Taiwan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, and Yemen.
Calculations
Static pools. S&P Global Ratings Research conducts its default studies on the basis of groupings called static pools. For the purposes of this study, we form static pools by grouping issuers by rating category at the beginning of each year covered by the study. Each static pool is followed from that point forward. All companies included in the study are assigned to one or more static pools. When an issuer defaults, we assign that default back to all of the static pools to which the issuer belonged.
We use static pools to avoid certain pitfalls in estimating default rates. This is to ensure that default rates account for rating migration and to allow for default rates to be calculated across multiperiod time horizons. Some methods for calculating default and rating transition rates might charge defaults against only the initial rating on the issuer, ignoring more recent rating changes that supply more current information. Other methods calculate default rates using only the most recent year's default and rating data, which might yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.
Membership in static pools remains constant. Each static pool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by every new update and because the criteria for inclusion or exclusion of companies in the default study are subject to minor revisions as time goes by, it is not possible to compare static pools across different studies. Therefore, every new update revises results back to the starting date so as to avoid continuity problems.
Issuers that have had ratings withdrawn--that is, revised to not rated ("NR")--are surveilled with the aim of capturing a potential default. Because static pools only include issuers with active ratings as of their beginning date, we exclude companies with withdrawn ratings, as well as those that have defaulted, from subsequent static pools. If the rating on an entity is withdrawn after the start date of a particular static pool and the entity subsequently defaults, we will include it in that static pool as a default and categorize it in the rating category of which it was a member at that time.
For instance, the 2001 static pool consists of all companies rated as of 12:01 a.m. on Jan. 1, 2001. Companies first rated in 2001 and surviving members of the 2001 static pool form the 2002 static pool. All rating changes that took place are reflected in the newly formed 2002 static pool through these issuer ratings as of 12:01 a.m. on Jan. 1, 2002.
Consider the following example: An issuer is originally rated 'BB' in mid-2000, and S&P Global Ratings downgrades the company to 'B' in 2002. This is followed by a rating withdrawal in 2003 and a default in 2004. We would include this hypothetical company in the 2001 and 2002 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Likewise, we would include it in the 2003 pool with the 'B' rating. It would not be part of the 2004 pool because it was not rated as of the first day of that year, and we would not include it in any pool after the last day of 2004 because S&P Global Ratings had withdrawn its rating on the company by then. Yet each of the three pools in which this company was included (2001-2003) would record its 2004 default at the appropriate time horizon.
Default rates. We calculated annual default rates for each static pool, first in units and later as percentages with respect to the number of issuers in each rating category. We combined these percentages to obtain cumulative default rates for the 40 years (globally) the study covers (28 years in Asia).
Issuer-weighted default rates. 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. 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.
Average cumulative default rates. The cumulative default rates in this study average the experience of all static pools by first calculating marginal default rates for each possible time horizon and for each static pool, weight-averaging the marginal default rates conditional on survival (survivors being nondefaulters), and accumulating the average conditional marginal default rates. We calculated conditional default rates by dividing the number of issuers in a static pool that default at a specific time horizon by the number of issuers that survived (did not default) to that point in time. Weights are based on the number of issuers in each static pool. Cumulative default rates are one minus the product of the proportion of survivors (nondefaulters).
Transition analysis. Transition rates compare issuer ratings at the beginning of a period with ratings at the end of the period. 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. An issuer that remained rated for more than one year was counted as many times as the number of years it was rated.
For instance, an issuer continually rated from the middle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transition matrices from 1985-1991. If the rating on the issuer was withdrawn in the middle of 1991, it would be included in the column representing transitions to "NR" in the 1991 transition matrix. Similarly, if it defaulted in the middle of 1991, it would be included in the column representing transitions to 'D' in the 1991 one-year transition matrix.
All 1981 static pool members still rated on Jan. 1, 2020, had 40 one-year transitions, while companies first rated on Jan. 1, 2019, had only one. Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. For each rating listed in the matrix's leftmost column, there are nine ratios listed in the rows, corresponding to the ratings from 'AAA' to 'D', plus an entry for "NR."
The only ratings considered in these calculations are those on issuers at the beginning of each static pool and those at the end. All rating changes that occur in between are ignored. For example, if an entity was rated 'A' on Jan. 1, 2020, and the rating was lowered to 'BBB' in the middle of the year and later raised to 'A' (with no other subsequent rating changes), this entity would be included only in the percentage of issuers that began the year as 'A' and ended the year as 'A'. This also applies to transition matrices that span longer time horizons. If an issuer defaults or the rating is withdrawn in the middle of the year, then the issuer would be considered rated 'D' or not rated on Dec. 31.
Multiyear transitions. Multiyear transitions were also calculated for periods of two to five years. In this case, we compared the rating at the beginning of the multiyear period with the rating at the end. For example, three-year transition matrices were the result of comparing ratings at the beginning of the years 1993-2018 with the ratings at the end of the years 1995-2020. Otherwise, our approach was identical to that used for single-year transitions.
We calculated average transition matrices on the basis of the multiyear matrices just described. These average matrices are a true summary, the ratios of which represent the historical incidence of the ratings listed in the first column changing to the ones listed in the top row over the course of the multiyear period. Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.
Rating modifiers. We use rating modifiers (plus and minus signs) to calculate upgrade and downgrade percentages, as well as the magnitude of rating changes, throughout this study. However, some transition tables may use full rating categories for practical reasons. In other words, the use of a rating category suggests that transitions to, for example, 'AA-' from 'AA' or to 'BBB-' from 'BBB+' are not considered to be rating transitions because the rating remained within the rating category.
Standard deviations. Many of the tables and charts in this study display averages of default rates, transition rates, and Gini ratios. Often these are issuer-weighted averages. Prior studies have shown that fluctuations within default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. As a supplement to many of the averages and time series presented in this study, standard deviations are also shown to provide a gauge of the dispersion of data behind these averages.
For the transition matrices, the standard deviation for each cell in a given matrix is a weighted standard deviation, calculated using the data from each of the underlying cohort years that contribute to the averages, weighted by that cohort year's issuer base for each rating level. For example, in the average one-year transition matrix, each cell's weighted standard deviation is calculated from the series of that particular cell in each of the 28 cohorts beginning with the 1993 cohort and ending with the 2020 cohort. The squared difference between each cohort's transition rate and the weighted average--which is the data point in each cell--is multiplied by each cohort's weight. These weights are based on the contribution of each cohort's rating level to the 28-year total issuer base for each rating level. We then divide this by the ratio of the total number of nonzero weights minus one and the total number of nonzero weights.
The standard deviations of Gini ratios are derived from the time series for all of their constituent annual cohorts. As an example, the standard deviation applied to the seven-year weighted average global Gini ratio was calculated from the time series of all available seven-year Gini ratios by cohort. In this case, these are the seven-year Gini ratios beginning with the 1993 cohort through the 2014 seven-year cohort. We calculated standard deviations for Gini ratios in this study as the standard deviations of a sample, not those of a population.
Time sample. This update limits the reporting of default rates to the 10-year time horizon. However, the Asia data were gathered for 28 years, and all calculations are based on the rating experience of that period. In addition, average default statistics become less reliable at longer time horizons as the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.
Additional Tables
Table 19
Static Pool Cumulative Corporate Default Rates Among All Asia Ratings (1993-2020) (%) | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Time horizon (years)-- | ||||||||||||||||||||||||
Year | Issuers (as of Jan. 1) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |||||||||||||
1993 | 59 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.7 | 1.7 | 1.7 | 1.7 | |||||||||||||
1994 | 69 | 0.0 | 0.0 | 0.0 | 0.0 | 1.4 | 4.3 | 4.3 | 5.8 | 5.8 | 5.8 | |||||||||||||
1995 | 84 | 0.0 | 0.0 | 0.0 | 1.2 | 6.0 | 6.0 | 7.1 | 7.1 | 7.1 | 7.1 | |||||||||||||
1996 | 96 | 0.0 | 0.0 | 1.0 | 5.2 | 5.2 | 6.3 | 6.3 | 6.3 | 6.3 | 6.3 | |||||||||||||
1997 | 132 | 0.8 | 3.0 | 6.1 | 6.8 | 7.6 | 7.6 | 8.3 | 8.3 | 8.3 | 8.3 | |||||||||||||
1998 | 185 | 4.9 | 7.6 | 8.1 | 10.3 | 11.4 | 11.9 | 11.9 | 11.9 | 11.9 | 11.9 | |||||||||||||
1999 | 196 | 2.6 | 4.6 | 6.6 | 7.1 | 7.7 | 7.7 | 7.7 | 7.7 | 7.7 | 7.7 | |||||||||||||
2000 | 233 | 1.3 | 3.0 | 3.0 | 3.4 | 3.4 | 3.4 | 3.4 | 3.9 | 3.9 | 4.3 | |||||||||||||
2001 | 243 | 2.1 | 2.1 | 2.5 | 2.5 | 2.5 | 2.5 | 2.9 | 2.9 | 3.3 | 3.3 | |||||||||||||
2002 | 265 | 0.0 | 0.8 | 0.8 | 0.8 | 0.8 | 1.1 | 1.1 | 1.5 | 1.5 | 1.5 | |||||||||||||
2003 | 334 | 0.6 | 0.6 | 0.6 | 0.6 | 0.9 | 1.2 | 1.8 | 1.8 | 1.8 | 1.8 | |||||||||||||
2004 | 534 | 0.4 | 0.4 | 0.4 | 0.6 | 0.6 | 1.3 | 1.5 | 1.5 | 1.5 | 1.7 | |||||||||||||
2005 | 624 | 0.2 | 0.2 | 0.3 | 0.5 | 1.4 | 1.6 | 1.6 | 1.9 | 2.1 | 2.1 | |||||||||||||
2006 | 650 | 0.2 | 0.3 | 0.5 | 1.8 | 2.0 | 2.0 | 2.3 | 2.5 | 2.5 | 2.6 | |||||||||||||
2007 | 648 | 0.2 | 0.5 | 2.0 | 2.3 | 2.3 | 2.5 | 2.6 | 2.6 | 2.9 | 2.9 | |||||||||||||
2008 | 574 | 1.0 | 3.0 | 3.3 | 3.3 | 3.8 | 3.8 | 3.8 | 4.2 | 4.2 | 4.2 | |||||||||||||
2009 | 570 | 2.1 | 2.5 | 2.5 | 3.0 | 3.0 | 3.0 | 3.3 | 3.5 | 3.7 | 3.7 | |||||||||||||
2010 | 487 | 0.6 | 0.6 | 1.0 | 1.0 | 1.2 | 1.6 | 1.6 | 1.8 | 1.8 | 1.8 | |||||||||||||
2011 | 491 | 0.0 | 0.6 | 0.8 | 1.0 | 1.6 | 1.6 | 1.8 | 1.8 | 1.8 | 1.8 | |||||||||||||
2012 | 507 | 0.4 | 0.6 | 0.8 | 1.6 | 1.6 | 2.0 | 2.0 | 2.0 | 2.0 | ||||||||||||||
2013 | 521 | 0.4 | 0.6 | 1.3 | 1.3 | 1.7 | 1.7 | 1.7 | 1.9 | |||||||||||||||
2014 | 565 | 0.2 | 0.9 | 1.1 | 1.4 | 1.6 | 1.6 | 1.9 | ||||||||||||||||
2015 | 622 | 0.6 | 1.0 | 1.3 | 1.4 | 1.6 | 2.1 | |||||||||||||||||
2016 | 682 | 0.3 | 0.6 | 0.7 | 0.7 | 1.2 | ||||||||||||||||||
2017 | 761 | 0.3 | 0.4 | 0.5 | 0.9 | |||||||||||||||||||
2018 | 828 | 0.1 | 0.6 | 1.4 | ||||||||||||||||||||
2019 | 904 | 0.7 | 1.5 | |||||||||||||||||||||
2020 | 886 | 1.0 | ||||||||||||||||||||||
Summary statistics | ||||||||||||||||||||||||
Marginal average | 0.6 | 0.5 | 0.4 | 0.4 | 0.3 | 0.2 | 0.2 | 0.2 | 0.1 | 0.0 | ||||||||||||||
Cumulative average | 0.6 | 1.1 | 1.5 | 1.9 | 2.3 | 2.5 | 2.7 | 2.8 | 2.9 | 2.9 | ||||||||||||||
Standard deviation | 1.1 | 1.7 | 2.1 | 2.5 | 2.7 | 2.8 | 2.8 | 2.9 | 2.9 | 2.9 | ||||||||||||||
Median | 0.4 | 0.6 | 1.0 | 1.4 | 1.7 | 2.1 | 2.5 | 2.6 | 3.1 | 3.3 | ||||||||||||||
Min | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.1 | 1.5 | 1.5 | 1.5 | ||||||||||||||
Max | 4.9 | 7.6 | 8.1 | 10.3 | 11.4 | 11.9 | 11.9 | 11.9 | 11.9 | 11.9 | ||||||||||||||
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 20
Static Pool Cumulative Corporate Default Rates Among Investment-Grade Asia Ratings (1993-2020) (%) | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Time horizon (years)-- | ||||||||||||||||||||||||
Year | Issuers (as of Jan. 1) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |||||||||||||
1993 | 59 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.7 | 1.7 | 1.7 | 1.7 | |||||||||||||
1994 | 66 | 0.0 | 0.0 | 0.0 | 0.0 | 1.5 | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | |||||||||||||
1995 | 77 | 0.0 | 0.0 | 0.0 | 1.3 | 2.6 | 2.6 | 2.6 | 2.6 | 2.6 | 2.6 | |||||||||||||
1996 | 89 | 0.0 | 0.0 | 1.1 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | |||||||||||||
1997 | 111 | 0.9 | 1.8 | 2.7 | 2.7 | 2.7 | 2.7 | 2.7 | 2.7 | 2.7 | 2.7 | |||||||||||||
1998 | 121 | 1.7 | 1.7 | 1.7 | 1.7 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | |||||||||||||
1999 | 112 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||
2000 | 132 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.8 | |||||||||||||
2001 | 143 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.7 | 0.7 | |||||||||||||
2002 | 168 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.6 | 0.6 | 0.6 | |||||||||||||
2003 | 198 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.5 | 0.5 | 0.5 | 0.5 | |||||||||||||
2004 | 349 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.6 | 0.6 | 0.6 | 0.6 | 0.6 | |||||||||||||
2005 | 427 | 0.0 | 0.0 | 0.0 | 0.0 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | |||||||||||||
2006 | 460 | 0.0 | 0.0 | 0.0 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 0.7 | |||||||||||||
2007 | 481 | 0.0 | 0.0 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 0.4 | 0.6 | 0.6 | |||||||||||||
2008 | 424 | 0.0 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.7 | 0.7 | 0.7 | |||||||||||||
2009 | 441 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.7 | 0.7 | 0.7 | 0.7 | |||||||||||||
2010 | 388 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | |||||||||||||
2011 | 396 | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | |||||||||||||
2012 | 397 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | ||||||||||||||
2013 | 410 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||
2014 | 440 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||
2015 | 486 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||
2016 | 544 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||
2017 | 592 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||||
2018 | 624 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||||
2019 | 670 | 0.0 | 0.0 | |||||||||||||||||||||
2020 | 681 | 0.0 | ||||||||||||||||||||||
Summary statistics | ||||||||||||||||||||||||
Marginal average | 0.1 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | ||||||||||||||
Cumulative average | 0.1 | 0.1 | 0.1 | 0.2 | 0.3 | 0.4 | 0.4 | 0.4 | 0.5 | 0.5 | ||||||||||||||
Standard deviation | 0.4 | 0.5 | 0.6 | 0.8 | 0.9 | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 | ||||||||||||||
Median | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.3 | 0.5 | 0.5 | 0.6 | 0.7 | ||||||||||||||
Min | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||
Max | 1.7 | 1.8 | 2.7 | 2.7 | 2.7 | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | ||||||||||||||
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 21
Static Pool Cumulative Corporate Default Rates Among Speculative-Grade Asia Ratings (1993-2020) (%) | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Time horizon (years)-- | ||||||||||||||||||||||||
Year | Issuers (as of Jan. 1) | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |||||||||||||
1993 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||
1994 | 3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 33.3 | 33.3 | 66.7 | 66.7 | 66.7 | |||||||||||||
1995 | 7 | 0.0 | 0.0 | 0.0 | 0.0 | 42.9 | 42.9 | 57.1 | 57.1 | 57.1 | 57.1 | |||||||||||||
1996 | 7 | 0.0 | 0.0 | 0.0 | 42.9 | 42.9 | 57.1 | 57.1 | 57.1 | 57.1 | 57.1 | |||||||||||||
1997 | 21 | 0.0 | 9.5 | 23.8 | 28.6 | 33.3 | 33.3 | 38.1 | 38.1 | 38.1 | 38.1 | |||||||||||||
1998 | 64 | 10.9 | 18.8 | 20.3 | 26.6 | 28.1 | 29.7 | 29.7 | 29.7 | 29.7 | 29.7 | |||||||||||||
1999 | 84 | 6.0 | 10.7 | 15.5 | 16.7 | 17.9 | 17.9 | 17.9 | 17.9 | 17.9 | 17.9 | |||||||||||||
2000 | 101 | 3.0 | 6.9 | 6.9 | 7.9 | 7.9 | 7.9 | 7.9 | 8.9 | 8.9 | 8.9 | |||||||||||||
2001 | 100 | 5.0 | 5.0 | 6.0 | 6.0 | 6.0 | 6.0 | 7.0 | 7.0 | 7.0 | 7.0 | |||||||||||||
2002 | 97 | 0.0 | 2.1 | 2.1 | 2.1 | 2.1 | 3.1 | 3.1 | 3.1 | 3.1 | 3.1 | |||||||||||||
2003 | 136 | 1.5 | 1.5 | 1.5 | 1.5 | 2.2 | 2.9 | 3.7 | 3.7 | 3.7 | 3.7 | |||||||||||||
2004 | 185 | 1.1 | 1.1 | 1.1 | 1.6 | 1.6 | 2.7 | 3.2 | 3.2 | 3.2 | 3.8 | |||||||||||||
2005 | 197 | 0.5 | 0.5 | 1.0 | 1.5 | 3.6 | 4.1 | 4.1 | 5.1 | 5.6 | 5.6 | |||||||||||||
2006 | 190 | 0.5 | 1.1 | 1.6 | 5.3 | 5.8 | 5.8 | 6.8 | 7.4 | 7.4 | 7.4 | |||||||||||||
2007 | 167 | 0.6 | 1.8 | 6.6 | 7.8 | 7.8 | 8.4 | 9.0 | 9.0 | 9.6 | 9.6 | |||||||||||||
2008 | 150 | 4.0 | 10.0 | 11.3 | 11.3 | 13.3 | 13.3 | 13.3 | 14.0 | 14.0 | 14.0 | |||||||||||||
2009 | 129 | 7.8 | 9.3 | 9.3 | 11.6 | 11.6 | 11.6 | 12.4 | 13.2 | 14.0 | 14.0 | |||||||||||||
2010 | 99 | 3.0 | 3.0 | 5.1 | 5.1 | 6.1 | 7.1 | 7.1 | 8.1 | 8.1 | 8.1 | |||||||||||||
2011 | 95 | 0.0 | 3.2 | 4.2 | 5.3 | 7.4 | 7.4 | 8.4 | 8.4 | 8.4 | 8.4 | |||||||||||||
2012 | 110 | 1.8 | 2.7 | 3.6 | 6.4 | 6.4 | 8.2 | 8.2 | 8.2 | 8.2 | ||||||||||||||
2013 | 111 | 1.8 | 2.7 | 6.3 | 6.3 | 8.1 | 8.1 | 8.1 | 9.0 | |||||||||||||||
2014 | 125 | 0.8 | 4.0 | 4.8 | 6.4 | 7.2 | 7.2 | 8.8 | ||||||||||||||||
2015 | 136 | 2.9 | 4.4 | 5.9 | 6.6 | 7.4 | 9.6 | |||||||||||||||||
2016 | 138 | 1.4 | 2.9 | 3.6 | 3.6 | 5.8 | ||||||||||||||||||
2017 | 169 | 1.2 | 1.8 | 2.4 | 4.1 | |||||||||||||||||||
2018 | 204 | 0.5 | 2.5 | 5.9 | ||||||||||||||||||||
2019 | 234 | 2.6 | 6.0 | |||||||||||||||||||||
2020 | 205 | 4.4 | ||||||||||||||||||||||
Summary statistics | ||||||||||||||||||||||||
Marginal average | 2.3 | 1.9 | 1.5 | 1.4 | 1.1 | 0.7 | 0.6 | 0.5 | 0.2 | 0.1 | ||||||||||||||
Cumulative average | 2.3 | 4.2 | 5.6 | 6.9 | 7.9 | 8.6 | 9.1 | 9.6 | 9.7 | 9.8 | ||||||||||||||
Standard deviation | 2.7 | 4.4 | 6.1 | 10.3 | 12.6 | 14.8 | 16.7 | 20.0 | 20.3 | 20.7 | ||||||||||||||
Median | 1.4 | 2.8 | 4.8 | 6.2 | 7.4 | 8.1 | 8.4 | 8.9 | 8.9 | 9.2 | ||||||||||||||
Min | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 2.7 | 3.1 | 3.1 | 3.1 | 3.1 | ||||||||||||||
Max | 10.9 | 18.8 | 23.8 | 42.9 | 42.9 | 57.1 | 57.1 | 66.7 | 66.7 | 66.7 | ||||||||||||||
N/A--Not applicable. Source: S&P Global Ratings Research; S&P Global Market Intelligence's CreditPro®. |
Table 22
Average Multi-Year (Two-Year) Asia Corporate Transition Matrices (1993-2020) (%) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
From/to | AAA | AA | A | BBB | BB | B | CCC/C | D | NR | |||||||||||
AAA | 70.59 | 26.14 | 1.96 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.31 | |||||||||||
(26.49) | (25.45) | (5.01) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (4.20) | ||||||||||||
AA | 0.85 | 79.22 | 13.66 | 0.00 | 0.00 | 0.17 | 0.00 | 0.00 | 6.11 | |||||||||||
(2.62) | (8.93) | (8.45) | (0.00) | (0.00) | (0.55) | (0.00) | (0.00) | (6.66) | ||||||||||||
A | 0.00 | 2.32 | 83.51 | 5.11 | 0.25 | 0.20 | 0.00 | 0.00 | 8.62 | |||||||||||
(0.00) | (1.73) | (8.92) | (6.76) | (1.81) | (0.88) | (0.00) | (0.00) | (6.66) | ||||||||||||
BBB | 0.00 | 0.00 | 8.88 | 72.86 | 3.56 | 0.35 | 0.12 | 0.23 | 13.99 | |||||||||||
(0.00) | (0.00) | (7.68) | (12.69) | (5.02) | (1.60) | (0.73) | (0.91) | (9.76) | ||||||||||||
BB | 0.00 | 0.00 | 0.06 | 10.56 | 54.79 | 5.65 | 1.08 | 0.91 | 26.94 | |||||||||||
(0.00) | (0.00) | (0.28) | (7.18) | (10.58) | (3.71) | (3.64) | (2.00) | (10.00) | ||||||||||||
B | 0.00 | 0.00 | 0.00 | 0.42 | 9.69 | 44.78 | 3.09 | 6.52 | 35.51 | |||||||||||
(0.00) | (0.00) | (0.00) | (1.08) | (8.55) | (10.50) | (3.04) | (6.73) | (9.48) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 2.73 | 18.18 | 17.27 | 26.36 | 35.45 | |||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (5.50) | (19.76) | (16.04) | (21.99) | (29.54) | ||||||||||||
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 23
Average Multi-Year (Three-Year) Asia Corporate Transition Matrices (1993-2020) (%) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
From/to | AAA | AA | A | BBB | BB | B | CCC/C | D | NR | |||||||||||
AAA | 60.26 | 35.10 | 3.31 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1.32 | |||||||||||
(27.47) | (25.92) | (5.91) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (3.65) | ||||||||||||
AA | 1.25 | 71.06 | 18.34 | 0.09 | 0.00 | 0.27 | 0.00 | 0.00 | 8.99 | |||||||||||
(2.97) | (9.19) | (9.34) | (0.42) | (0.00) | (0.65) | (0.00) | (0.00) | (8.60) | ||||||||||||
A | 0.00 | 3.22 | 76.39 | 6.68 | 0.38 | 0.30 | 0.00 | 0.00 | 13.04 | |||||||||||
(0.00) | (1.91) | (11.02) | (8.38) | (2.05) | (1.34) | (0.00) | (0.00) | (9.30) | ||||||||||||
BBB | 0.00 | 0.00 | 12.22 | 62.21 | 4.56 | 0.41 | 0.19 | 0.38 | 20.01 | |||||||||||
(0.00) | (0.00) | (9.80) | (15.89) | (5.19) | (1.33) | (0.80) | (1.30) | (12.54) | ||||||||||||
BB | 0.00 | 0.00 | 0.37 | 13.66 | 41.46 | 5.94 | 1.16 | 1.78 | 35.64 | |||||||||||
(0.00) | (0.00) | (0.77) | (7.83) | (10.73) | (3.47) | (4.39) | (2.98) | (10.68) | ||||||||||||
B | 0.00 | 0.00 | 0.00 | 1.10 | 11.46 | 32.81 | 2.47 | 8.43 | 43.72 | |||||||||||
(0.00) | (0.00) | (0.00) | (1.99) | (8.11) | (11.24) | (2.48) | (7.05) | (10.04) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 4.95 | 19.80 | 4.95 | 28.71 | 41.58 | |||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (7.53) | (16.39) | (8.08) | (23.90) | (28.64) | ||||||||||||
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 24
Average Multi-Year (Five-Year) Asia Corporate Transition Matrices (1993-2020) (%) | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
From/to | AAA | AA | A | BBB | BB | B | CCC/C | D | NR | |||||||||||
AAA | 42.86 | 47.14 | 6.43 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3.57 | |||||||||||
(26.85) | (24.66) | (8.49) | (0.00) | (0.00) | (0.00) | (0.00) | (0.00) | (8.43) | ||||||||||||
AA | 2.15 | 56.75 | 25.44 | 1.47 | 0.10 | 0.39 | 0.00 | 0.00 | 13.70 | |||||||||||
(3.50) | (7.57) | (11.94) | (2.74) | (0.43) | (0.73) | (0.00) | (0.00) | (11.31) | ||||||||||||
A | 0.00 | 5.09 | 65.94 | 8.10 | 0.70 | 0.22 | 0.00 | 0.10 | 19.85 | |||||||||||
(0.00) | (2.34) | (13.32) | (10.76) | (2.43) | (0.82) | (0.00) | (0.34) | (11.15) | ||||||||||||
BBB | 0.00 | 0.04 | 16.29 | 46.75 | 4.82 | 0.53 | 0.11 | 0.76 | 30.69 | |||||||||||
(0.00) | (0.26) | (10.51) | (17.76) | (5.23) | (1.95) | (0.43) | (2.07) | (15.37) | ||||||||||||
BB | 0.00 | 0.00 | 1.62 | 15.24 | 24.58 | 5.34 | 0.84 | 4.14 | 48.24 | |||||||||||
(0.00) | (0.00) | (2.60) | (7.58) | (10.19) | (4.07) | (5.24) | (5.32) | (13.71) | ||||||||||||
B | 0.00 | 0.00 | 0.11 | 2.14 | 9.94 | 19.02 | 1.39 | 11.00 | 56.41 | |||||||||||
(0.00) | (0.00) | (0.60) | (3.60) | (6.66) | (10.67) | (2.22) | (8.81) | (10.44) | ||||||||||||
CCC/C | 0.00 | 0.00 | 0.00 | 0.00 | 6.52 | 15.22 | 0.00 | 30.43 | 47.83 | |||||||||||
(0.00) | (0.00) | (0.00) | (0.00) | (7.07) | (10.48) | (0.00) | (26.78) | (24.17) | ||||||||||||
Numbers in parenthese are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 25
Initial-To-Last Transition Rates By Rating Modifier For Nonfinancials (1981-2020) (%) | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Rating-- | ||||||||||||||||||||||||||||||||||||||||||
From/to | Issuers | AAA | AA+ | AA | AA- | A+ | A | A- | BBB+ | BBB | BBB- | BB+ | BB | BB- | B+ | B | B- | CCC | D | NR | ||||||||||||||||||||||
AAA | 12.0 | 16.7 | 8.3 | 8.3 | 0.0 | 8.3 | 25.0 | 8.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 25.0 | ||||||||||||||||||||||
AA+ | 8.0 | 0.0 | 12.5 | 12.5 | 0.0 | 25.0 | 25.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 25.0 | ||||||||||||||||||||||
AA | 14.0 | 0.0 | 0.0 | 14.3 | 21.4 | 7.1 | 7.1 | 7.1 | 7.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 35.7 | ||||||||||||||||||||||
AA- | 34.0 | 0.0 | 2.9 | 0.0 | 14.7 | 17.6 | 5.9 | 5.9 | 2.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 50.0 | ||||||||||||||||||||||
A+ | 40.0 | 0.0 | 5.0 | 5.0 | 2.5 | 25.0 | 12.5 | 7.5 | 7.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 35.0 | ||||||||||||||||||||||
A | 73.0 | 0.0 | 0.0 | 4.1 | 0.0 | 5.5 | 32.9 | 4.1 | 1.4 | 0.0 | 1.4 | 0.0 | 1.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.4 | 47.9 | ||||||||||||||||||||||
A- | 92.0 | 0.0 | 0.0 | 3.3 | 1.1 | 0.0 | 7.6 | 32.6 | 4.3 | 2.2 | 1.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 47.8 | ||||||||||||||||||||||
BBB+ | 86.0 | 0.0 | 0.0 | 2.3 | 0.0 | 1.2 | 1.2 | 5.8 | 29.1 | 11.6 | 2.3 | 1.2 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 45.3 | ||||||||||||||||||||||
BBB | 114.0 | 0.0 | 0.0 | 0.9 | 0.0 | 0.9 | 0.0 | 3.5 | 7.9 | 27.2 | 7.9 | 1.8 | 1.8 | 0.0 | 0.9 | 0.0 | 0.0 | 0.0 | 0.0 | 47.4 | ||||||||||||||||||||||
BBB- | 167.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.6 | 1.2 | 3.6 | 6.0 | 26.3 | 4.2 | 0.6 | 0.0 | 0.0 | 0.0 | 0.6 | 0.0 | 2.4 | 54.5 | ||||||||||||||||||||||
BB+ | 98.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.0 | 0.0 | 4.1 | 1.0 | 5.1 | 20.4 | 5.1 | 2.0 | 1.0 | 1.0 | 0.0 | 0.0 | 3.1 | 56.1 | ||||||||||||||||||||||
BB | 112.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.8 | 0.0 | 2.7 | 0.9 | 1.8 | 11.6 | 3.6 | 1.8 | 0.9 | 0.9 | 0.0 | 8.0 | 66.1 | ||||||||||||||||||||||
BB- | 123.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.8 | 0.0 | 0.8 | 2.4 | 0.8 | 6.5 | 4.1 | 0.8 | 0.8 | 0.8 | 11.4 | 70.7 | ||||||||||||||||||||||
B+ | 153.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.7 | 0.7 | 0.0 | 0.7 | 0.0 | 9.2 | 4.6 | 2.0 | 1.3 | 17.0 | 64.1 | ||||||||||||||||||||||
B | 124.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 2.4 | 7.3 | 3.2 | 0.8 | 14.5 | 71.8 | ||||||||||||||||||||||
B- | 63.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.6 | 1.6 | 0.0 | 0.0 | 9.5 | 3.2 | 12.7 | 71.4 | ||||||||||||||||||||||
CCC/C | 29.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.4 | 0.0 | 0.0 | 0.0 | 3.4 | 0.0 | 3.4 | 0.0 | 3.4 | 0.0 | 0.0 | 17.2 | 27.6 | 41.4 | ||||||||||||||||||||||
NR--Not rated. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Table 26
Initial-to-Last Transition Rates By Rating Modifier For Financials (1981-2020) (%) | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
--Rating-- | ||||||||||||||||||||||||||||||||||||||||||
From/to | Issuers | AAA | AA+ | AA | AA- | A+ | A | A- | BBB+ | BBB | BBB- | BB+ | BB | BB- | B+ | B | B- | CCC | D | NR | ||||||||||||||||||||||
AAA | 16.0 | 0.0 | 0.0 | 0.0 | 0.0 | 12.5 | 12.5 | 6.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 68.8 | ||||||||||||||||||||||
AA+ | 3.0 | 0.0 | 0.0 | 0.0 | 0.0 | 33.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 66.7 | ||||||||||||||||||||||
AA | 14.0 | 0.0 | 0.0 | 7.1 | 7.1 | 7.1 | 7.1 | 0.0 | 7.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 64.3 | ||||||||||||||||||||||
AA- | 32.0 | 0.0 | 3.1 | 0.0 | 12.5 | 31.3 | 9.4 | 9.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.1 | 31.3 | ||||||||||||||||||||||
A+ | 47.0 | 0.0 | 0.0 | 0.0 | 6.4 | 23.4 | 27.7 | 6.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 36.2 | ||||||||||||||||||||||
A | 78.0 | 0.0 | 0.0 | 0.0 | 5.1 | 17.9 | 43.6 | 3.8 | 1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 28.2 | ||||||||||||||||||||||
A- | 68.0 | 0.0 | 0.0 | 0.0 | 0.0 | 7.4 | 13.2 | 45.6 | 8.8 | 1.5 | 0.0 | 0.0 | 0.0 | 0.0 | 1.5 | 0.0 | 0.0 | 0.0 | 1.5 | 20.6 | ||||||||||||||||||||||
BBB+ | 79.0 | 0.0 | 0.0 | 0.0 | 1.3 | 1.3 | 7.6 | 17.7 | 34.2 | 3.8 | 1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 32.9 | ||||||||||||||||||||||
BBB | 86.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.2 | 2.3 | 10.5 | 12.8 | 32.6 | 3.5 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 4.7 | 32.6 | ||||||||||||||||||||||
BBB- | 79.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 1.3 | 5.1 | 8.9 | 13.9 | 22.8 | 3.8 | 1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 2.5 | 40.5 | ||||||||||||||||||||||
BB+ | 36.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 2.8 | 5.6 | 2.8 | 2.8 | 5.6 | 25.0 | 0.0 | 2.8 | 0.0 | 0.0 | 0.0 | 0.0 | 5.6 | 47.2 | ||||||||||||||||||||||
BB | 33.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.0 | 0.0 | 0.0 | 6.1 | 6.1 | 0.0 | 0.0 | 15.2 | 6.1 | 0.0 | 0.0 | 0.0 | 0.0 | 6.1 | 57.6 | ||||||||||||||||||||||
BB- | 24.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 4.2 | 0.0 | 0.0 | 4.2 | 0.0 | 0.0 | 4.2 | 8.3 | 4.2 | 0.0 | 0.0 | 4.2 | 70.8 | ||||||||||||||||||||||
B+ | 31.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.2 | 3.2 | 0.0 | 0.0 | 6.5 | 0.0 | 3.2 | 6.5 | 0.0 | 9.7 | 3.2 | 0.0 | 3.2 | 0.0 | 61.3 | ||||||||||||||||||||||
B | 37.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 5.4 | 5.4 | 0.0 | 0.0 | 0.0 | 2.7 | 2.7 | 2.7 | 0.0 | 2.7 | 5.4 | 73.0 | ||||||||||||||||||||||
B- | 10.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 10.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 90.0 | ||||||||||||||||||||||
CCC/C | 5.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 20.0 | 80.0 | ||||||||||||||||||||||
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Appendix II: Calculating Gini Coefficients
To measure ratings performance, or ratings accuracy, we plotted the cumulative share of issuers by rating against the cumulative share of defaulters in a Lorenz curve to visually render the accuracy of their rank ordering. The Lorenz curve was developed by Max O. Lorenz as a graphical representation of the proportionality of a distribution. To build the Lorenz curve, the observations are ordered from the low end of the ratings scale ('CCC'/ 'C') to the high end ('AAA').
If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal. Their Gini coefficient--which is a summary statistic of the Lorenz curve--would thus be zero. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the curve would capture all the area above the diagonal on the graph, and the Gini coefficient would be 1 (see chart 10).
The procedure for calculating Gini coefficients is shown in chart 10 and is accomplished by dividing area B by the total of area A plus area B. In other words, the Gini coefficient captures the extent to which actual ratings accuracy diverges from the random scenario and aspires to the ideal scenario.
Chart 10
Table 27
Issuer Credit Rating--Qinghai Provincial Investment Group Co. Ltd. | ||||
---|---|---|---|---|
Date | To | |||
26-Feb-2020 | NR/--/-- | |||
14-Jan-2020 | D/--/-- | |||
30-Aug-2019 | CCC-/Negative/-- | |||
25-Feb-2019 | CCC+/Watch Neg/-- | |||
06-Sep-2018 | B+/Stable/-- | |||
06-Sep-2018 | B+/Watch Neg/-- | |||
07-Feb-2017 | BB-/Watch Neg/-- | |||
07-Feb-2017 | BB-/Stable/-- | |||
NR--Not rated. |
Table 28
Issuer Credit Rating--Tunghsu Group Co. Ltd. | ||||
---|---|---|---|---|
Date | To | |||
29-Apr-2020 | NR/--/-- | |||
21-Feb-2020 | SD/N.M./-- | |||
19-Nov-2019 | CCC-/Watch Neg/-- | |||
18-Feb-2019 | B-/Negative/-- | |||
22-Oct-2018 | B/Stable/-- | |||
31-May-2017 | B+/Negative/-- | |||
31-May-2017 | B+/Stable/-- | |||
NR--Not rated. N.M.--Not meaningful. |
Table 29
Issuer Credit Rating--Geo Energy Resources Ltd. | ||||
---|---|---|---|---|
Date | To | |||
08-Dec-2020 | CCC/Stable/-- | |||
19-Mar-2020 | SD/N.M./-- | |||
05-Jul-2019 | B-/Negative/-- | |||
07-Jul-2017 | B/Stable/-- | |||
N.M.--Not meaningful. |
Table 30
Issuer Credit Rating--Yihua Enterprise (Group) Co. Ltd. | ||||
---|---|---|---|---|
Date | To | |||
11-May-2020 | NR/--/-- | |||
11-May-2020 | SD/N.M./-- | |||
26-Jul-2019 | CCC/Negative/-- | |||
17-Apr-2019 | B-/Negative/-- | |||
26-Jul-2018 | B/Negative/-- | |||
11-Sep-2017 | B/Stable/-- | |||
NR--Not rated. N.M.--Not meaningful. |
Table 31
Issuer Credit Rating--PT Modernland Realty Tbk. | ||||
---|---|---|---|---|
Date | To | |||
15-Oct-2020 | D/--/-- | |||
08-Jul-2020 | SD/N.M./-- | |||
02-Jul-2020 | CCC-/Watch Neg/-- | |||
19-Jun-2020 | CCC/Negative/-- | |||
07-Apr-2020 | B-/Watch Neg/-- | |||
21-Aug-2019 | B/Negative/-- | |||
28-Sep-2018 | B/Stable/-- | |||
13-Aug-2018 | B/Negative/-- | |||
28-Jul-2013 | B/Stable/-- | |||
N.M.--Not meaningful. |
Table 32
Issuer Credit Rating--Seadrill Partners LLC | |
---|---|
Date | To |
17-Jul-2020 | SD/--/-- |
08-Nov-2019 | CCC/Negative/-- |
27-Mar-2018 | CCC+/Stable/-- |
20-Oct-2016 | CCC+/Negative/-- |
30-Mar-2016 | B-/Watch Neg/-- |
10-Dec-2015 | B/Negative/-- |
20-Mar-2015 | BB-/Negative/-- |
09-Jun-2014 | BB-/Stable/-- |
Table 33
Issuer Credit Rating--PT Alam Sutera Realty Tbk. | |
---|---|
Date | To |
03-Nov-2020 | CCC/Negative/-- |
28-Oct-2020 | D/--/-- |
29-Sep-2020 | CC/Negative/-- |
13-Aug-2020 | CCC-/Negative/-- |
30-Apr-2020 | CCC+/Negative/-- |
24-Mar-2020 | B-/Watch Neg/-- |
10-Oct-2019 | B-/Negative/-- |
08-May-2019 | B/Stable/-- |
10-Jan-2019 | B/Watch Neg/-- |
24-Oct-2018 | B/Negative/-- |
03-Nov-2015 | B/Stable/-- |
07-Jan-2014 | B+/Stable/-- |
12-Mar-2012 | B/Stable/-- |
Related Research
- 2020 Annual Global Corporate Default And Rating Transition Study, April 7, 2021
- 2019 Annual Greater China Corporate Default And Rating Transition Study, Dec. 1, 2020
- Asia-Pacific Credit Markets Update-4Q 2020, Dec. 1, 2020
- 2019 Annual Asia Corporate Default And Rating Transition Study, Oct. 13, 2020
This report does not constitute a rating action.
Credit Markets Research: | Xu Han, New York + 1 (212) 438 1491; xu.han@spglobal.com |
Sudeep K Kesh, New York + 1 (212) 438 7982; sudeep.kesh@spglobal.com | |
Research Contributor: | Nivritti Mishra Richhariya, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai |
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