Greater China's speculative-grade default rate increased to 4.2% in 2020, from 3.1% in 2019. Globally, the 2020 speculative-grade default rate was 5.5%, up from 2.5% in 2019.

Of issuers rated by S&P Global Ratings based in Greater China, the speculative-grade population rose to 143 in 2020 from 89 in 2015. Conversely, the investment-grade population increased to 413 from 274 for the same time period.

Default counts in Greater China were generally in line with global trends from 2000-2019. But in 2020, the global default count almost doubled to 226, from 118 in 2019, when Greater China defaults decreased to seven in 2020, from a historical peak of nine defaults in 2019.

While the COVID-19 pandemic and knock-on effects on global economic growth became major dampers in 2020, observed defaults for issuers in Greater China and Asia overall remained lower than for issuers globally. However, defaults for Chinese onshore bonds are increasing in size. For more information, see "China Bond Defaults 2021: More Tolerance For Bigger Hits,"June 23, 2021.

For newly rated corporate issuers in Greater China, 53 came to market in 2020, compared with 66 the previous year. The tally of companies rated by S&P Global Ratings in Greater China (China, Hong Kong, Macau, and Taiwan) was 556 at year-end 2020, down by 2.3% from 569 issuers at year-end 2019.

In this study, S&P Global Ratings Research examines the ratings performance of more than 1,000 Greater China-based issuers rated by S&P Global Ratings. Entities included in this study have business operations in Greater China, regardless of the market they are incorporated in. In several instances, entities included in this study were incorporated in foreign tax havens like the Cayman Islands. While S&P Global Ratings rated issuers in Greater China prior to 2000, we limited the scope of analysis to issuers rated from 2000-2020. The statistics refer only to the corporate ratings universe, which includes financial and nonfinancial entities in Greater China. Our methodology and the definitions of the terms we use in this study are in Appendix I.

Our study of corporate defaults in Greater China identified a clear negative correspondence between ratings and defaults: The higher the issuer credit rating, the lower the observed default frequency.

The one-year average Gini ratio--a measure of the relative ability of ratings to differentiate risk--was 91% in Greater China. This signifies a very strong ability of ratings to differentiate relative credit risk across the ratings spectrum. The three-year Gini ratio for Greater China was 84.58%. By comparison, the global one-year Gini ratio was 82.8%, and the global three-year Gini ratio was 75.3% (see table 1). Gini ratios are measures of the rank-ordering power of ratings over a given time horizon. They show the ratio of actual rank-ordering performance to theoretically perfect rank ordering (for details on the Gini methodology, refer to Appendix III).

Table 1

Corporate Gini Coefficients By Region (%)
	--Time horizon--
Region	One-year	Three-year	Five-year	Seven-year
Global	82.84	75.31	71.53	69.15
U.S.	80.98	72.88	69.05	66.64
Europe	90.44	85.17	82.44	79.83
Asia	88.15	82.86	76.79	72.59
Greater China	91.00	84.58	76.75	72.86
Note: The Asian figures are for the period 1993-2020. Greater China figures are for the period 2000-2020. Global, U.S., and rest are for the period from 1981-2019. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Conversely, our study found that higher ratings correspond with stronger ratings stability in Greater China for both state-owned enterprises (SOEs) and non-SOEs. The Greater China SOE 2000-2020 one-year Gini coefficient was 99.3%, three-year Gini ratio was 97.3%, and five-year Gini was 98.7%. For the same period, the Greater China non-SOE one-year Gini ratio was 87.6%, three-year Gini ratio was 80.2%, and five-year Gini ratio was 71.0% (see table 2). Note that small sample sizes of the rated population in Greater China combined with issuer-specific factors that lead to defaults may yield stronger variation in Gini coefficients in the region compared with generalized trends globally.

Table 2

Corporate Gini Coefficients By Type (%)
	--Time horizon--
Type	One-year	Three-year	Five-year	Seven-year
Greater China non-SOE	87.60	80.18	71.01	67.51
Greater China SOE	99.32	97.30	98.66	97.93
Note: Greater China figures are for the period 2000-2020. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Greater China has a combination of a high proportion of investment-grade companies, which tend to default less than their lower-rated peers, and a strong Gini ratio, indicative of reliable rank- ordering efficacy of credit ratings. Issuers in the investment-grade categories are overall better equipped to weather deteriorating credit than those in the lower rating categories like 'B' and 'CCC'. These rating categories are where most downgrades and defaults would likely be concentrated if currently favorable market conditions deteriorated.

China Led Global Recovery In 2020 And Accelerates Its Vaccinations In 2021

As of the second quarter of 2021, the global macro outlook continues to improve. We raised our global growth forecast by 40 basis points to 5.9% in 2021, reflecting stronger performance nearly across the board in the first quarter along with faster reopenings. Our 2022-2024 outlook shows a stronger U.S., but lagging emerging markets (see "Global Economic Outlook Q3 2021: Picking Up Steam, Fueled By Vaccinations," June 30, 2021).

We edge China's growth up to 8.3% on accelerating vaccinations. While China suppressed the virus early and allowed for an almost complete domestic reopening, consumer confidence remains shaken. Saving has been persistently high and spending weak. A faster vaccine rollout may boost confidence, reduce saving, and help the economy rebalance. The recovery, until now, has been dependent on infrastructure investment, real estate, and exports, a combination that is not sustainable. As consumer spending picks up--we expect real spending growth to be more than 10% this year--policymakers can apply the brakes elsewhere while maintaining growth at or around potential (see “Asia-Pacific's Recovery Regains Its Footing," June 23, 2021).

The successful containment of the pandemic enables policymakers to shift their focus back on curbing debt growth. We expect China's scaling back of capital spending at the national level will result in a bigger burden for local governments. Given support is growing more selective, some weaker state-owned enterprises could fall between the cracks and defaults could come (see "Credit Conditions Asia-Pacific Q3 2021: One Region, Two Recoveries," June 29, 2021).

U.S. 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 owing to government efforts to rein in leverage post-COVID-19. (see "China's Corporate Debt Slowdown Is Timely As Rate Cycle Turns," April 13, 2021).

Rated Issuers In Greater China

Given the strong presence of SOEs in Greater China, there is an inherent relationship between the rating on the sovereign and many corporations based in Greater China. On June 25, 2021, S&P Global Ratings affirmed its unsolicited 'A+' long-term and 'A-1' short-term sovereign credit ratings on China. The outlook on the long-term ratings is stable. The stable outlook reflects our view that China will maintain above-average GDP growth over the next two to three years. This is despite headwinds from unpredictable pandemic developments and geopolitical risks. We also expect the country's fiscal performance to improve as policy support for the economy is cautiously dialed back and restrictions on off-budget borrowings of subnational government are maintained (see "China Ratings Affirmed At 'A+/A-1'; Outlook Stable," June 25, 2021).

At the end of 2020, the share of investment grade in Greater China rose to 74.3% in 2020, from 70.5% in 2019 (see chart 1), compared with 49.7% globally, 42.3% in the U.S., and 55.6% in Europe. This distinction is particularly important as ratings also correspond strongly to the cost of debt: The higher the rating, the lower the cost of debt.

In Greater China, the percentage of unchanged ratings was 81.4% in 2020 (versus 75.9% in 2019 and 77.9% in 2018). By comparison, the percentage of unchanged ratings globally was 69.2% in 2020, 75.6% in 2019, and 73.2% in 2018.

The new issuers in Greater China in 2020 were predominantly rated in the 'BBB' rating category, which is like the trend in 2019. In 2020, the pool of rated issuers for corporations in Greater China shrank by roughly 2.3%. The pool decreased by 2.7% in 2019, but increased by 15.4% in 2018 year over year.

For 2020, the median rating for Greater China was 'BBB' (higher than the global median rating of 'BB+' in 2020), with a median rating of 'BBB+' for financial issuers and 'BBB-' for nonfinancial issuers. By comparison, the U.S. median rating in 2020 was 'A-', with a financial median rating of 'A-' and nonfinancial median rating of 'BB-'. The global median ratings were 'BBB+' for financials and 'BB' for nonfinancials.

There Were Three Times As Many Downgrades As Upgrades In 2020

In 2020, there were almost three times as many downgrades (29) as upgrades (10) in Greater China (see chart 2), yielding a downgrade-to-upgrade ratio of 2.9 to 1. By comparison, the downgrade-to-upgrade ratio was 1.5 to 1 in 2019 and an average of 1.9 to 1 during 2000-2020. Financial institutions had a downgrade-to-upgrade ratio of 0.67 to 1 in 2020.

The number of rated issuers in Greater China grew rapidly--from 75 by end of 2000 to 556 by the end of 2020--particularly in the 'A' and 'BBB' categories.

All of S&P Global Ratings Research's default studies have found a clear correlation between ratings and defaults. Over every time horizon, lower ratings correspond to higher default rates (see chart 3). We found the same when examining the data by rating as well as by region. As the Gini ratios show, the ability of corporate ratings to serve as effective measures of relative risk remains intact over time, particularly in low-default years.

For all rated entities in Greater China, the default rate was 1.2% in 2020, higher than 1.0% in 2019 (see table 3). This is like the global trend--the global default rate for all rated corporate entities increased to 2.7% in 2020 (with a total of 226 defaults), from 1.3% (with a total of 118 defaults) in the prior year.

The 2020 speculative-grade corporate default rate for Greater China increased to 4.2% from 3.1% in 2019, but was lower than the speculative-grade default rate of 7.2% in 2015. Globally, the speculative-grade corporate default rate also increased, to 5.5% in 2020 from 2.5% in 2019. Similarly, the U.S. speculative-grade corporate default rate rose to 6.7% from 3.1% (see chart 5).

Table 3

Greater China Corporate Default Summary (One-Year Horizon)
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)
2000	1	0	0	0.00	0.00	0.00
2001	0	0	0	0.00	0.00	0.00
2002	1	0	0	0.00	0.00	0.00
2003	1	0	1	0.77	0.00	1.33
2004	0	0	0	0.00	0.00	0.00
2005	0	0	0	0.00	0.00	0.00
2006	1	0	1	0.64	0.00	1.49
2007	1	0	1	0.83	0.00	2.70
2008	3	0	3	2.21	0.00	7.32
2009	4	0	4	2.56	0.00	8.70
2010	1	0	1	0.68	0.00	2.78
2011	0	0	0	0.00	0.00	0.00
2012	2	0	1	0.51	0.00	1.47
2013	2	0	2	0.97	0.00	3.08
2014	2	0	1	0.41	0.00	1.37
2015	6	0	6	2.03	0.00	7.32
2016	1	0	0	0.00	0.00	0.00
2017	1	0	1	0.22	0.00	0.79
2018	3	0	2	0.39	0.00	1.28
2019	9	0	6	1.03	0.00	3.11
2020	7	0	7	1.23	0.00	4.17
Average	2	0	2	0.69	0.00	2.23
Median	1	0	1	0.51	0.00	1.37
Standard deviation	2	0	2	0.77	0.00	2.64
Minimum	0	0	0	0.00	0.00	0.00
Maximum	9	0	7	2.56	0.00	8.70
*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®.

Table 4

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	7.1
2007	24	0	21	0.37	0.00	0.91	8.2
2008	127	14	89	1.80	0.42	3.71	429.6
2009	268	11	224	4.19	0.33	9.95	627.7
2010	83	0	64	1.21	0.00	3.02	97.5
2011	53	1	44	0.80	0.03	1.85	84.3
2012	83	0	66	1.14	0.00	2.59	86.7
2013	81	0	64	1.06	0.00	2.31	97.3
2014	60	0	45	0.69	0.00	1.44	91.6
2015	113	0	94	1.36	0.00	2.78	110.3
2016	163	1	143	2.09	0.03	4.24	239.8
2017	95	0	83	1.21	0.00	2.47	104.6
2018	82	0	72	1.03	0.00	2.10	131.7
2019	118	2	92	1.30	0.06	2.54	183.2
2020	226	0	198	2.74	0.00	5.50	353.4
Average	77	2	62	1.48	0.09	4.01	81.7
Median	56	1	45	1.21	0.03	3.17	22.4
Standard deviation	67	4	54	0.98	0.12	2.63	131.2
Minimum	2	0	2	0.15	0.00	0.63	0.1
Maximum	268	14	224	4.19	0.42	11.05	627.7
*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 5

Summary Of Greater China Net Annual Rating Activity (%)*
Year	Issuers as of Jan. 1	Upgrades (%)	Downgrades (%)§	Defaults (%)	Withdrawn ratings (%)	Changed ratings (%)	Unchanged ratings (%)	Downgrade/ upgrade ratio
2000	67	4.48	7.46	0.00	4.48	16.42	83.58	1.67
2001	75	5.33	2.67	0.00	4.00	12.00	88.00	0.50
2002	83	13.25	18.07	0.00	9.64	40.96	59.04	1.36
2003	130	0.77	3.08	0.77	10.77	15.38	84.62	4.00
2004	131	8.40	2.29	0.00	3.82	14.50	85.50	0.27
2005	146	28.08	4.79	0.00	6.16	39.04	60.96	0.17
2006	156	9.62	4.49	0.64	36.54	51.28	48.72	0.47
2007	121	14.05	6.61	0.83	10.74	32.23	67.77	0.47
2008	136	7.35	13.24	2.21	8.82	31.62	68.38	1.80
2009	156	4.49	12.82	2.56	13.46	33.33	66.67	2.86
2010	146	15.75	4.11	0.68	8.22	28.77	71.23	0.26
2011	158	8.86	12.66	0.00	5.06	26.58	73.42	1.43
2012	195	1.03	10.26	0.51	8.72	20.51	79.49	10.00
2013	206	9.71	7.28	0.97	7.77	25.73	74.27	0.75
2014	244	6.97	9.43	0.41	4.10	20.90	79.10	1.35
2015	296	4.73	8.45	2.03	5.41	20.61	79.39	1.79
2016	363	3.58	12.95	0.00	6.89	23.42	76.58	3.62
2017	453	5.30	11.48	0.22	9.49	26.49	73.51	2.17
2018	507	8.48	5.92	0.39	7.30	22.09	77.91	0.70
2019	585	4.27	6.50	1.03	12.31	24.10	75.90	1.52
2020	569	1.76	5.10	1.23	10.54	18.63	81.37	2.90
Weighted average		6.60	8.00	0.75	9.36	24.72	75.28	2.05
Average		7.92	8.08	0.69	9.25	25.93	74.07	1.91
Median		6.97	7.28	0.51	8.22	24.10	75.90	1.43
Standard deviation		6.16	4.23	0.77	6.85	9.65	9.65	2.16
Minimum		0.77	2.29	0.00	3.82	12.00	48.72	0.17
Maximum		28.08	18.07	2.56	36.54	51.28	88.00	10.00
*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®.

Table 6

Rating Classification Of New Corporate Issuers* In Greater China
	--First rating--
Year	AAA	AA	A	BBB	BB	B	CCC/C	Total	% IG	% SG
2000	0	0	2	2	1	6	0	11	36.36	63.64
2001	0	2	1	7	0	1	0	11	90.91	9.09
2002	0	2	3	12	15	29	1	62	27.42	72.58
2003	0	0	1	11	3	1	1	17	70.59	29.41
2004	0	0	4	8	5	0	0	17	70.59	29.41
2005	0	0	0	8	8	2	0	18	44.44	55.56
2006	0	0	3	4	12	7	0	26	26.92	73.08
2007	0	0	9	4	5	12	1	31	41.94	58.06
2008	0	1	13	10	9	1	0	34	70.59	29.41
2009	0	0	6	4	1	2	2	15	66.67	33.33
2010	0	1	3	8	8	5	0	25	48.00	52.00
2011	0	3	4	6	22	11	0	46	28.26	71.74
2012	0	0	7	8	8	6	0	29	51.72	48.28
2013	0	2	12	22	15	7	1	59	61.02	38.98
2014	0	0	20	24	9	10	1	64	68.75	31.25
2015	0	4	24	31	12	6	2	79	74.68	25.32
2016	0	0	15	47	34	8	0	104	59.62	40.38
2017	0	4	14	19	26	33	1	97	38.14	61.86
2018	0	0	10	36	32	39	4	121	38.02	61.98
2019	0	0	11	20	17	14	4	66	46.97	53.03
2020	0	2	5	26	10	8	2	53	62.26	37.74
Total	0	21	167	317	252	208	20	985	51.27	48.73
*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®.

Higher Ratings Are Consistent With Fewer Defaults

Higher-rated entities appear to take a longer time to default than lower-rated entities. We have also found this to be true for issuers in Greater China, using the original rating and last rating as the reference points (see table 7). Greater China entities rated 'B' took an average of 3.3 years to default--less than the average of 4.8 years to default for 'BB' rated entities. The exception to this pattern for Greater China is in the 'BBB' rating category, which had an average of 3.5 years to default, owing to a small sample size of defaulted issuers (just two) that were ever rated in the 'BBB' category.

95.7% of the defaulters from 2000-2020 in Greater China were initially rated speculative grade, and they averaged 3.5 years from initial rating to default. This is a faster rate of deterioration than globally, with an average of 5.9 years from initial rating to default (see table 7). We observe the same gap in the average time to default between rated global issuers and rated Greater China issuers in each rating category. The smaller sample size in Greater China (and a relative scarcity of defaults) is largely responsible for this disparity.

Defaults in Greater China total just 46 from 2000-2020 , compared with 2412 defaults globally during the same time frame. As a result, idiosyncratic factors could be at play when analyzing Greater China defaulters.

Table 7

Time To Default From Original Rating Among Corporate Defaulters (Greater China Versus Global)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
Greater China (2000-2019)
AAA	N/A	N/A	N/A	N/A
AA	N/A	N/A	N/A	N/A
A	N/A	N/A	N/A	N/A
BBB	2	3.5	3.5	1.3
BB	16	4.8	4.4	3.2
B	22	3.3	2.7	2.8
CCC/C	6	1.0	1.2	0.7
Total	46	3.5	2.7	2.9
	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
Global (1981-2019)
AAA	8	18.0	18.5	11.4
AA	32	17.4	19.6	10.6
A	101	14.1	10.9	9.1
BBB	221	9.2	7.3	6.7
BB	649	7.1	5.4	5.9
B	1734	5.1	3.7	4.3
CCC/C	353	2.2	1.3	2.7
Total	3098	5.9	4.1	5.7
N/A--Not available. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Default rates by rating modifier (the plus or minus after the rating) show that lower rating categories historically have higher default rates on average, though variability is possible in any given year (see table 8). Nevertheless, the data from past default cycles indicates that most defaults stemmed from the lowest ratings.

Table 8

Greater China Cumulative Corporate One-Year Default Rates By Rating Modifier (%)
	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C
2000	N/A	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
2001	N/A	N/A	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
2002	N/A	N/A	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
2003	N/A	N/A	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	20.00
2004	N/A	N/A	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
2005	N/A	N/A	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
2006	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	6.67	0.00	0.00	0.00	0.00
2007	N/A	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
2008	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	9.09	20.00	0.00	25.00	0.00	0.00
2009	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	14.29	33.33	25.00	100.00
2010	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	33.33
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	5.88	0.00	0.00	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	8.33	0.00	0.00	100.00
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	33.33
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	4.17	9.09	9.09	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	0.00	0.00	0.00	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	11.11	0.00
2018	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	33.33
2019	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	2.86	3.45	6.25	27.27
2020	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	53.85
Average	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.43	1.47	1.93	3.37	2.02	28.62
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	0.00
Standard deviation	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.98	4.56	4.01	8.92	5.92	38.84
Minimum	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
Maximum	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	9.09	20.00	14.29	33.33	25.00	100.00
N/A--Not available. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

A Closer Look At Greater China Defaulters And Industry Profile

In 2020, all seven defaults (five were publicly rated) in Greater China were rated at the beginning of the year and together accounted for about 0.7% of the $353.4 billion in debt globally affected by defaults in 2020.

These defaulters raised the annual corporate default rate for the high tech sector to 5.88%, energy and natural resources to 4.55%, utility to 2.94%, real estate to 2.82, and the consumer and service sector to 2.63%. Other sectors' annual corporate default rates were zero. There was one SOE default in 2020 from the energy and natural resources sector, making the default rate for this sector in SOE 2.94%. The remaining defaulters in 2020 were non-SOE defaults.

The five publicly rated defaulters in 2020 are Yihua Enterprise (Group) Co. Ltd., Yida China Holdings Ltd., Tunghsu Group Co. Ltd., Panda Green Energy Group Ltd., and Qinghai Provincial Investment Group Co. Ltd. All five were rated in the 'CCC' category at the beginning of the year. See Appendix IV for more details.

Table 9

Annual Greater China 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
2000	0.00	0.00	N/A	0.00	0.00	0.00	N/A
2001	0.00	0.00	N/A	0.00	0.00	0.00	N/A
2002	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	N/A	10.00
2004	0.00	0.00	0.00	0.00	0.00	N/A	0.00
2005	0.00	0.00	0.00	0.00	0.00	N/A	0.00
2006	12.50	0.00	0.00	0.00	0.00	0.00	0.00
2007	16.67	0.00	0.00	0.00	0.00	0.00	0.00
2008	0.00	33.33	14.29	0.00	0.00	0.00	0.00
2009	50.00	0.00	0.00	0.00	0.00	0.00	0.00
2010	0.00	0.00	0.00	0.00	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	9.09	0.00
2013	0.00	0.00	0.00	0.00	10.00	0.00	0.00
2014	0.00	0.00	5.26	0.00	0.00	0.00	0.00
2015	0.00	7.14	4.17	0.00	25.00	0.00	0.00
2016	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2017	0.00	0.00	3.57	0.00	0.00	0.00	0.00
2018	0.00	0.00	2.63	0.00	0.00	0.00	5.88
2019	1.49	0.00	2.04	0.00	7.41	3.45	0.00
2020	0.00	2.63	4.55	0.00	0.00	0.00	5.88
Average	3.84	2.05	1.92	0.00	2.02	0.70	1.15
Median	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Standard deviation	11.46	7.35	3.52	0.00	5.89	2.25	2.83
Minimum	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	50.00	33.33	14.29	0.00	25.00	9.09	10.00
Year	Insurance	Leisure time / media	Real estate	Telecommunications	Transportation	Utility
2000	0.00	N/A	0.00	N/A	0.00	0.00
2001	0.00	N/A	0.00	N/A	0.00	0.00
2002	0.00	N/A	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	0.00	0.00	0.00
2009	0.00	0.00	5.26	0.00	0.00	0.00
2010	0.00	0.00	0.00	0.00	12.50	0.00
2011	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
2013	0.00	0.00	0.00	0.00	10.00	0.00
2014	0.00	0.00	0.00	0.00	0.00	0.00
2015	0.00	0.00	1.69	0.00	8.33	0.00
2016	0.00	0.00	0.00	0.00	0.00	0.00
2017	0.00	0.00	0.00	0.00	0.00	0.00
2018	0.00	0.00	0.00	0.00	0.00	0.00
2019	0.00	0.00	0.00	10.00	0.00	0.00
2020	0.00	0.00	2.82	0.00	0.00	2.94
Average	0.00	0.00	0.47	0.53	1.47	0.14
Median	0.00	0.00	0.00	0.00	0.00	0.00
Standard deviation	0.00	0.00	1.30	2.29	3.74	0.64
Minimum	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	0.00	0.00	5.26	10.00	12.50	2.94
N/A--Not applicable. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 10

Cumulative Greater China Corporate Default Rates By Sector (%)
	--All financials--			--All nonfinancials--
Year	One-year	Three-year	10-year	One-year	Three-year	10-year
2000	0.00	0.00	0.00	0.00	0.00	3.45
2001	0.00	0.00	0.00	0.00	0.00	3.33
2002	0.00	0.00	0.00	0.00	2.94	5.88
2003	0.00	0.00	0.00	2.00	2.00	4.00
2004	0.00	0.00	0.00	0.00	0.00	3.77
2005	0.00	0.00	0.00	0.00	1.56	6.25
2006	0.00	0.00	0.00	1.47	2.94	7.35
2007	0.00	0.00	0.00	1.35	4.05	8.11
2008	0.00	0.00	0.00	4.00	9.33	12.00
2009	0.00	0.00	0.00	4.82	6.02	10.84
2010	0.00	0.00	0.00	1.39	2.78	5.56
2011	0.00	0.00	0.00	0.00	3.57	9.52
2012	0.00	0.00		0.88	3.51
2013	0.00	0.00		1.63	5.69
2014	0.00	0.00		0.66	3.97
2015	0.00	0.00		3.30	3.85
2016	0.00	0.00		0.00	1.35
2017	0.00	0.00		0.36	1.43
2018	0.00	0.00		0.63	3.44
2019	0.00			1.57
2020	0.00			1.91
Median	0.00	0.00	0.00	0.88	2.94	6.07
Standard deviation	0.00	0.00	0.00	1.39	2.30	2.95
Minimum	0.00	0.00	0.00	0.00	0.00	3.33
Maximum	0.00	0.00	0.00	4.82	9.33	12.00
Note: All financials refers to financial institutions and insurance combined. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Transition Tables And Cumulative Default Rates

Analysis of rating transitions in 2020 suggests that ratings behavior in Greater China continues to be consistent with global trends, which have shown a negative correspondence between credit rating and default.

Overall, higher-rated issuers in Greater China showed greater ratings stability in 2020 than speculative-grade issuers. For example, 93.3% of Greater China issuers rated 'AA' at the beginning of 2020 (Jan. 1, 2020) were still rated 'AA' at the end of the year (Dec. 31, 2020), and the comparable share for issuers rated 'B' was only 72.3%. For 'CCC'/'C', it was only 7.7%, well below the one-year average of 38.4% since 2000 (see tables 11-12).

We also track defaults even after the ratings on the issuers are withdrawn. For example, a hypothetical issuer rated in January 2020 undergoes a rating withdrawal in May 2020 and defaults in December 2020 will count in the 2020 trailing-12-month default rate. In the trailing-12-month default rate for June 2020, this hypothetical issuer will not count because it was not rated at the start of the period (June 2020). Please see Appendix I for more details.

Table 11

2020 One-Year Corporate Transition Rates: China Versus Global (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
China
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	93.33	0.00	0.00	0.00	0.00	0.00	0.00	6.67
A	0.00	0.00	94.25	3.45	0.00	0.00	0.00	0.00	2.30
BBB	0.00	0.00	0.47	91.51	1.42	0.00	0.00	0.00	6.60
BB	0.00	0.00	0.00	0.00	76.67	1.11	0.00	0.00	22.22
B	0.00	0.00	0.00	0.00	0.00	72.31	3.08	0.00	24.62
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	7.69	53.85	38.46
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	90.13	4.48	0.22	0.00	0.00	4.53
BB	0.00	0.00	0.00	0.78	78.13	11.44	0.86	0.93	7.86
B	0.00	0.00	0.00	0.05	0.96	71.92	12.59	3.52	10.95
CCC/C	0.00	0.00	0.00	0.00	0.00	5.46	34.45	47.48	12.61
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

For average one-year transition rates, the long-term (2000-2020) trends of ratings behavior were similar for Greater China and global rated issuers (see table 12). After one year, the average percent of issuers that retained the same rating were the following for 'AAA', 'AA', and 'B':

• 'AAA': 85.7% for Greater China and 87.1% for global;
• 'AA': 87.1% for Greater China and 87.2% for global; and
• 'B': Only 65.6% for Greater China and 74.6% for global.

Based on the transition analysis for a two-year horizon, lower ratings also tend to display less stability than higher ratings (see table 13). Because of sample sizes, there are occasional deviations. These deviations have lowered the stability rate for certain rating categories because of the relatively high withdrawal rate of these issuers.

Transitions at the rating modifier also display the same relationship mostly, though differences in sample size occasionally create slight variations between adjacent rating categories (see table 14).

Table 12

Average One-Year Corporate Transition Rates (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Greater China (2000-2020)
AAA	85.71	14.29	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	2.39	87.08	9.09	0.00	0.00	0.00	0.00	0.00	1.44
A	0.00	1.28	93.81	2.20	0.00	0.00	0.00	0.00	2.70
BBB	0.00	0.00	2.96	89.72	1.81	0.06	0.00	0.00	5.44
BB	0.00	0.00	0.00	2.23	73.81	5.30	0.21	0.42	18.03
B	0.00	0.00	0.00	0.17	4.30	65.56	4.47	1.99	23.51
CCC/C	0.00	0.00	0.00	0.00	0.00	8.22	38.36	28.77	24.66
Global (1981-2020)
AAA	87.06	9.06	0.53	0.05	0.11	0.03	0.05	0.00	3.11
AA	0.48	87.23	7.77	0.47	0.05	0.06	0.02	0.02	3.89
A	0.03	1.60	88.59	5.00	0.26	0.11	0.02	0.05	4.35
BBB	0.00	0.09	3.25	86.50	3.56	0.43	0.10	0.16	5.92
BB	0.01	0.03	0.11	4.55	77.81	6.81	0.55	0.63	9.51
B	0.00	0.02	0.07	0.15	4.54	74.59	4.96	3.34	12.34
CCC/C	0.00	0.00	0.10	0.17	0.55	12.47	43.11	28.30	15.31
Note: The Greater China figures are for the time period from 2000-2019. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 13

Average Two-Year Corporate Transition Rates (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Greater China (2000-2020)
AAA	71.43	28.57	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	5.15	74.23	17.53	0.00	0.00	0.00	0.00	0.00	3.09
A	0.00	2.44	87.82	4.30	0.00	0.00	0.00	0.00	5.44
BBB	0.00	0.00	6.32	81.05	3.05	0.07	0.07	0.00	9.44
BB	0.00	0.00	0.12	4.57	57.91	7.85	0.82	0.82	27.90
B	0.00	0.00	0.00	0.56	6.68	45.83	4.64	5.94	36.36
CCC/C	0.00	0.00	0.00	0.00	1.67	10.00	15.00	35.00	38.33
Global (1981-2020)
AAA	75.71	16.19	1.43	0.11	0.24	0.05	0.11	0.03	6.15
AA	0.85	76.31	13.72	1.20	0.18	0.13	0.02	0.06	7.54
A	0.04	2.89	78.63	8.69	0.68	0.25	0.04	0.13	8.66
BBB	0.02	0.16	6.03	75.30	5.62	0.97	0.19	0.44	11.27
BB	0.01	0.04	0.26	8.16	61.03	9.99	1.00	1.92	17.59
B	0.00	0.03	0.12	0.36	7.73	55.83	5.67	7.79	22.47
CCC/C	0.00	0.00	0.13	0.45	1.01	16.70	20.54	37.29	23.88
Note: The Greater China figures are for the time period from 2000-2019. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 14

Average One-Year Transition Rates For Greater China Corporates By Rating Modifier, 2000-2020 (%)
	--Rating--
From/to	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	85.71	14.29	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
AA+	20.00	80.00	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	0.00
AA	0.00	15.38	73.08	11.54	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
AA-	0.00	0.00	3.16	82.91	11.39	0.63	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.90
A+	0.00	0.00	0.29	4.68	83.63	7.89	0.58	0.29	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.63
A	0.00	0.00	0.00	0.21	4.20	88.87	3.36	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.36
A-	0.00	0.00	0.00	0.00	0.34	4.42	87.93	4.76	0.34	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.21
BBB+	0.00	0.00	0.00	0.00	0.00	0.16	7.44	83.01	5.02	0.32	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.05
BBB	0.00	0.00	0.00	0.00	0.00	0.00	0.18	8.73	83.09	2.73	0.55	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.73
BBB-	0.00	0.00	0.00	0.00	0.00	0.00	0.21	1.03	5.98	78.97	4.95	0.21	0.41	0.21	0.00	0.00	0.00	0.00	8.04
BB+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.69	4.86	68.75	9.38	1.39	0.00	0.35	0.00	0.00	0.00	14.58
BB	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.33	0.33	0.33	5.63	63.58	11.92	1.66	0.00	0.33	0.33	0.33	15.23
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.28	0.28	0.85	4.82	57.22	9.63	1.70	0.85	0.28	0.85	23.23
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.40	1.19	5.14	52.96	13.04	2.77	2.37	1.98	20.16
B	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.79	2.37	6.72	54.94	8.70	1.58	1.58	23.32
B-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.02	0.00	0.00	1.02	0.00	4.08	40.82	17.35	3.06	32.65
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	5.48	1.37	1.37	38.36	28.77	24.66
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

The negative correspondence between ratings and defaults in Greater China holds true over time, as the cumulative average default rates illustrate (see tables 15-16 and chart 7). On average, for 2000-2020, all rated Greater China issuers had a default rate of 0.8% in the first year after they were rated, and 1.4% in the second year. Issuers rated in the 'BB' category had a default rate of 0.4% in the first year after they were rated, and 0.78% in the second year. Issuers rated in the 'B' category had a default rate of 1.99%, on average, in the first year, and 5.7% in the second.

The stability rates of 'B-' rated entities are lower than both 'B' and 'CCC'/'C' rated entities because of relatively higher withdrawals and transitions to not rated. The cumulative average default rates in the 'CCC'/'C' rating category are repeated in years two to 10 because of a limited sample size and a limited number of 10-year periods in 2000-2020 in Greater China (ten 10-year samples), compared with a larger sample of 1981-2020 globally (30 10-year samples).

Table 15

Comparison Of Corporate Cumulative Average Default Rates (%)
	--Time horizon (year)--
From/to	1	2	3	4	5	6	7	8	9	10
Greater China (2000-2020)
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	0.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	0.08	0.18	0.29	0.42	0.58	0.76	0.95	0.95
BB	0.42	0.78	1.31	2.67	3.88	4.46	5.32	5.80	5.80	6.09
B	1.99	5.71	8.74	9.49	10.31	11.22	11.55	12.25	12.63	12.63
CCC/C	28.77	39.61	39.61	39.61	39.61	39.61	39.61	39.61	39.61	39.61
Investment grade	0.00	0.00	0.04	0.09	0.14	0.20	0.28	0.36	0.46	0.46
Speculative grade	2.28	4.35	5.77	6.85	7.86	8.54	9.16	9.70	9.85	10.01
All rated	0.75	1.44	1.94	2.34	2.73	3.02	3.30	3.56	3.68	3.75
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	2.28	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	7.80	11.73	14.87	17.33	19.34	20.97	22.29	23.49	24.60
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	7.18	10.18	12.62	14.63	16.29	17.67	18.82	19.85	20.80
All rated	1.53	2.99	4.27	5.34	6.24	7.00	7.64	8.18	8.66	9.11
Note: The Greater China figures are for the time period from 2000-2020. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

The default rates in the 'CCC'/'C' category are much higher than those in the higher rating categories. The relatively small sample sizes of some rating categories in Greater China may add volatility to default rates and occasionally cause them to deviate from both global trends and expectations, as is the case in the 'BB-' through 'B' rating categories (see table 16).

Table 16

Greater China Corporate Cumulative Average Default Rates By Rating Modifier, 2000-2020 (%)
	--Time horizon (year)--
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	0.00	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
BBB+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB-	0.00	0.00	0.27	0.58	0.95	1.37	1.85	2.39	2.99	2.99
BB+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.03
BB	0.33	0.70	1.52	2.94	4.62	4.62	4.62	4.62	4.62	4.62
BB-	0.85	1.47	2.17	4.50	6.19	7.59	9.68	10.86	10.86	10.86
B+	1.98	5.54	10.29	11.43	12.64	14.61	15.31	16.77	17.55	17.55
B	1.58	4.25	6.28	6.88	7.57	7.57	7.57	7.57	7.57	7.57
B-	3.06	9.82	11.17	11.17	11.17	11.17	11.17	11.17	11.17	11.17
CCC/C	28.77	39.61	39.61	39.61	39.61	39.61	39.61	39.61	39.61	39.61
Investment grade	0.00	0.00	0.04	0.09	0.14	0.20	0.28	0.36	0.46	0.46
Speculative grade	2.28	4.35	5.77	6.85	7.86	8.54	9.16	9.70	9.85	10.01
All rated	0.75	1.44	1.94	2.34	2.73	3.02	3.30	3.56	3.68	3.75
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 the relative rank ordering of ratings in Greater China 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. For definitions and methodology, refer to Appendix III.

Our calculations indicate that the one-year transition to default in Greater China shows an average one-year Gini coefficient of 91.0%, a three-year Gini of 84.6%, and a five-year Gini of 76.8% (see table 1). For Greater China, where SOEs play a critical role in the Chinese economy, we also differentiated the Gini by SOE and non-SOE: The average one-year SOE Gini coefficient was 99.3%, and the average one-year non-SOE Gini was 87.6% (see table 2). These figures illustrate that SOE issuers show comparatively stronger rank ordering of ratings with respect to defaults, while non-SOE issuers follow global norms, albeit with slightly higher ratings performance.

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 entities, the Lorenz curve would capture all of the area on chart 11 above the diagonal, and its Gini coefficient would be 1.

As expected, the Gini coefficients decline as the time horizon lengthens because longer time frames allow for more credit degradation among higher-rated entities. In the one-year Greater China Lorenz curve, for example, 100% of defaults occurred in the speculative-grade category, while speculative-grade ratings constituted only 32.91% of all Greater China corporate issuers (see chart 8). The three-year Lorenz curve shows that speculative-grade issuers constituted 98.51% of defaulters and 33.4% of the entire sample (see chart 9). The five-year Lorenz curve shows that speculative-grade issuers constituted 96% of defaulters and only 34.78% of the entire sample (see chart 10). If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate entities and the cumulative share of all entities would be nearly the same.

Appendix I: Default Methodology 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 tables and charts in this study are the direct output of the CreditPro® application, while others are based on 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, its 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.

Although the ratings on a company's very senior forms of secured debt, particularly ones with strong covenants, could occasionally be higher than the issuer credit rating on the company, specific issues are typically rated as high as or lower than these issuer ratings, depending on their relative priority within the company's debt structure. If they are speculative grade, issuer credit ratings are generally two notches higher than subordinated debt ratings. Otherwise, they are generally one notch higher. Therefore, although a 'BB+' issuer credit rating is generally paired with a 'BB-' subordinated debt rating, an 'AA' issuer credit rating usually corresponds to a 'AA-' subordinated rating.

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 back to Dec. 31, 1980. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.

Issuers included in this study

This study analyzes the rating histories of over 1,000 Greater China entities that S&P Global Ratings rated from Jan. 1, 2000, through Dec. 31, 2020. These include industrials, utilities, financial institutions, and insurance entities 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 overcounting, 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 entities 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 mergers and acquisitions. 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' upon an issuer's filing for bankruptcy or taking a similar action that jeopardizes 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 Ratings 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 is 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 others or pay some obligations and not others.

Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default.

We deem 'D', 'SD', and 'R' issuer credit 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 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 as entirely separate from its experience leading up to its earlier default.

Calculations

Static pool methodology.  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 that the CreditPro® database covers. Each static pool is followed from that point forward. All entities 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 the static pool methodology 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 multi-period 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 may calculate default rates using only the most recent year's default and rating data, which may yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.

The pools are static in the sense that their membership remains constant over time. 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 entities 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 same starting date so as to avoid continuity problems.

Entities that have had ratings withdrawn--that is, revised to not rated--are surveilled with the aim of capturing a potential default. Because static pools only include entities with active ratings as of the beginning date of a given pool, we exclude entities 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 2000 static pool consists of all entities rated as of 12:01 a.m. on Jan. 1, 2000. Adding those entities first rated in 2000 to the surviving members of the 2000 static pool forms the 2001 static pool. All rating changes that took place are reflected in the newly formed 2001 static pool through the ratings on these entities as of 12:01 a.m. on Jan. 1, 2001. We used the same method to form static pools for 2000 through 2020.

Consider the following example: An issuer is originally rated 'BB' in mid-2006 and is downgraded to 'B' in 2008. This is followed by a rating withdrawal in 2010 and a default in 2013. We would include this hypothetical company in the 2007 and 2008 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Likewise, it would be included in the 2009 and 2010 pools with the 'B' rating. It would not be part of the 2006 pool because it was not rated as of the first day of that year, and it would not be included in any pool after the last day of 2010 because the rating had been withdrawn by then. Yet each of the four pools in which this company was included (2007-2010) would record its 2013 default at the appropriate time horizon.

Default rates.  We calculated annual default rates for each static pool, first in units and then as percentages with respect to the number of issuers in each rating category. Finally, we combined these percentages to obtain cumulative default rates for the 21 years covered by the study.

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.

Many practitioners utilize statistics from this default study and CreditPro® to estimate "probability of default" and "probability of rating transition." It is important to note that S&P Global Ratings' credit ratings do not imply a specific probability of default.

Cumulative average default rates.  We derived cumulative default rates that average the experience of all static pools by calculating marginal default rates, conditional on survival (survivors being nondefaulters), for each possible time horizon and for each static pool, weight-averaging the conditional marginal default rates, and accumulating the average conditional marginal default rates. Conditional default rates are calculated 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).

For instance, the hypothetical weighted-average first-year default rate for 'B' rated entities in Greater China for all 20 pools was 2%, meaning that an average of 98% survived one year. Similarly, the second- and third-year conditional marginal averages were 3% for the first 19 pools (98% of those entities that did not default in the first year survived the second year) and 3% for the first 18 pools (97% of those entities that did not default by the second year survived the third year). Multiplying 97.81% by 96.75% results in a 94.6% survival rate to the end of the second year, which yields a two-year cumulative average default rate of 5.4%. Multiplying 97.41% by 94.64% results in a 92.19% survival rate to the end of the third year, which yields a three-year cumulative average default rate of 7.81%.

Time sample.  This update limits the reporting of default rates in Greater China to the 21-year time horizon, and we based all calculations on the rating experience of that period. Global data is based on a 40-year time horizon. The maturities of most obligations are much shorter than 21 years. In addition, average default statistics become less reliable at longer time horizons because the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.

Default patterns share broad similarities across all static pools, suggesting that S&P Global Ratings' credit rating standards have been consistent over time. Adverse business conditions tend to coincide with default upswings for all pools. These upswings have hit speculative-grade issuers the hardest, but investment-grade default rates also increase during stressful periods.

Transition analysis

Transition rates compare issuer credit 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 2004 to the middle of 2011 would appear in the six consecutive one-year transition matrices from 2005-2010. All 2003 static pool members still rated on Dec. 31, 2015, had 12 one-year transitions, while entities first rated between Jan. 1, 2015, and Dec. 31, 2015, 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." For instance, the first panel of table 11, which corresponds to the 2020 static pool, shows that out of all 'BBB' rated entities at the beginning of that year, 91.5% were rated the same at year-end, while S&P Global Ratings had upgraded 0.47% to 'A', and so on.

Average one-year transition matrices were calculated on the basis of the one-year transition matrix just described. The ratios 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 reference period.

Multiyear transitions.  We also calculated multiyear transitions 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, average two-year transition matrices were the result of comparing ratings at the beginning of the years 2000-2019 with the ratings at the end of the years 2001-2020 (see table 13). Otherwise, the methodology was identical to that used for single-year transitions.

Comparing transition rates with default rates.  For more information on the differences between transition rates and default rates, please see the section "Comparing transition rates with default rates" in Appendix I of the "2020 Annual Global Corporate Default And Rating Transition Study."

Appendix II: Additional Tables

Table 17

Static Pool Cumulative Corporate Default Rates Among All Rated Greater China Ratings, 2000-2020 (Default Rates In %)
		--Time horizon (year)--
Year	Issuers as of Jan. 1	1	2	3	4	5	6	7	8	9	10
2000	67	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.49	1.49	1.49
2001	75	0.00	0.00	0.00	0.00	0.00	0.00	1.33	1.33	1.33	1.33
2002	83	0.00	1.20	1.20	1.20	1.20	2.41	2.41	2.41	2.41	2.41
2003	130	0.77	0.77	0.77	0.77	1.54	1.54	1.54	1.54	1.54	1.54
2004	131	0.00	0.00	0.00	0.76	0.76	0.76	1.53	1.53	1.53	1.53
2005	146	0.00	0.00	0.68	0.68	1.37	2.05	2.05	2.74	2.74	2.74
2006	156	0.64	1.28	1.28	1.92	2.56	2.56	3.21	3.21	3.21	3.21
2007	121	0.83	1.65	2.48	3.31	3.31	4.13	4.13	4.13	4.96	4.96
2008	136	2.21	4.41	5.15	5.15	5.88	5.88	5.88	6.62	6.62	6.62
2009	156	2.56	3.21	3.21	3.85	3.85	3.85	4.49	5.13	5.13	5.77
2010	146	0.68	0.68	1.37	1.37	1.37	2.05	2.05	2.05	2.74	2.74
2011	158	0.00	1.27	1.90	2.53	4.43	4.43	4.43	5.06	5.06	5.06
2012	195	0.51	1.54	2.05	4.10	4.10	4.62	5.64	5.64	5.64
2013	206	0.97	1.46	3.40	3.40	3.88	4.85	4.85	4.85
2014	244	0.41	2.46	2.46	2.87	3.69	3.69	3.69
2015	296	2.03	2.03	2.36	3.04	3.38	3.38
2016	363	0.00	0.28	0.83	0.83	0.83
2017	453	0.22	0.66	0.88	1.10
2018	507	0.39	1.18	2.17
2019	585	1.03	2.05
2020	569	1.23
Summary statistics
Marginal average		0.75	0.64	0.47	0.50	0.48	0.38	0.36	0.34	0.15	0.09
Cumulative average		0.75	1.39	1.85	2.34	2.81	3.17	3.53	3.86	4.00	4.09
Standard deviation		0.77	1.14	1.32	1.52	1.73	1.76	1.75	1.80	1.83	1.85
Median		0.51	1.24	1.37	1.65	2.56	2.97	3.21	2.97	2.74	2.74
Minimum		0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.33	1.33	1.33
Maximum		2.56	4.41	5.15	5.15	5.88	5.88	5.88	6.62	6.62	6.62
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 18

Static Pool Cumulative Corporate Default Rates Among All Investment-Grade Greater China Ratings, 2000-2020 (Default Rates In %)
		--Time horizon (year)--
Year	Issuers as of Jan. 1	1	2	3	4	5	6	7	8	9	10
2000	28	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2001	31	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	40	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	55	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	66	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	79	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	89	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	84	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	95	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2009	110	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2010	110	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.91	0.91
2011	118	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.85	0.85	0.85
2012	127	0.00	0.00	0.00	0.00	0.00	0.00	0.79	0.79	0.79
2013	141	0.00	0.00	0.00	0.00	0.00	0.71	0.71	0.71
2014	171	0.00	0.00	0.00	0.00	0.58	0.58	0.58
2015	214	0.00	0.00	0.00	0.47	0.47	0.47
2016	274	0.00	0.00	0.36	0.36	0.36
2017	327	0.00	0.00	0.00	0.00
2018	351	0.00	0.00	0.00
2019	392	0.00	0.00
2020	401	0.00
Summary statistics
Marginal average		0.00	0.00	0.05	0.06	0.07	0.09	0.10	0.11	0.13	0.00
Cumulative average		0.00	0.00	0.05	0.12	0.14	0.16	0.18	0.21	0.24	0.13
Standard deviation		0.00	0.00	0.08	0.14	0.19	0.24	0.29	0.33	0.37	0.34
Median		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Minimum		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum		0.00	0.00	0.36	0.47	0.58	0.71	0.79	0.85	0.91	0.91
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 19

Static Pool Cumulative Corporate Default Rates Among All Speculative-Grade Greater China Ratings, 2000-2020 (Default Rates In %)
		--Time horizon (years)--
Year	Issuers as of Jan. 1	1	2	3	4	5	6	7	8	9	10
2000	39	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.56	2.56	2.56
2001	44	0.00	0.00	0.00	0.00	0.00	0.00	2.27	2.27	2.27	2.27
2002	43	0.00	2.33	2.33	2.33	2.33	4.65	4.65	4.65	4.65	4.65
2003	75	1.33	1.33	1.33	1.33	2.67	2.67	2.67	2.67	2.67	2.67
2004	65	0.00	0.00	0.00	1.54	1.54	1.54	3.08	3.08	3.08	3.08
2005	67	0.00	0.00	1.49	1.49	2.99	4.48	4.48	5.97	5.97	5.97
2006	67	1.49	2.99	2.99	4.48	5.97	5.97	7.46	7.46	7.46	7.46
2007	37	2.70	5.41	8.11	10.81	10.81	13.51	13.51	13.51	16.22	16.22
2008	41	7.32	14.63	17.07	17.07	19.51	19.51	19.51	21.95	21.95	21.95
2009	46	8.70	10.87	10.87	13.04	13.04	13.04	15.22	17.39	17.39	19.57
2010	36	2.78	2.78	5.56	5.56	5.56	8.33	8.33	8.33	8.33	8.33
2011	40	0.00	5.00	7.50	10.00	17.50	17.50	17.50	17.50	17.50	17.50
2012	68	1.47	4.41	5.88	11.76	11.76	13.24	14.71	14.71	14.71
2013	65	3.08	4.62	10.77	10.77	12.31	13.85	13.85	13.85
2014	73	1.37	8.22	8.22	9.59	10.96	10.96	10.96
2015	82	7.32	7.32	8.54	9.76	10.98	10.98
2016	89	0.00	1.12	2.25	2.25	2.25
2017	126	0.79	2.38	3.17	3.97
2018	156	1.28	3.85	7.05
2019	193	3.11	6.22
2020	168	4.17
Summary statistics
Marginal average		2.28	1.94	1.28	1.31	1.19	0.88	0.81	0.72	0.19	0.21
Cumulative average		2.28	4.18	5.41	6.65	7.76	8.58	9.32	9.97	10.14	10.33
Standard deviation		2.64	3.87	4.58	5.20	6.14	6.19	6.24	6.64	6.97	7.35
Median		1.37	3.42	5.56	5.02	5.97	9.65	8.33	7.90	7.46	6.72
Minimum		0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.27	2.27	2.27
Maximum		8.70	14.63	17.07	17.07	19.51	19.51	19.51	21.95	21.95	21.95
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 20

Average Two-Year Greater China Corporate Transition Matrix 2000-2020 (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	71.4	28.6	0.0	0.0	0.0	0.0	0.0	0.0	0.0
AA	5.2	74.2	17.5	0.0	0.0	0.0	0.0	0.0	3.1
A	0.0	2.4	87.8	4.3	0.0	0.0	0.0	0.0	5.4
BBB	0.0	0.0	6.3	81.1	3.1	0.1	0.1	0.0	9.4
BB	0.0	0.0	0.1	4.6	57.9	7.9	0.8	0.8	27.9
B	0.0	0.0	0.0	0.6	6.7	45.8	4.6	5.9	36.4
CCC/C	0.0	0.0	0.0	0.0	1.7	10.0	15.0	35.0	38.3
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 21

Average Three-Year Greater China Corporate Transition Matrix 2000-2020 (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	57.14	42.86	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	7.87	63.48	24.16	0.00	0.00	0.00	0.00	0.00	4.49
A	0.00	3.19	83.38	5.73	0.00	0.00	0.00	0.00	7.70
BBB	0.00	0.00	9.01	74.19	4.06	0.08	0.08	0.08	12.50
BB	0.00	0.00	0.27	7.32	45.27	9.32	1.46	1.46	34.89
B	0.00	0.00	0.00	0.44	9.37	32.24	3.49	8.28	46.19
CCC/C	0.00	0.00	0.00	0.00	4.08	10.20	4.08	34.69	46.94
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 22

Average Five-Year Greater China Corporate Transition Matrix 2000-2020 (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	33.33	66.67	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	14.77	46.98	34.23	0.00	0.00	0.00	0.00	0.00	4.03
A	0.00	4.90	77.84	7.22	0.00	0.00	0.00	0.00	10.05
BBB	0.00	0.11	12.77	62.14	4.10	0.11	0.11	0.34	20.30
BB	0.00	0.00	0.35	10.36	29.19	10.54	0.86	4.32	44.39
B	0.00	0.00	0.00	0.00	8.33	17.22	1.67	9.44	63.33
CCC/C	0.00	0.00	0.00	0.00	0.00	2.63	0.00	34.21	63.16
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's S&P CreditPro®.

Table 23

Greater China Defaults (2000-2020)
Issuer	Market	Industry	Default date	Rating prior to default	Rating date for rating prior to default	Reason for default
Tianjin International Trust & Investment Corp.	China	Financial Institutions	12/16/2000	NR	8/2/1999	Missed interest payment
Fujian International Trust & Investment Corp.	China	Financial Institutions	1/24/2002	NR	8/2/1999	Liquidation
Mosel Vitelic Inc.	Taiwan	High Tech/Computers/Office Equipment	4/25/2003	NR	3/25/2003	Missed principal payment
Ocean Grand Holdings Ltd.	Hong Kong	Aerospace/Automotive/Capital Goods/Metal	7/25/2006	B	7/20/2006	Appointment of provisional liquidator
ASAT Holdings Ltd.	Hong Kong	Aerospace/Automotive/Capital Goods/Metal	8/3/2007	CCC	12/15/2006	Missed interest payment and debt restructuring
3D-Gold Jewellery Holdings Ltd.	Hong Kong	Consumer/Service Sector	10/15/2008	BB	10/2/2007	Missed interest payment and request for standstill
ASAT Holdings Ltd. (A)	Hong Kong	Aerospace/Automotive/Capital Goods/Metal	2/2/2009	CC	12/16/2008	Missed interest payment
Asia Aluminum Holdings Ltd.	China	Aerospace/Automotive/Capital Goods/Metal	3/17/2009	CC	2/16/2009	Appointment of provisional liquidator
China Glass Holdings Ltd.	China	Aerospace/Automotive/Capital Goods/Metal	8/4/2009	CC	6/5/2009	Distressed exchange
Titan Petrochemicals Group Ltd.	Hong Kong	Transportation	7/21/2010	CC	12/8/2009	Distressed exchange
China Medical Technologies Inc.	China	Health Care/Chemicals	1/31/2012	B+	9/21/2010	Missed interest payment
Sino-Forest Corp.	China	Forest & Building Products/Homebuilders	3/30/2012	NR	8/30/2011	Missed interest payment
Winsway Enterprises Holdings Ltd.	China	Transportation	10/10/2013	CC	8/21/2013	Distressed exchange
China Forestry Holdings Co. Ltd.	China	Forest & Building Products/Homebuilders	11/19/2013	CCC-	8/4/2011	Missed interest payment
LDK Solar Co. Ltd.	China	High Tech/Computers/Office Equipment	10/21/2014	NR	9/8/2011	Missed principal payment
Hidili Industry International Development Ltd.	China	Energy and Natural Resources	10/22/2014	CC	9/18/2014	Distressed exchange
Kaisa Group Holdings Ltd.	China	Forest & Building Products/Homebuilders	1/5/2015	BB-	5/2/2014	Missed principal payment
Renhe Commercial Holdings Co. Ltd.	China	Real Estate	1/8/2015	CC	11/26/2014	Distressed exchange
Winsway Enterprises Holdings Ltd. (A)	China	Transportation	4/27/2015	CCC	10/28/2013	Missed interest payment
Hidili Industry International Development Ltd. (A)	China	Energy and Natural Resources	11/4/2015	CCC-	4/27/2015	Missed interest and principal payment
China Shanshui Cement Group Ltd.	Hong Kong	Forest & Building Products/Homebuilders	11/13/2015	CC	11/6/2015	Missed principal payment
China Fishery Group Ltd.	Hong Kong	Consumer/Service Sector	11/26/2015	CCC+	10/19/2015	Missed loan payment
MIE Holdings Corp.	Cayman Islands	Energy and Natural Resources	8/28/2017	CC	6/12/2017	Distressed Exchange
Noble Group Ltd.	Bermuda	Energy and Natural Resources	3/20/2018	CC	1/30/2018	Missed interest and principal payment
China Huayang Economic and Trade Group Co. Ltd.	China	Aerospace/Automotive/Capital Goods/Metal	10/2/2018	B+	3/13/2018	Missed principal payment
China Automation Group Ltd.	Cayman Islands	Aerospace/Automotive/Capital Goods/Metal	11/25/2018	CC	11/14/2018	Distressed Exchange
MIE Holdings Corp. (A)	Cayman Islands	Energy and Natural Resources	4/12/2019	CC	3/1/2019	Distressed Exchange
Shandong Yuhuang Chemical Co. Ltd.	China	Health Care/Chemicals	11/29/2019	CC	11/22/2019	Missed principal payment
Qinghai Provincial Investment Group Co. Ltd.	China	Energy and Natural Resources	1/14/2020	CCC-	8/30/2019	Missed interest payment
Panda Green Energy Group Ltd.	Bermuda	Utility	1/21/2020	CC	12/18/2019	Distressed Exchange
Tunghsu Group Co. Ltd.	China	High Tech/Computers/Office Equipment	2/21/2020	CCC-	11/19/2019	Missed interest and principal payment
Yida China Holdings Ltd.	Cayman Islands	Real Estate	3/27/2020	CC	2/26/2020	Distressed Exchange
Yihua Enterprise (Group) Co. Ltd.	China	Consumer/Service Sector	5/11/2020	CCC	7/26/2019	Missed interest payment
Note: Excludes 13 confidential issuers. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Appendix III: Gini Methodology

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 entities, the curve would capture all of the area above the diagonal on the graph, and its Gini coefficient would be 1 (see chart 11).

The procedure for calculating the Gini coefficients is to divide 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.

Appendix IV: Defaults In Profile

In 2020, seven companies, including two confidential issuers, in Greater China defaulted on a total of $2,390 million of debt. This appendix provides summaries of the events leading up to each default and, in some cases, events following the default. We also include the defaulting instruments for each company that S&P Global Ratings rates.

Qinghai Provincial Investment Group Co. Ltd.

• US$300 million 7.25% bonds due Feb. 22, 2020
• US$300 million 6.40% bonds due July 10, 2021
• US$250 million 7.875% bonds due March 22, 2021
• CNY1 billion 7.20% bonds due Dec. 20, 2022
• CNY600 million 7.08% bonds due Oct. 8, 2022

On Jan. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based integrated aluminum producer Qinghai Provincial Investment Group Co. Ltd. (QPIG) to 'D' from 'CCC-' following the company's failure to pay interest due on Jan. 10, 2020, on its US$300 million bonds.

Later on Feb. 26, 2020, S&P Global Ratings withdrew its issuer ratings on the issuer.

Table 24

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/--
6-Sep-2018	B+/Stable/--
6-Sep-2018	B+/Watch Neg/--
7-Feb-2017	BB-/Watch Neg/--
7-Feb-2017	BB-/Stable/--

Panda Green Energy Group Ltd.

• US$350 million 8.25% notes due Jan. 25, 2020
• US$112.308 million 8.00% notes due Jan. 20, 2022

On Jan. 21, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Panda Green Energy Group Ltd. to 'SD' from 'CC' on completion of a distressed exchange offer on its U.S. bonds due in January 2020.

Later on Feb. 21, 2020, S&P Global Ratings raised the issuer ratings to 'CCC-' from 'SD', after the issuer reached a settlement on the US$350 million notes via a partial exchange and also the new shareholder Beijing Energy Group Co. Ltd. can provide credit enhancements.

Later on May 6, 2020, S&P Global Ratings withdrew its issuer ratings on the issuer.

Table 25

Issuer Credit Rating - Panda Green Energy Group Ltd.
Date	To
6-May-2020	NR/--/--
21-Feb-2020	CCC-/Positive/--
21-Jan-2020	SD/NM/--
18-Dec-2019	CC/Watch Dev/--
12-Dec-2018	CCC+/Watch Dev/--
12-Dec-2018	CCC+/Watch Neg/--
26-Sep-2018	B/Negative/--
19-Sep-2017	B+/Stable/--
30-Oct-2016	BB-/Stable/--

Tunghsu Group Co. Ltd.

• US$440 million 7.00% guaranteed notes due June 12, 2020
• CNY2 billion 6.2% debenture due July 30, 2020
• CNY1 billion 7.00% notes due Sept. 28, 2020
• CNY2 billion 7.5% debenture due Nov. 13, 2020
• CNY1 billion 7.5% debenture due Jan. 18, 2021
• CNY1 billion 7.85% notes due March 23, 2021
• CNY1.5 billion 7.5% notes due June 13, 2021
• CNY3.5 billion 7.8% debenture due July 25, 2021
• CNY2.6 billion 8.18% debenture due Sept. 4, 2021
• CNY900 million 8.18% debenture due Oct. 25, 2021
• CNY500 million 6.8% debenture due March 13, 2022
• CNY2.5 billion 6.55% debenture due March 13, 2022

On Feb. 21, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based high technology service provider Tunghsu Group Co. Ltd. to 'SD' from 'CCC-' after the issuer missed interest and principal payments on three onshore bonds. Tunghsu has also signed a letter of intent to acquire 26%-38% stake in Alderon Iron Ore Corp., which would be conducted by its subsidiary.

Later on April 29, 2020, S&P Global Ratings withdrew its issuer ratings at the issuer's request.

Table 26

Issuer Credit Rating - Tunghsu Group Co. Ltd.
Date	To
29-Apr-2020	NR/--/--
21-Feb-2020	SD/NM/--
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/--

Yida China Holdings Ltd.

• US$300 million 6.95% notes due April 19, 2020
• US$224 million 10% step-up notes due March 27, 2022

On March 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based business parks developer and operator Yida China Holdings Ltd. to 'SD' from 'CC', after the issuer completed a distressed exchange.

Later on April 1, 2020, the issuer credit ratings on Yida China Holdings Ltd. were raised to CCC-' from 'SD' on reassessment of the company's credit profile. Later on the same day we withdrew the ratings at the company's request.

Table 27

Issuer Credit Rating - Yida China Holdings Ltd.
Date	To
1-Apr-2020	NR/--/--
1-Apr-2020	CCC-/Negative/--
27-Mar-2020	SD/NM/--
26-Feb-2020	CC/Negative/--
6-Dec-2019	CCC-/Negative/--
18-Apr-2019	CCC/Negative/--
31-Jan-2019	CCC+/Negative/--
21-Aug-2018	B-/Negative/--
10-Apr-2017	B/Negative/--
10-Apr-2017	B/Stable/--

Yihua Enterprise (Group) Co. Ltd.

On May 11, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chinese furniture maker Yihua Enterprise (Group) Co. Ltd. to 'SD' from 'CCC' after the issuer failed to make interest payment on its domestic medium-term notes due 2022. There is no stated grace period on this note. A default could trigger an acceleration of its various payment obligations. Subsequently, we withdrew the ratings due to insufficient information.

Table 28

Issuer Credit Rating - Yihua Enterprise (Group) Co. Ltd.
Date	To
11-May-2020	NR/--/--
11-May-2020	SD/NM/--
26-Jul-2019	CCC/Negative/--
17-Apr-2019	B-/Negative/--
26-Jul-2018	B/Negative/--
11-Sep-2017	B/Stable/--

Related Research

• 2020 Annual Asia Corporate Default And Rating Transition Study, June 21, 2021
• 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

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 Contributors:	Sundaram Iyer, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
	Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
Secondary Contacts:	Daniel Sek, New York + 1 (212) 438 3707; daniel.sek@spglobal.com
	Boyang Gao, Beijing + 86 (010) 65692725; boyang.gao@spglobal.com