Global economic activity abruptly slowed at the end of first-quarter 2020 as governments around the world instituted stay-at-home orders, mandated business closures, and imposed travel restrictions to curb the spread of COVID-19. The sudden global recession led to a sharp tightening in financial conditions and caused credit quality to rapidly deteriorate among corporate issuers rated by S&P Global Ratings in emerging and frontier markets. Over 20% of the region's corporate issuers rated at the beginning of the year were downgraded (including defaults), and the proportion of issuers that were upgraded hit an all-time low of 2.1%. This pushed the ratio of downgrades (including defaults) to upgrades to its highest since 1998.

The number of emerging and fronter market corporate issuer defaults increased to 26 in 2020 from 22 in 2019 (see chart 1). Of these 26 defaults, 25 were from companies rated speculative-grade ('BB+' or lower) at the start of the year, and 18 of those were rated 'B-' or lower.

The one-year Gini ratios (a measure of the rank-ordering power of ratings over a given time horizon) for emerging and frontier markets in 2020 were 85.5% and 100%, respectively, both higher than the one-year weighted average Gini ratios (since 1997) (75.6% and 78.9%, respectively). High Gini ratios reflect a high proportion of the lowest-rated issuers among defaulters in a given period.

In the 24 years that we have tracked defaults in emerging markets, the region's speculative-grade corporate default rate has exceeded the global speculative-grade corporate default rate in only four years: 1998, 1999, 2002, and 2015 (see chart 2). In 2020, the emerging markets speculative-grade corporate default rate was 239 basis points below the global speculative-grade corporate default rate.

The lower speculative-grade default rate in emerging markets is due to its smaller proportion of speculative-grade corporate issuers rated 'B+' or lower. Since 1997, the proportion of speculative-grade ratings that were 'B+' or lower has been, on average, 13 percentage points lower in emerging markets than globally. This gap has grown further since 2009 as accommodative financial conditions have led to an even larger share of 'B+' or lower issuers among speculative-grade corporate issuers globally, while that same proportion has remained unchanged in emerging markets.

This divergence will likely persist even as capital markets in emerging market countries develop; investors in emerging and frontier markets generally have less appetite for lower-rated issuers because recoveries can be more complex in the event of default, given disparate legal and regulatory frameworks.

Table 1

Emerging And Frontier Markets Corporate Default Summary
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)
1997	1	1	0	0.81	1.33	0.00
1998	16	2	13	5.54	1.64	8.72
1999	20	0	19	5.60	0.00	8.72
2000	7	0	6	1.56	0.00	2.40
2001	30	0	19	4.42	0.00	6.79
2002	60	0	53	11.47	0.00	17.04
2003	14	0	13	2.54	0.00	3.79
2004	3	0	3	0.53	0.00	0.82
2005	2	0	1	0.15	0.00	0.24
2006	2	0	2	0.27	0.00	0.43
2007	1	0	1	0.12	0.00	0.20
2008	16	1	12	1.39	0.26	2.17
2009	37	3	33	3.68	0.69	6.08
2010	10	0	8	0.86	0.00	1.54
2011	4	0	4	0.42	0.00	0.76
2012	19	0	13	1.27	0.00	2.33
2013	15	0	12	1.08	0.00	1.95
2014	15	0	9	0.73	0.00	1.30
2015	28	0	26	1.95	0.00	3.66
2016	30	1	27	2.05	0.16	3.63
2017	8	0	8	0.56	0.00	1.04
2018	16	0	10	0.67	0.00	1.23
2019	22	0	16	1.04	0.00	1.97
2020	26	0	25	1.64	0.00	3.19
Average	17	0	14	2.10	0.17	3.33
Median	16	0	12	1.18	0.00	2.07
Standard deviation	14	1	12	2.55	0.43	3.85
Minimum	1	0	0	0.12	0.00	0.00
Maximum	60	3	53	11.47	1.64	17.04
*This column includes companies that were not rated as of the beginning of the year. Investment-grade/speculative-grade defaults include defaulting entities within the year that were rated investment-grade/speculative-grade at the beginning of the period. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 2

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	172	3.77	0.23	9.84	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	223	4.17	0.33	9.91	627.70
2010	83	0	64	1.21	0.00	3.03	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	62	1.03	0.00	2.24	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	71	1.02	0.00	2.07	131.65
2019	118	2	92	1.30	0.06	2.54	183.21
2020	226	0	198	2.75	0.00	5.52	353.43
Average	77	2	62	1.48	0.09	4.00	81.70
Median	56	1	45	1.21	0.03	3.17	22.40
Standard deviation	67	4	54	0.98	0.12	2.63	131.22
Minimum	2	0	2	0.15	0.00	0.63	0.06
Maximum	268	14	223	4.17	0.42	11.05	627.70
*This column includes companies that were not rated as of the beginning of the year. Investment-grade/speculative-grade defaults include defaulting entities within the year that were rated investment-grade/speculative-grade at the beginning of the period. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Unless noted otherwise, the statistics we present in this study refer to S&P Global Market Intelligence's CreditPro® corporate local currency ratings. Rated issuers include financial and nonfinancial companies in emerging and frontier markets but exclude sovereigns and public finance issuers. We calculated default and transition rates based on the number of issuers in the sample period. The weighted averages in this study use the number of issuers at the beginning of each year as the basis for each year's weight. The data we present in this study, unless labeled otherwise, refers to only public and confidential issuer credit ratings on nonfinancial and financial issuers and excludes credit estimates. For our full methodology and definitions of the terms used, as well as a full list of the emerging and frontier market countries used in this study, see Appendix I.

The Upgrade Ratio Hit An All-Time Low

The proportion of emerging and frontier markets issuers that were upgraded hit an all-time low of 2.1% in 2020, and 18.6% of issuers were downgraded, pushing the proportion of emerging and frontier market issuers rated 'B-' or lower to its highest since 2016. It remained near this peak at year-end 2020.

While downgrades surged in 2020, the increase in emerging and frontier market defaults was relatively small, although coming off a base that was somewhat high in 2019. This reflected the sharp recovery in global economic activity in the second half of 2020 and the positive effects of monetary policy responses on global financial conditions.

Through the first three quarters of 2021, upgrades have sharply increased and defaults have fallen among emerging and frontier market issuers. As of Oct. 31, 2021, the proportion of 'B-' or lower issuers in the region was the same as at year-end 2019.

Table 3

Summary Of Emerging And Frontier Markets Net Annual Rating Activity
Year	Issuers	Upgrades (%)	Downgrades (%)*	Defaults (%)	Withdrawn ratings (%)	Changed ratings (%)	Unchanged ratings (%)	Downgrade/upgrade ratio
1997	123	4.88	12.20	0.81	5.69	23.58	76.42	2.50
1998	271	2.21	28.04	5.54	4.80	40.59	59.41	12.67
1999	339	2.36	15.34	5.60	7.67	30.97	69.03	6.50
2000	384	10.94	9.38	1.56	5.47	27.34	72.66	0.86
2001	430	9.53	16.74	4.42	8.37	39.07	60.93	1.76
2002	462	9.52	14.50	11.47	7.36	42.86	57.14	1.52
2003	511	14.48	5.48	2.54	9.00	31.51	68.49	0.38
2004	566	16.43	1.94	0.53	6.71	25.62	74.38	0.12
2005	655	24.73	2.44	0.15	8.85	36.18	63.82	0.10
2006	743	20.86	3.10	0.27	14.94	39.17	60.83	0.15
2007	812	21.55	3.94	0.12	9.48	35.10	64.90	0.18
2008	937	11.10	9.93	1.39	9.39	31.80	68.20	0.89
2009	977	5.02	19.14	3.68	11.16	39.00	61.00	3.82
2010	932	16.20	6.12	0.86	9.12	32.30	67.70	0.38
2011	959	17.94	9.18	0.42	10.01	37.54	62.46	0.51
2012	1,020	9.02	11.47	1.27	8.04	29.80	70.20	1.27
2013	1,106	14.74	10.22	1.08	7.32	33.36	66.64	0.69
2014	1,239	6.78	13.72	0.73	8.31	29.54	70.46	2.02
2015	1,330	5.79	16.92	1.95	9.32	33.98	66.02	2.92
2016	1,363	6.97	18.27	2.05	8.58	35.88	64.12	2.62
2017	1,435	7.80	12.13	0.56	9.90	30.38	69.62	1.55
2018	1,486	9.76	11.98	0.67	8.82	31.22	68.78	1.23
2019	1,534	7.17	6.26	1.04	10.30	24.77	75.23	0.87
2020	1,525	2.10	18.56	1.64	8.79	31.08	68.92	8.84
Weighted average		10.37	11.63	1.61	9.07	32.68	67.32	1.12
Average		10.75	11.54	2.10	8.64	33.03	66.97	2.26
Median		9.53	11.72	1.18	8.80	32.05	67.95	1.25
Standard deviation		6.35	6.33	2.55	2.05	5.10	5.10	3.04
Minimum		2.10	1.94	0.12	4.80	23.58	57.14	0.10
Maximum		24.73	28.04	11.47	14.94	42.86	76.42	12.67
Note: 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 4

Rating Classification Of New Corporate Issuers In Emerging And Frontier Markets
	--First rating--
Year	AAA	AA	A	BBB	BB	B	CCC/C	Total	% IG	% SG
1997		2	3	48	56	47		156	34.0	66.0
1998		2	7	19	33	35		96	29.2	70.8
1999		1	2	17	41	25	3	89	22.5	77.5
2000			4	12	23	29	4	72	22.2	77.8
2001		3	3	19	28	32	11	96	26.0	74.0
2002		2	4	23	46	57	12	144	20.1	79.9
2003			5	25	32	37	17	116	25.9	74.1
2004			9	26	49	29	12	125	28.0	72.0
2005			10	30	39	58	5	142	28.2	71.8
2006		1	12	33	54	74	12	186	24.7	75.3
2007	1		26	36	52	79	9	203	31.0	69.0
2008		1	24	34	41	34	9	143	41.3	58.7
2009			8	18	34	30	13	103	25.2	74.8
2010		2	4	28	24	54	10	122	27.9	72.1
2011		2	9	36	42	62	8	159	29.6	70.4
2012		1	12	30	57	74	10	184	23.4	76.6
2013		2	16	50	68	78	9	223	30.5	69.5
2014		2	23	67	45	49	7	193	47.7	52.3
2015		5	24	57	43	37	9	175	49.1	50.9
2016			18	68	61	39	13	199	43.2	56.8
2017		5	17	33	56	80	5	196	28.1	71.9
2018			13	47	56	68	10	194	30.9	69.1
2019		1	12	33	53	59	6	164	28.0	72.0
2020		3	6	27	28	32	13	109	33.0	67.0
Total	1	35	271	816	1,061	1,198	207	3,589	31.3	68.7
Includes issuers that are assigned new ratings after default as well as those companies that receive ratings for the first time. IG--Investment-grade. SG--Speculative-grade. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Emerging market corporate issuer credit ratings are more concentrated in the 'BBB' and 'BB' rating categories compared with all global corporate issuer ratings. The concentration in the 'BBB' category largely owes to lower sovereign credit ratings in emerging markets; although sovereign ratings don't act as a ceiling on issuer credit ratings, a corporate issuer rated higher than the sovereign must be able to withstand a sovereign default. Meanwhile, the concentration of issuers in the 'BB' rating category reflects limited investor appetite for emerging market debt in lower rating categories.

Frontier market corporate issuer ratings are highly concentrated in the 'B' rating category, but inferences in this study based on our frontier market ratings are limited by small sample sizes, with just 17 rated issuers in frontier markets at the end of 2020, compared with 1,463 in emerging markets and 7,120 globally.

Defaults Were Concentrated By Industry

The leisure time/media (five), real estate (five), transportation (four), and energy and natural resources (three) industries led defaults in emerging and frontier markets in 2020. Three industries' default rates in 2020 were meaningfully above their long-term medians: leisure time/media, high technology/computers/office equipment, and real estate.

Defaults from these five industries in total accounted for nearly three-quarters of 2020 defaults.

Table 5

Annual Emerging And Frontier Markets Corporate Default Rates By Industry
(%)
Year	Aerospace/auto/capital goods/metals	Consumer/service	Energy and natural resources	Financial institutions	Forest and building products/homebuilders	Health care/chemicals	High tech/computers/office equipment
1997	0.00	0.00	0.00	2.63	0.00	0.00	0.00
1998	4.55	3.85	0.00	8.24	5.00	25.00	0.00
1999	23.08	8.11	0.00	1.12	4.55	12.50	0.00
2000	0.00	2.78	6.67	0.00	0.00	12.50	0.00
2001	18.52	2.33	0.00	3.97	15.79	0.00	33.33
2002	7.69	6.67	16.67	2.42	12.50	18.18	0.00
2003	0.00	0.00	0.00	0.00	5.88	0.00	9.09
2004	0.00	0.00	3.23	0.43	5.88	0.00	0.00
2005	0.00	0.00	2.63	0.00	0.00	0.00	0.00
2006	2.33	1.79	0.00	0.00	0.00	0.00	0.00
2007	2.04	0.00	0.00	0.00	0.00	0.00	0.00
2008	0.00	4.88	4.05	0.60	2.56	0.00	0.00
2009	13.21	9.38	2.82	2.73	5.00	8.70	0.00
2010	2.27	0.00	3.17	0.83	0.00	0.00	0.00
2011	0.00	0.00	0.00	0.28	2.63	0.00	0.00
2012	4.17	0.00	2.78	0.52	2.63	2.86	0.00
2013	0.00	1.28	2.60	0.24	7.50	2.38	0.00
2014	1.82	2.04	3.19	0.44	0.00	0.00	0.00
2015	4.84	5.32	3.30	2.26	4.35	0.00	0.00
2016	4.62	5.43	4.71	1.20	0.00	0.00	9.09
2017	0.00	2.20	2.20	0.39	0.00	0.00	0.00
2018	2.20	2.08	0.00	0.58	0.00	0.00	0.00
2019	2.88	0.97	0.00	0.76	3.51	1.52	0.00
2020	0.00	1.87	2.42	0.37	0.00	1.56	9.09
Weighted average	3.27	2.56	2.30	0.89	2.61	1.71	2.07
Average	3.93	2.54	2.52	1.25	3.24	3.55	2.53
Median	2.12	1.95	2.51	0.55	2.60	0.00	0.00
Standard deviation	6.09	2.76	3.55	1.83	4.18	6.79	7.24
Minimum	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	23.08	9.38	16.67	8.24	15.79	25.00	33.33
	Insurance	Leisure time/media	Real estate	Telecom	Transportation	Utility
1997	0.00	0.00	0.00	0.00	0.00	0.00
1998	0.00	5.56	11.11	0.00	6.25	0.00
1999	0.00	12.00	0.00	0.00	16.67	0.00
2000	0.00	0.00	0.00	2.94	10.53	0.00
2001	0.00	0.00	0.00	5.71	5.56	0.00
2002	0.00	45.00	12.50	14.63	0.00	26.67
2003	0.00	8.33	0.00	13.04	5.00	5.08
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	4.17	0.00	3.23	0.00	0.00
2009	0.00	9.09	0.00	4.76	3.03	1.03
2010	0.00	0.00	0.00	0.00	3.13	1.01
2011	0.00	5.00	3.57	0.00	0.00	0.00
2012	0.00	0.00	0.00	0.00	2.50	3.70
2013	0.00	0.00	0.00	5.56	2.13	0.00
2014	0.00	4.17	0.00	0.00	0.00	0.00
2015	0.00	0.00	0.00	0.00	2.67	0.00
2016	0.66	0.00	1.56	3.45	6.02	0.00
2017	0.00	0.00	0.00	1.85	0.00	0.78
2018	0.00	4.55	0.00	0.00	1.96	0.00
2019	0.00	0.00	0.00	5.17	2.04	0.00
2020	0.66	20.83	7.14	1.92	3.06	0.00
Weighted average	0.11	5.45	1.18	2.53	2.48	1.40
Average	0.06	4.95	1.50	2.59	2.94	1.59
Median	0.00	0.00	0.00	0.00	2.08	0.00
Standard deviation	0.19	9.96	3.56	4.03	3.99	5.49
Minimum	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	0.66	45.00	12.50	14.63	16.67	26.67
Includes investment-grade- and speculative-grade-rated entities. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 6

Cumulative Emerging And Frontier Markets Corporate Default Rates By Sector
(%)	--All financials--			--All nonfinancials--
Year	One-year	Three-year	10-year	One-year	Three-year	10-year
1997	2.56	N/A	N/A	0.00	N/A	N/A
1998	8.05	N/A	N/A	4.35	N/A	N/A
1999	1.08	5.13	N/A	7.32	10.71	N/A
2000	0.00	9.20	N/A	2.44	11.41	N/A
2001	3.82	7.53	N/A	4.76	14.63	N/A
2002	2.33	5.07	N/A	16.90	23.98	N/A
2003	0.00	4.46	N/A	4.48	25.27	N/A
2004	0.39	2.33	N/A	0.65	21.38	N/A
2005	0.00	0.45	N/A	0.28	5.52	N/A
2006	0.00	0.39	12.82	0.49	0.98	25.00
2007	0.00	0.00	16.09	0.22	0.56	32.07
2008	0.48	0.00	10.75	2.11	1.23	32.93
2009	2.13	2.23	5.07	5.12	3.74	30.08
2010	0.65	3.13	5.73	1.07	7.47	27.11
2011	0.22	2.99	3.49	0.60	6.50	23.10
2012	0.40	1.08	1.36	2.12	3.43	7.24
2013	0.18	1.08	1.16	1.97	4.43	4.23
2014	0.34	1.00	1.35	1.07	5.00	4.74
2015	1.74	1.83	2.98	2.15	4.65	7.13
2016	1.07	2.58	5.87	2.96	5.63	8.37
2017	0.29	3.01	5.78	0.79	5.73	12.07
2018	0.44	1.83	5.76	0.86	4.51	11.61
2019	0.59	1.18	4.30	1.40	2.12	7.71
2020	0.44	1.48	4.55	2.62	3.95	9.46
Average	1.13	2.63	5.80	2.78	7.86	16.19
Median	0.44	2.03	5.07	2.04	5.26	11.61
Standard deviation	1.77	2.38	4.30	3.53	7.24	10.77
Minimum	0.00	0.00	1.16	0.00	0.56	4.23
Maximum	8.05	9.20	16.09	16.90	25.27	32.93
"All financials" refers to financial institutions and insurance combined. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Defaults Were Concentrated By Region

We group emerging and frontier market countries into three subregions (see Appendix I for a breakdown of each subregion).

In 2020, the Latin American and Caribbean region led with 14 defaults (up from six in 2019). The sharp increase in Latin American and Caribbean defaults came from issuers in Mexico (four defaults; up from two in 2019), Argentina (three defaults; no defaults in 2019), Brazil (three defaults; two defaults in 2019), Chile (three defaults; no defaults in 2019), and Panama (one default; two defaults in 2019).

The Asia-Pacific region and the Europe, Middle East, and Africa (EMEA) region each saw fewer defaults in 2020 than in 2019, with eight and four defaults, respectively.

By country, China led with five defaults in 2020 (down from seven defaults in 2019).

Of the 26 emerging market defaulters in 2020, five were rated confidentially (see table 7). For details on the defaulted companies, including their rating histories, see Appendix IV.

Table 7  |  View Expanded Table

Publicly Rated 2020 Emerging And Frontier Markets Corporate Defaults
Company name	Reason for default	Country	EM/Frontier	Industry	Debt amount (mil. $)	Default date	Rating one year prior to default	Rating three years prior to default	First rating	Date of first rating	EM subregion
Qinghai Provincial Investment Group Co. Ltd.	Missed interest	China	EM	Energy and natural resources	850	1/14/2020	B+	-	BB-	2/7/2017	Asia-Pacific
Tunghsu Group Co. Ltd.	Missed principal/interest	China	EM	High tech/computers/office equipment	390	2/21/2020	B-	-	B+	5/31/2017	Asia-Pacific
Grain Insurance Co. JSC	Missed interest	Kazakhstan	EM	Insurance	0	3/20/2020	B	B	B	11/8/2012	EMEA
Vestel Elektronik Sanayi Ve Ticaret A.S.	Distressed exchange	Turkey	EM	High tech/computers/office equipment	0	4/10/2020	CCC+	B-	B+	6/9/2000	EMEA
NMC Health PLC	Missed interest	UAE	EM	Health care/chemicals	400	4/14/2020	BB+	-	BB+	4/20/2018	EMEA
O1 Properties Ltd.	Missed interest	Cyprus	EM	Real estate	552	4/16/2020	CCC	B+	B+	7/1/2013	EMEA
Enjoy S.A.	Bankruptcy	Chile	EM	Leisure time/media	300	4/24/2020	B	-	B-	5/11/2017	Latin America and Carribean
Avianca Holdings S.A.	Chapter 11	Panama	EM	Transportation	1,595	5/11/2020	-	-	B-	12/20/2019	Latin America and Carribean
Yihua Enterprise (Group) Co. Ltd.	Missed interest	China	EM	Consumer/service sector	0	5/11/2020	B-	-	B	9/11/2017	Asia-Pacific
Aeropuertos Argentina 2000 S.A.	Distressed exchange	Argentina	EM	Transportation	750	5/19/2020	B+	B+	B	11/26/2010	Latin America and Carribean
Latam Airlines Group S.A.	Chapter 11	Chile	EM	Transportation	1,800	5/27/2020	BB-	BB-	BB	6/10/2013	Latin America and Carribean
Grupo Famsa S.A.B. de C.V.	Missed principal	Mexico	EM	Consumer/service sector	81	6/2/2020	B-	B	B	7/12/2010	Latin America and Carribean
Grupo Posadas S.A.B. de C.V.	Missed interest	Mexico	EM	Leisure time/media	400	7/1/2020	B+	B+	BB-	7/15/2004	Latin America and Carribean
Grupo Aeromexico S.A.B. de C.V.	Chapter 11	Mexico	EM	Transportation	400	7/1/2020	-	-	BB-	1/24/2020	Latin America and Carribean
PT Modernland Realty Tbk.	Missed principal/interest	Indonesia	EM	Real estate	390	7/8/2020	B	B	B	7/28/2013	Asia-Pacific
Seadrill Partners LLC	Missed interest	Marshall Islands	Frontier	Energy and natural resources	2,900	7/17/2020	CCC+	CCC+	BB-	6/9/2014	Asia-Pacific
Oi S.A.	Distressed exchange	Brazil	EM	Telecommunications	1,654	10/9/2020	B	-	CCC+	3/22/2018	Latin America and Carribean
Banco Hipotecario S.A.	Distressed exchange	Argentina	EM	Financial institutions	350	10/14/2020	B-	B	B-	4/25/2009	Latin America and Carribean
Corp Group Banking S.A.	Missed interest	Chile	EM	Financial institutions	500	10/16/2020	CCC+	B-	BB	1/18/2013	Latin America and Carribean
PT Alam Sutera Realty Tbk.	Distressed exchange	Indonesia	EM	Real estate	545	10/28/2020	B-	B	B	3/12/2012	Asia-Pacific
IRSA Inversiones y Representaciones S.A.	Distressed exchange	Argentina	EM	Real estate	360	11/12/2020	B-	B	BB	6/1/1999	Latin America and Carribean
		Total			14,217
Excludes confidential issuers. Debt excludes confidential debt. EM--Emerging markets. EMEA--Europe, Middle East, and Africa. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Three of the historical periods with relatively high emerging market default rates were associated with shocks that stemmed from the Asian financial crisis. In 1998, defaults were concentrated among Indonesian nonfinancial companies and Russian financial companies, with the defaults in Indonesia coming amid the political unrest that ensued from the crisis and those in Russia amid the collapse of its banking system. The following year, defaults in Asia-Pacific continued, but as the financial crisis spilled into other regions, the majority of defaults came from issuers in Latin America.

Then, in 2002, the emerging market corporate default rate spiked to its all-time high when the recession in Argentina, which began in 1998, deepened into a financial crisis, with nearly three-quarters of defaults that year coming from Argentine issuers.

In 2015, most emerging market corporate defaults were from nonfinancial issuers in Brazil amid a worsening recession and from financial issuers in Russia amid a financial crisis, which in part stemmed from sanctions imposed on Russia following its 2014 invasion of Ukraine.

Ratings Performance Was Generally Consistent With Global Trends

The sample sizes for emerging and frontier markets present a challenge in our analysis. For this study, there were 21,671 issuers in the global pool from 1981 to 2020, compared with 3,718 issuers in the combined emerging and frontier markets pool from 1997 to 2020. From 1997 to 2020, corporate defaults in emerging and frontier markets totaled just 386 and 16, respectively--a fraction of the 2,600 defaults globally during that time.

Additionally, while the study period for emerging and frontier markets is 1997-2020, more than two-thirds of these issuers were assigned ratings after 2005, and averages are more heavily influenced by recent years. The sample sizes for emerging and frontier markets should be considered while reviewing default trends.

Average times to default and default rates by rating modifier

In emerging markets, the average times to default across most rating categories are shorter than in the global pool. Higher ratings generally take longer to default, but this is less evident in emerging markets than in the global pool because of the paucity of investment-grade (rated 'BBB-' or higher) defaults (see table 8).

The average time to default from the original rating for 'A' rating category issuers in emerging markets should be considered an anomaly, with just one default in this rating category from 1997 to 2020; this issuer was first rated 'A+' confidentially in 2008, was downgraded twice in 2009 (by a total of three notches) to 'BBB+', and then had the rating withdrawn before it defaulted later in 2009. Similarly, the average time to default across rating categories in frontier markets should be viewed with the small sample sizes in mind.

The emerging market rating categories with the largest sample sizes exhibit the same relationship that appears in the global data: Emerging market corporate issuers rated in the 'B' category took 3.5 years to default on average, while those rated in the 'BB' category took 5.2 years. However, this relationship appears to weaken--and the average time to default is shorter--using post-original ratings (see table 9).

Table 8

Time To Default From Original Rating Among Corporate Defaulters
Original rating	Defaults	Average years from original rating	Median years from original rating	Standard deviation of years from original rating
Emerging market (1997-2020)
AAA	N.A.	N.A.	N.A.	N.A.
AA	N.A.	N.A.	N.A.	N.A.
A	1	1.6	1.6	N.A.
BBB	41	5.9	4.8	4.9
BB	113	5.2	4.3	4.5
B	183	3.5	2.6	3.2
CCC/C	48	2.8	1.4	3.6
Total	386	4.2	3.1	4.0
Frontier market (1997-2020)
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	N.A.	N.A.	N.A.	N.A.
BB	6	8.9	8.1	5.4
B	7	3.5	3.4	1.8
CCC/C	3	0.6	0.5	0.4
Total	16	5.0	3.8	4.7
Global (1981-2020)
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	648	7.1	5.4	5.9
B	1,734	5.1	3.7	4.3
CCC/C	354	2.2	1.3	2.7
Total	3,098	5.9	4.1	5.7
N.A.--Not available. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 9

Time To Default From Post-Original Ratings Among Corporate Defaulters
Rating path to default	Average years from rating category	Median years from rating category	Standard deviation of years from rating category
Emerging market (1997-2020)
AAA	N.A.	N.A.	N.A.
AA	N.A.	N.A.	N.A.
A	6.1	7.4	4.8
BBB	7.3	6.2	4.9
BB	2.9	1.8	3.4
B	2.8	1.1	4.0
CCC/C	0.7	0.2	1.7
Total	2.0	0.7	3.4
Frontier market (1997-2020)
AAA	N.A.	N.A.	N.A.
AA	N.A.	N.A.	N.A.
A	N.A.	N.A.	N.A.
BBB	N.A.	N.A.	N.A.
BB	10.9	10.9	N.A.
B	3.1	2.6	2.7
CCC/C	1.0	0.3	1.2
Total	2.2	1.2	2.7
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	3.2	1.2	4.9
N.A.--Not available. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Looking at default rates by modifier shows that lower rating categories experience higher default rates on average historically, though variability is possible in any given year (see table 10). Nevertheless, data from past default cycles shows a preponderance of defaults from the lowest rating categories.

Table 10

Emerging And Frontier Markets Corporate Default Rates By Rating Modifier
(%)	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C
1997	N/A	0.00	N/A	0.00	0.00	0.00	0.00	0.00	6.67	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A
1998	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.77	3.85	3.23	0.00	16.67	20.00	22.22	N/A
1999	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.63	2.27	12.50	18.18	14.29	27.27
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	2.44	4.76	5.26	14.29
2001	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.61	14.55	7.27	3.45	4.76	19.05
2002	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.70	3.33	9.52	2.22	19.51	16.13	58.18
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	3.08	5.56	2.50	18.18
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	1.43	1.56	0.00	0.00	2.70
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	1.67	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	1.02	0.00	0.00	0.00	4.55
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	4.17
2008	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.06	0.00	1.14	0.75	2.91	3.41	4.00	9.52
2009	0.00	0.00	0.00	0.00	2.70	0.00	0.00	1.30	0.00	0.97	0.00	1.00	1.38	9.86	8.00	11.48	41.67
2010	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.27	0.00	1.57	0.00	0.00	0.00	15.15
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	2.70	11.11
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	2.17	2.25	0.00	7.69	13.79
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	0.94	1.25	1.98	4.35	14.29
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	1.11	0.85	2.56	8.77
2015	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.75	0.00	5.45	5.61	1.59	20.34
2016	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.79	0.00	0.57	0.00	1.69	1.90	3.61	12.79	18.60
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	1.22	1.06	15.79
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	2.54	3.26	15.38
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	2.56	1.44	6.25	20.00
2020	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.82	0.00	1.02	0.00	3.25	7.53	44.00
Average	0.00	0.00	0.00	0.00	0.11	0.00	0.00	0.05	0.31	0.24	0.38	0.57	1.60	3.04	4.38	5.43	18.04
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	0.37	1.73	2.26	3.63	15.27
Standard deviation	0.00	0.00	0.00	0.00	0.55	0.00	0.00	0.27	1.36	0.81	0.96	1.06	3.39	4.38	6.13	5.97	14.05
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	2.70	0.00	0.00	1.30	6.67	3.77	3.85	3.33	14.55	16.67	20.00	22.22	58.18
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Transition and cumulative default rate tables

Analysis of 2020 rating transitions suggests that rating activity in emerging and frontier markets is consistent with global trends, which have shown a clear correlation between low ratings and the probability of default.

Investment-grade-rated issuers in emerging markets tend to have greater ratings stability (as measured by the rate of transitions) than their speculative-grade counterparts (see table 11). For instance, about 91.1% of emerging market issuers in the 'A' rating category as of Jan. 1, 2020, were still rated in that category at the end of 2020, whereas the comparable metric for issuers rated in the 'B' category was 67.9%.

Table 11

One-Year 2020 Corporate Transition Rates
(%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Emerging market
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	90.00	0.00	0.00	0.00	0.00	0.00	0.00	10.00
A	0.00	0.00	91.10	5.93	0.00	0.42	0.00	0.00	2.54
BBB	0.00	0.00	0.00	89.81	5.20	0.00	0.00	0.00	4.99
BB	0.00	0.00	0.00	0.46	79.45	8.31	0.69	0.69	10.39
B	0.00	0.00	0.00	0.00	0.32	67.85	12.54	3.54	15.76
CCC/C	0.00	0.00	0.00	0.00	0.00	4.17	29.17	41.67	25.00
Frontier market
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
A	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00
BB	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	100.00
B	0.00	0.00	0.00	0.00	0.00	85.71	7.14	0.00	7.14
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	100.00	0.00
Global
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	87.31	9.60	0.00	0.00	0.00	0.00	0.00	3.10
A	0.00	0.00	92.89	4.04	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	78.18	11.38	0.86	0.94	7.87
B	0.00	0.00	0.00	0.05	0.97	72.00	12.62	3.53	10.83
CCC/C	0.00	0.00	0.00	0.00	0.00	5.49	34.18	47.68	12.66
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Emerging market corporate rating transitions also remain similar to global corporate transitions over the long term. Of the emerging market issuers rated in the 'A' rating category from 1997 to 2020, 91% were still rated in that category after one year, whereas 71.4% of issuers rated in the 'B' rating category remained at that rating (see table 12). Transition rates for emerging markets are also generally consistent with global patterns in periods greater than one year (see table 13).

By modifier, rating transitions generally display the same relationship, but there is some variation between adjacent rating categories; this in part reflects the sample sizes for each rating (see table 14).

Table 12

Average One-Year Corporate Transition Rates
(%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Emerging market (1997-2020)
AAA	83.78	13.51	0.00	0.00	0.00	0.00	0.00	0.00	2.70
	(39.10)	(36.26)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(17.20)
AA	1.77	85.46	10.28	0.00	0.00	0.00	0.00	0.00	2.48
	(8.99)	(17.39)	(15.12)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.40)
A	0.00	0.88	90.98	5.06	0.27	0.23	0.00	0.04	2.55
	(0.00)	(1.48)	(4.63)	(3.72)	(0.76)	(0.51)	(0.00)	(0.16)	(1.43)
BBB	0.00	0.02	1.97	87.08	4.83	0.33	0.16	0.11	5.51
	(0.00)	(0.09)	(2.07)	(5.54)	(4.20)	(1.10)	(0.98)	(0.36)	(2.02)
BB	0.00	0.00	0.02	3.89	79.82	5.00	0.72	0.63	9.93
	(0.00)	(0.00)	(0.11)	(2.48)	(4.08)	(2.41)	(1.94)	(1.19)	(3.11)
B	0.00	0.00	0.00	0.06	5.72	71.35	4.22	3.29	15.36
	(0.00)	(0.00)	(0.00)	(0.24)	(4.07)	(4.70)	(3.76)	(3.51)	(3.08)
CCC/C	0.00	0.00	0.00	0.00	0.43	18.33	44.88	18.33	18.04
	(0.00)	(0.00)	(0.00)	(0.00)	(0.97)	(13.72)	(13.90)	(15.67)	(9.70)
Frontier market (1997-2020)
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	72.73	18.18	0.00	0.00	0.00	0.00	0.00	9.09
	(0.00)	(41.22)	(40.66)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(20.33)
A	0.00	4.76	85.71	4.76	0.00	0.00	0.00	0.00	4.76
	(0.00)	(15.10)	(28.15)	(21.91)	(0.00)	(0.00)	(0.00)	(0.00)	(15.10)
BBB	0.00	0.00	0.00	84.62	0.00	0.00	0.00	0.00	15.38
	(0.00)	(0.00)	(0.00)	(32.71)	(0.00)	(0.00)	(0.00)	(0.00)	(32.71)
BB	0.00	0.00	0.00	1.32	76.32	10.53	0.00	0.00	11.84
	(0.00)	(0.00)	(0.00)	(8.18)	(24.40)	(17.87)	(0.00)	(0.00)	(20.74)
B	0.00	0.00	0.00	0.00	1.45	82.61	7.25	2.90	5.80
	(0.00)	(0.00)	(0.00)	(0.00)	(3.99)	(15.66)	(10.41)	(8.19)	(12.74)
CCC/C	0.00	0.00	0.00	0.00	0.00	5.00	40.00	40.00	15.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(12.62)	(34.64)	(32.55)	(31.82)
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	87.24	7.76	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	88.59	5.00	0.26	0.11	0.02	0.05	4.34
	(0.09)	(1.05)	(3.75)	(2.15)	(0.38)	(0.24)	(0.06)	(0.10)	(1.68)
BBB	0.00	0.09	3.25	86.50	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	77.81	6.80	0.55	0.63	9.51
	(0.05)	(0.08)	(0.24)	(2.01)	(4.37)	(3.08)	(0.70)	(0.81)	(2.16)
B	0.00	0.02	0.07	0.15	4.54	74.60	4.96	3.33	12.33
	(0.00)	(0.08)	(0.19)	(0.21)	(2.21)	(3.97)	(2.75)	(3.03)	(2.17)
CCC/C	0.00	0.00	0.10	0.17	0.55	12.47	43.10	28.31	15.29
	(0.00)	(0.00)	(0.40)	(0.62)	(0.88)	(7.45)	(8.49)	(11.29)	(4.95)
The emerging and frontier market figures are for 1997-2020. Numbers in parentheses are weighted standard deviations. 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
Emerging market (1997-2020)
AAA	67.57	27.03	0.00	0.00	0.00	0.00	0.00	0.00	5.41
	(49.65)	(47.10)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
AA	3.82	73.28	19.08	0.00	0.00	0.00	0.00	0.00	3.82
	(12.89)	(23.66)	(22.06)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.46)
A	0.00	1.55	82.69	9.24	0.63	0.42	0.00	0.04	5.44
	(0.00)	(1.91)	(6.05)	(4.32)	(1.31)	(0.83)	(0.00)	(0.17)	(2.25)
BBB	0.00	0.02	4.04	76.44	7.81	0.71	0.39	0.51	10.09
	(0.00)	(0.10)	(3.24)	(6.94)	(5.67)	(1.39)	(1.32)	(1.94)	(2.86)
BB	0.00	0.00	0.07	7.28	64.87	7.18	0.97	1.71	17.92
	(0.00)	(0.00)	(0.18)	(3.68)	(5.57)	(2.80)	(1.97)	(3.37)	(3.75)
B	0.00	0.00	0.00	0.18	9.71	53.63	4.71	6.81	24.95
	(0.00)	(0.00)	(0.00)	(0.43)	(6.50)	(5.25)	(3.51)	(5.51)	(3.98)
CCC/C	0.00	0.00	0.00	0.15	0.60	28.40	20.48	22.27	28.10
	(0.00)	(0.00)	(0.00)	(0.63)	(1.54)	(14.58)	(10.78)	(15.52)	(11.10)
Frontier market (1997-2020)
AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
AA	0.00	54.55	27.27	0.00	0.00	0.00	0.00	0.00	18.18
	(0.00)	(47.43)	(46.95)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(33.88)
A	0.00	10.00	70.00	10.00	0.00	0.00	0.00	0.00	10.00
	(0.00)	(20.62)	(37.87)	(30.92)	(0.00)	(0.00)	(0.00)	(0.00)	(26.28)
BBB	0.00	0.00	0.00	70.00	0.00	0.00	0.00	0.00	30.00
	(0.00)	(0.00)	(0.00)	(36.33)	(0.00)	(0.00)	(0.00)	(0.00)	(36.33)
BB	0.00	0.00	0.00	2.67	58.67	16.00	1.33	1.33	20.00
	(0.00)	(0.00)	(0.00)	(10.43)	(27.82)	(15.38)	(5.10)	(5.10)	(23.46)
B	0.00	0.00	0.00	0.00	1.61	68.55	11.29	7.26	11.29
	(0.00)	(0.00)	(0.00)	(0.00)	(4.19)	(17.97)	(14.24)	(11.04)	(16.95)
CCC/C	0.00	0.00	0.00	0.00	0.00	5.26	15.79	52.63	26.32
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(12.99)	(16.32)	(33.84)	(36.93)
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	13.71	1.20	0.18	0.13	0.02	0.06	7.54
	(0.70)	(8.15)	(5.90)	(1.11)	(0.33)	(0.28)	(0.06)	(0.12)	(2.90)
A	0.04	2.89	78.64	8.68	0.68	0.25	0.04	0.13	8.65
	(0.07)	(1.71)	(5.89)	(2.91)	(0.77)	(0.40)	(0.10)	(0.19)	(2.66)
BBB	0.02	0.16	6.03	75.30	5.62	0.97	0.19	0.44	11.26
	(0.07)	(0.23)	(2.46)	(6.20)	(1.99)	(1.06)	(0.29)	(0.62)	(2.50)
BB	0.01	0.04	0.26	8.17	61.03	9.99	1.00	1.92	17.60
	(0.05)	(0.10)	(0.48)	(2.97)	(6.40)	(2.72)	(0.88)	(2.14)	(2.98)
B	0.00	0.03	0.12	0.36	7.73	55.84	5.66	7.77	22.48
	(0.00)	(0.10)	(0.28)	(0.43)	(3.29)	(4.93)	(2.46)	(5.50)	(3.57)
CCC/C	0.00	0.00	0.13	0.45	1.01	16.70	20.55	37.27	23.89
	(0.00)	(0.00)	(0.45)	(1.12)	(1.10)	(7.36)	(7.34)	(11.97)	(6.85)
The emerging and frontier market figures are for 1997-2020. Numbers in parentheses are weighted standard deviations. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 14

Average One-Year Transition Rates For Emerging And Frontier Markets Corporate Issuers By Rating Modifier (1997-2020)
(%)
From/to	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC	D	NR
AAA	83.78	13.51	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	2.70
	(39.10)	(36.26)	(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)	(17.20)
AA+	19.23	76.92	3.85	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
	(43.17)	(46.15)	(21.07)	(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	11.43	68.57	14.29	0.00	0.00	2.86	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)	(28.86)	(38.28)	(30.36)	(0.00)	(0.00)	(17.17)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(9.62)
AA-	0.00	0.00	2.59	81.47	12.50	0.43	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.02
	(0.00)	(0.00)	(12.52)	(18.00)	(16.11)	(1.74)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(6.63)
A+	0.00	0.00	0.19	4.10	81.90	8.96	0.93	0.37	0.37	0.00	0.37	0.00	0.00	0.37	0.00	0.00	0.00	0.19	2.24
	(0.00)	(0.00)	(0.70)	(6.49)	(11.02)	(10.10)	(2.23)	(1.76)	(0.97)	(0.00)	(1.40)	(0.00)	(0.00)	(1.40)	(0.00)	(0.00)	(0.00)	(0.70)	(2.26)
A	0.00	0.00	0.00	0.12	4.56	83.21	6.95	1.32	0.60	0.12	0.00	0.00	0.00	0.12	0.00	0.00	0.00	0.00	3.00
	(0.00)	(0.00)	(0.00)	(0.53)	(6.17)	(10.87)	(8.16)	(3.33)	(2.37)	(1.17)	(0.00)	(0.00)	(0.00)	(0.51)	(0.00)	(0.00)	(0.00)	(0.00)	(2.89)
A-	0.00	0.00	0.00	0.00	0.16	5.24	82.71	7.51	0.86	0.47	0.08	0.31	0.00	0.08	0.16	0.00	0.00	0.00	2.43
	(0.00)	(0.00)	(0.00)	(0.00)	(0.74)	(5.21)	(8.31)	(4.73)	(1.68)	(1.48)	(0.34)	(1.37)	(0.00)	(0.33)	(0.43)	(0.00)	(0.00)	(0.00)	(2.11)
BBB+	0.00	0.00	0.00	0.00	0.00	0.21	5.71	79.99	8.64	0.96	0.05	0.11	0.11	0.05	0.00	0.00	0.00	0.05	4.11
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.69)	(5.24)	(7.49)	(7.15)	(1.25)	(0.29)	(0.51)	(0.38)	(0.25)	(0.00)	(0.00)	(0.00)	(0.26)	(2.22)
BBB	0.00	0.00	0.00	0.05	0.05	0.05	0.16	9.06	75.62	7.61	1.45	0.57	0.16	0.10	0.00	0.05	0.05	0.10	4.92
	(0.00)	(0.00)	(0.00)	(0.27)	(0.24)	(0.27)	(0.42)	(7.70)	(8.78)	(6.87)	(2.34)	(1.65)	(0.54)	(0.58)	(0.00)	(0.38)	(0.44)	(0.63)	(3.63)
BBB-	0.00	0.00	0.00	0.00	0.00	0.08	0.13	0.72	7.25	72.83	8.35	1.87	0.38	0.21	0.30	0.17	0.38	0.17	7.16
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.38)	(0.57)	(1.18)	(4.77)	(9.68)	(8.11)	(2.78)	(0.68)	(0.71)	(1.15)	(0.82)	(2.17)	(0.63)	(3.14)
BB+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.16	0.64	10.90	65.15	10.42	2.03	0.53	0.27	0.21	0.53	0.27	8.87
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.56)	(1.89)	(8.14)	(8.25)	(9.06)	(2.34)	(0.79)	(1.18)	(0.57)	(2.46)	(0.66)	(4.60)
BB	0.00	0.00	0.00	0.00	0.00	0.00	0.05	0.09	0.09	0.82	10.47	64.52	10.29	1.77	0.63	0.27	0.91	0.36	9.74
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.28)	(0.34)	(0.33)	(0.96)	(6.48)	(10.16)	(8.70)	(1.76)	(0.86)	(0.76)	(2.67)	(0.82)	(4.11)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.13	0.21	0.80	9.75	65.84	8.03	2.06	0.38	0.67	1.13	11.01
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.66)	(1.26)	(1.42)	(6.55)	(6.88)	(4.04)	(1.73)	(0.56)	(1.41)	(2.53)	(3.51)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.06	0.33	1.32	11.18	56.06	9.58	3.25	1.76	2.37	14.10
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.30)	(0.94)	(1.86)	(6.55)	(9.41)	(5.48)	(2.30)	(2.67)	(3.41)	(4.65)
B	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.06	0.12	0.18	1.49	10.37	55.36	11.56	3.16	3.10	14.60
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.30)	(0.43)	(0.48)	(3.09)	(7.11)	(9.46)	(7.65)	(3.43)	(4.33)	(5.31)
B-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.08	0.00	0.23	0.30	2.63	12.25	53.49	9.24	4.73	17.05
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.41)	(0.00)	(0.62)	(0.87)	(4.66)	(6.93)	(7.67)	(9.66)	(4.64)	(5.60)
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	0.42	0.84	1.82	15.29	44.74	18.93	17.95
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.94)	(2.18)	(2.09)	(11.41)	(14.09)	(15.28)	(9.49)
Numbers in parentheses are weighted standard deviations. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Lower ratings and defaults in emerging and frontier markets remain correlated over longer time horizons (see charts 4-5 and tables 15-16). In emerging markets, no issuers rated in the 'AAA' or 'AA' rating categories have ever defaulted, and there was just one default in the 'A' category from 1997 to 2020. Default rates increase at lower ratings. For instance, emerging market issuers in the 'BB' rating category had an average default rate of 0.63% after one year and 6.87% after 10 years, while those in the 'B' rating category had an average default rate of 3.29% after one year and 17.58% after 10 years.

Table 15

Comparison Of Corporate Cumulative Average Default Rates
(%)	--Time horizon (years)--
From/to	1	2	3	4	5	6	7	8	9	10
Emerging market (1997-2020)
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	0.04	0.04	0.04	0.04	0.04	0.04	0.11	0.19	0.28	0.38
BBB	0.11	0.50	0.94	1.47	1.95	2.36	2.54	2.73	2.91	3.03
BB	0.63	1.72	2.92	4.03	5.02	5.61	6.12	6.35	6.61	6.87
B	3.29	6.83	9.39	11.47	12.87	14.02	15.03	16.02	16.76	17.58
CCC/C	18.33	23.06	25.67	26.47	27.49	28.22	28.82	29.52	30.26	30.78
Investment-grade	0.09	0.35	0.65	1.01	1.34	1.63	1.76	1.92	2.07	2.18
Speculative-grade	2.73	5.02	6.85	8.33	9.50	10.32	11.05	11.63	12.13	12.63
All rated	1.58	2.99	4.17	5.17	5.99	6.58	7.07	7.48	7.83	8.18
Frontier market (1997-2020)
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	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
BB	0.00	1.33	1.33	2.70	4.11	7.06	7.06	10.38	13.83	15.66
B	2.90	6.94	12.58	18.12	25.79	30.25	33.57	35.47	37.62	40.11
CCC/C	40.00	55.00	65.00	70.83	70.83	70.83	70.83	70.83	70.83	70.83
Investment-grade	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Speculative-grade	5.13	9.25	13.26	17.13	21.33	24.64	26.08	28.43	30.99	32.86
All rated	4.30	7.77	11.16	14.43	18.02	20.86	22.12	24.21	26.50	28.21
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	7.74	8.88	9.90	10.81	11.64
B	3.33	7.79	11.72	14.86	17.32	19.33	20.95	22.27	23.45	24.56
CCC/C	28.31	38.32	43.41	46.35	48.57	49.60	50.73	51.48	52.15	52.75
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	10.17	12.61	14.62	16.28	17.66	18.81	19.84	20.78
All rated	1.53	2.99	4.26	5.34	6.24	7.00	7.63	8.17	8.65	9.10
The emerging and frontier market figures are for 1997-2020. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 16

Emerging And Frontier Markets Corporate Cumulative Average Default Rates By Rating Modifier (1997-2020)
(%)	--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+	0.19	0.19	0.19	0.19	0.19	0.19	0.19	0.19	0.19	0.19
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	0.15	0.32	0.51	0.73
BBB+	0.05	0.11	0.11	0.11	0.19	0.38	0.69	1.05	1.45	1.74
BBB	0.10	0.16	0.34	0.80	1.17	1.65	1.65	1.65	1.65	1.77
BBB-	0.17	1.08	2.07	3.03	3.91	4.41	4.63	4.87	5.05	5.05
BB+	0.27	1.01	1.81	2.49	3.01	3.09	3.19	3.19	3.31	3.58
BB	0.36	1.56	2.68	3.63	4.64	4.85	5.31	5.65	6.02	6.44
BB-	1.13	2.42	3.98	5.62	6.98	8.38	9.20	9.65	10.05	10.22
B+	2.37	5.59	7.80	9.43	10.59	11.62	12.23	12.88	13.09	13.20
B	3.10	6.57	9.53	11.99	13.72	15.03	16.57	17.96	19.39	21.23
B-	4.73	8.84	11.69	14.21	16.06	17.40	18.48	19.53	20.28	20.94
CCC/C	18.93	23.96	26.80	27.73	28.72	29.43	30.02	30.70	31.42	31.93
Investment-grade	0.09	0.35	0.65	1.01	1.34	1.62	1.76	1.91	2.06	2.17
Speculative-grade	2.78	5.10	6.98	8.50	9.72	10.60	11.34	11.95	12.49	13.02
All rated	1.61	3.06	4.26	5.29	6.14	6.77	7.26	7.70	8.07	8.44
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Gini ratios and Lorenz curves

As in our global default study, the default data in emerging markets indicates that issuer credit ratings are effective indicators of relative credit risk over time. We measure this relationship with movements in Gini ratios.

Gini ratios measure the rank-ordering power of ratings over a given time horizon and show the ratio of actual rank-ordering performance to theoretically perfect rank ordering. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the Gini ratio would be 100%. Among rated corporate issuers based in emerging and frontier markets, the one-year Gini ratios were 85.5% and 100% in 2020, respectively.

Growth in the number of emerging and frontier markets corporate issuers rated by S&P Global Ratings will continue to make weighted average Gini ratios more meaningful, as well as lower the likelihood of data distortion by outliers, which affects long-term averages. (For definitions and more information on the Gini methodology, see Appendix III.)

Table 17

Corporate Gini Coefficients By Region
(%)	--Time horizon--
Region	One-year	Three-year	Five-year	Seven-year
Global	82.85	75.30	71.52	69.13
U.S.	80.99	72.89	69.06	66.64
Europe	90.41	85.07	82.31	79.68
Frontier market	78.87	67.86	65.95	63.03
Emerging market	75.63	61.43	54.01	49.44
Emerging and frontier market figures are for 1997-2020. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

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 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 be assigned an issuer credit rating.

While the 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 the lower priority in bankruptcy and ultimate recovery expectations. Alternatively, secured debt may receive a rating that is above 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.

The 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 Dec. 31, 1996. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.

Issuers included in this study

Emerging markets in this study consist of the following subregions:

Asia-Pacific--Bangladesh, Bhutan, China, Fiji, Hong Kong, India, Indonesia, Macao Special Administrative Region of China, Malaysia, Mongolia, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Taiwan, Thailand, and Vietnam

EMEA--Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia and Herzegovina, Bulgaria, Cote d'Ivoire, Croatia, Cyprus, Czech Republic, Egypt, Estonia, Gabon, Georgia, Ghana, Greece, Hungary, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Mauritius, Montenegro, Morocco, Namibia, Nigeria, Oman, Poland, Qatar, Republic of Moldova, Romania, Russia, Saudi Arabia, Slovakia, Slovenia, South Africa, Tunisia, Turkey, Ukraine, United Arab Emirates, and Uzbekistan

Latin America and Caribbean--Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, and Uruguay

Frontier markets in this study consist of the following subregions:

Asia-Pacific--Cambodia and Marshall Islands

EMEA--Liberia, Syrian Arab Republic, and Togo

Latin America and Caribbean--Aruba, Bahamas, Curacao, Netherlands Antilles*, Turks and Caicos Islands, and Venezuela

*The Netherlands Antilles was dissolved in 2010.

This study analyzes the rating histories of 3,718 emerging and frontier market corporate issuers with credit ratings from S&P Global Ratings between Jan. 1, 1997, and 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 or government entity. 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.

In this study, the insurance industry includes life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, and title insurance. This study also groups insurance service providers (such as insurance brokers and third-party administrators that are rated according to corporate criteria) with the insurance industry.

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 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 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 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. On July 5, 2019, we removed 'R' from all rating scales.

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 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 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 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, such as by ensuring that default rates account for rating migration and can 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; these methods might 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 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 update revises results to the same starting date of Dec. 31, 1996, to avoid continuity problems.

Entities 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 entities with active ratings as of the beginning date of a given pool, 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 1998 static pool consists of all companies rated as of 12:01 a.m. on Jan. 1, 1998, while the 1999 static pool consists of those companies first rated in 1998 and the surviving members of the 1998 static pool. All rating changes that took place in 1998 are reflected in the newly formed 1999 static pool. We used this same method to form static pools for each year in the study.

Consider the following example: S&P Global Ratings Research downgraded an issuer that was originally rated 'BB' in mid-1998 to 'B' in 2000 and then withdrew the rating (NR) in 2002; the company subsequently defaulted ('D') in 2005. This hypothetical company would be included in the 1999 and 2000 pools with the 'BB' rating, which was the rating at the beginning of those years. Likewise, the company would be included in the 2001 and 2002 pools with the 'B' rating. The company would not be part of the 1998 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 2002 because S&P Global Ratings had withdrawn the rating by then. Yet each of the four pools in which this company was included (1999-2002) would record its 2005 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 24 years the study covers.

Issuer-weighted default rates.  All default rates that appear in this study are calculated 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 use 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.  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 calculate 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. The weights are based on the number of issuers in each static pool. The cumulative default rate is one minus the product of the proportion of survivors (nondefaulters).

Standard deviations.  Many of the exhibits 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 in default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. Standard deviations are also shown to provide a gauge of the dispersion of the ranges of data behind these averages.

For the transition matrices in tables 12-14 and 24-27, the standard deviation for each cell in a given matrix is calculated using the data from each of the underlying cohort years that contribute to the averages. For example, in the average one-year emerging market transition matrix in table 12, each cell's standard deviation is calculated from the series of that particular cell in each of the 24 cohorts beginning with the 1997 cohort and ending with the 2020 cohort.

Time sample.  This study limits the reporting of default rates in the emerging markets to the 24-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 24 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' standards have been consistent over time. Adverse business conditions tend to coincide with default upswings for all pools. Speculative-grade issuers have been hit the hardest by these upswings, but investment-grade default rates also increase in stressful periods.

Transition analysis

Transition rates compare the issuer credit ratings at the beginning of a period with the 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. We counted an issuer that remained rated for more than one year as many times as the number of years it was rated.

For instance, an issuer continuously rated from mid-1999 to mid-2006 would appear in the six consecutive one-year transition matrices from 2000 to 2005. If the rating on the issuer was withdrawn in the middle of 2006, it would be included in the column representing transitions to NR in the 2006 transition matrix. Similarly, if it defaulted in the middle of 2006, it would be included in the column representing transitions to 'D' in the 2006 one-year transition matrix.

All 1997 static pool members still rated on Dec. 31, 2020, had 24 one-year transitions, while companies first rated on Jan. 1, 2020, had only one. Each one-year transition matrix displays all rating movements 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 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 (see tables 12 and 13).

The only ratings considered in these calculations are those on entities 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, downgraded to 'BBB' in the middle of the year, and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would only be included in the percentage of issuers that began the year as 'A' that 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 it would be considered either rated 'D' or not rated as of Dec. 31 of that particular year.

Multiyear transitions

We also calculated multiyear transitions for periods of two years 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, we could calculate two-year transition matrices by comparing the ratings at the beginning of the years 1997-2019 with the ratings at the end of the years 1998-2020 (see table 13). Otherwise, the methodology 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 (see tables 13 and 24-27). Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.

Comparing transition rates with default rates

Rating transition rates may be compared with the marginal and cumulative default rates. For example, the one-year default rate column of table 15 is equivalent to column 'D' of the average one-year transition matrix in table 12 and the cumulative average in the summary statistics of the year one column in table 20.

However, the two-year default rate column in table 15 is not the same as column 'D' of the average two-year transition matrix in table 13. This difference results from the different methods of calculating default rates. The default rates in table 13 are calculated as not conditional on survival, while those in table 15 are average default rates conditional on survival. The two-year default rates in table 15 are calculated in the same way as those in the cumulative average section for the year two column in table 20, while those in the 'D' column of table 21 are equivalent to the sum of all the defaults behind the year two column's annual default rates in table 20 divided by the sum of all the issuers in table 20.

Tables 18-23 best illustrate the links between transition matrices and average cumulative default rates. The default rates in the columns of these tables, associated with each static pool year, are calculated in the same way as they would be for each individual year's transition matrices. Tables 18-23 are broken out by the broadest rating classifications (all rated, investment-grade, and speculative-grade). These tables can also be constructed for each rating category.

As an example, the year two column of table 20 shows the two-year default rates (not conditional on survival) for each static pool. These are calculated in the same way as the default column in table 11, though table 11 shows the one-year default rates for each rating category for 2020 exclusively. In the summary section at the bottom of tables 18-23, the first row shows the issuer-weighted averages of the marginal default rates. These marginal averages are then used to calculate the cumulative average default rates in the row directly beneath them. These default rates are the same that appear in table 15 and are average cumulative default rates conditional on survival.

Appendix II: Additional Tables

Table 18

Static Pool Cumulative Corporate Default Rates Among All Rated Emerging Market Issuers (1997-2020)
Rating: All rated
(%)		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10
1997	121	0.83	4.13	9.09	9.09	12.40	19.83	21.49	21.49	21.49	21.49
1998	266	5.64	9.77	10.53	15.04	24.06	26.69	26.69	26.69	26.69	26.69
1999	331	5.14	7.25	12.08	23.26	25.98	25.98	25.98	25.98	25.98	26.28
2000	379	1.58	6.33	17.41	20.05	20.05	20.05	20.05	20.32	20.58	21.11
2001	426	4.46	15.49	17.84	17.84	18.08	18.08	18.31	18.54	19.25	19.48
2002	456	11.62	14.25	14.47	14.69	14.69	14.91	15.13	15.79	16.01	16.01
2003	506	2.57	3.16	3.36	3.36	3.56	3.75	4.35	4.74	4.74	4.74
2004	560	0.54	0.71	0.71	0.89	1.07	1.61	2.14	2.14	2.32	2.68
2005	648	0.15	0.15	0.31	0.46	1.39	2.01	2.16	2.62	2.93	3.09
2006	736	0.27	0.41	0.68	2.17	2.72	2.99	3.80	4.21	4.35	5.16
2007	805	0.12	0.62	3.11	3.98	4.35	5.22	5.84	5.96	6.83	7.20
2008	928	1.40	4.74	5.60	5.93	7.00	7.54	7.65	8.62	9.05	9.16
2009	967	3.72	4.55	4.86	5.89	6.51	6.72	7.65	8.17	8.27	8.69
2010	922	0.87	1.19	2.28	2.93	3.36	4.34	4.88	4.99	5.42	5.86
2011	946	0.42	1.90	2.75	3.38	4.55	5.29	5.39	5.81	6.24	6.87
2012	1,006	1.29	2.39	2.98	4.37	5.17	5.37	5.86	6.26	6.86
2013	1,091	1.01	1.56	3.21	4.49	4.77	5.22	5.59	6.32
2014	1,222	0.74	2.70	4.09	4.42	4.91	5.32	6.30
2015	1,310	1.98	3.74	4.12	4.66	5.19	6.11
2016	1,340	1.87	2.24	2.84	3.28	4.25
2017	1,414	0.35	0.85	1.41	2.40
2018	1,464	0.61	1.50	2.73
2019	1,511	0.99	2.38
2020	1,505	1.59
Summary statistics
Marginal average		1.58	1.44	1.21	1.05	0.86	0.64	0.52	0.44	0.38	0.38
Cumulative average		1.58	2.99	4.17	5.17	5.99	6.58	7.07	7.48	7.83	8.18
Standard deviation		2.57	4.17	5.36	6.70	7.68	8.23	8.32	8.39	8.49	8.60
Median		1.15	2.39	3.28	4.42	5.04	5.37	6.08	6.32	7.57	8.69
Minimum		0.12	0.15	0.31	0.46	1.07	1.61	2.14	2.14	2.32	2.68
Maximum		11.62	15.49	17.84	23.26	25.98	26.69	26.69	26.69	26.69	26.69
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 19

Static Pool Cumulative Corporate Default Rates Among All Rated Frontier Market Issuers (1997-2020)
Rating: All rated
(%)		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10
1997	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5	0.00	20.00	20.00	20.00	20.00	40.00	40.00	40.00	40.00	40.00
1999	8	25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
2000	5	0.00	0.00	0.00	20.00	20.00	20.00	20.00	20.00	20.00	20.00
2001	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67
2005	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	14.29
2006	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	14.29	14.29
2007	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29
2008	9	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	22.22	22.22
2009	10	0.00	0.00	0.00	0.00	0.00	0.00	0.00	20.00	20.00	20.00
2010	10	0.00	0.00	0.00	0.00	0.00	0.00	20.00	20.00	20.00	20.00
2011	13	0.00	0.00	7.69	7.69	7.69	23.08	23.08	23.08	23.08	23.08
2012	14	0.00	7.14	7.14	7.14	21.43	28.57	28.57	28.57	28.57
2013	15	6.67	6.67	6.67	20.00	33.33	33.33	33.33	33.33
2014	17	0.00	0.00	11.76	23.53	29.41	29.41	29.41
2015	20	0.00	15.00	25.00	30.00	30.00	35.00
2016	23	13.04	21.74	26.09	26.09	30.43
2017	21	14.29	19.05	19.05	23.81
2018	22	4.55	4.55	9.09
2019	23	4.35	8.70
2020	20	5.00
Summary statistics
Marginal average		4.30	3.63	3.67	3.68	4.19	3.47	1.59	2.68	3.03	2.33
Cumulative average		4.30	7.77	11.16	14.43	18.02	20.86	22.12	24.21	26.50	28.21
Standard deviation		6.21	8.44	10.99	12.65	15.70	17.49	16.99	16.41	15.42	14.36
Median		0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	17.14	16.67
Minimum		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum		25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
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 Emerging Market Issuers (1997-2020)
Rating: Investment-grade
(%)		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10
1997	75	1.33	2.67	2.67	2.67	4.00	12.00	12.00	12.00	12.00	12.00
1998	122	1.64	1.64	1.64	3.28	13.11	13.93	13.93	13.93	13.93	13.93
1999	121	0.00	0.00	0.83	12.40	13.22	13.22	13.22	13.22	13.22	13.22
2000	134	0.00	0.00	11.19	11.94	11.94	11.94	11.94	11.94	11.94	11.94
2001	150	0.00	10.00	10.00	10.00	10.67	10.67	10.67	11.33	11.33	11.33
2002	150	0.00	0.00	0.00	0.67	0.67	0.67	1.33	1.33	1.33	1.33
2003	167	0.00	0.00	0.00	0.00	0.00	0.60	0.60	0.60	0.60	0.60
2004	199	0.00	0.00	0.00	0.00	0.50	0.50	0.50	0.50	0.50	0.50
2005	233	0.00	0.00	0.00	0.43	0.43	0.43	0.43	0.43	0.43	0.43
2006	278	0.00	0.00	0.36	0.36	0.36	0.36	0.36	0.36	0.36	1.80
2007	310	0.00	0.32	0.65	0.97	0.97	1.29	1.29	1.29	2.58	2.58
2008	383	0.26	0.78	1.04	1.04	1.31	1.31	1.31	2.35	2.87	2.87
2009	432	0.69	0.93	0.93	1.16	1.16	1.16	2.08	2.55	2.55	2.55
2010	411	0.00	0.00	0.00	0.00	0.00	0.97	1.46	1.46	1.46	1.46
2011	429	0.00	0.00	0.00	0.00	0.00	0.47	0.47	0.47	0.47	0.47
2012	458	0.00	0.00	0.00	0.00	0.66	0.66	0.66	0.66	0.66
2013	488	0.00	0.00	0.00	0.61	0.61	0.82	0.82	0.82
2014	542	0.00	0.00	0.55	0.55	0.74	0.74	0.74
2015	616	0.00	0.32	0.32	0.49	0.49	0.49
2016	616	0.16	0.16	0.32	0.32	0.32
2017	659	0.00	0.00	0.00	0.00
2018	672	0.00	0.00	0.00
2019	716	0.00	0.00
2020	737	0.00
Summary statistics
Marginal average		0.09	0.26	0.30	0.36	0.34	0.29	0.14	0.16	0.15	0.12
Cumulative average		0.09	0.35	0.65	1.01	1.34	1.63	1.76	1.92	2.07	2.18
Standard deviation		0.43	2.12	3.06	3.97	4.81	5.29	5.32	5.42	5.46	5.46
Median		0.00	0.00	0.32	0.55	0.66	0.82	1.30	1.33	2.00	2.55
Minimum		0.00	0.00	0.00	0.00	0.00	0.36	0.36	0.36	0.36	0.43
Maximum		1.64	10.00	11.19	12.40	13.22	13.93	13.93	13.93	13.93	13.93
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 21

Static Pool Cumulative Corporate Default Rates Among Investment-Grade Frontier Market Issuers (1997-2020)
Rating: Investment-grade
(%)		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10
1997	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1998	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1999	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2000	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2001	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2002	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2009	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2010	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2011	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2012	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2013	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2014	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2015	4	0.00	0.00	0.00	0.00	0.00	0.00
2016	4	0.00	0.00	0.00	0.00	0.00
2017	4	0.00	0.00	0.00	0.00
2018	4	0.00	0.00	0.00
2019	4	0.00	0.00
2020	4	0.00
Summary statistics
Marginal average		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Cumulative average		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
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	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 22

Static Pool Cumulative Corporate Default Rates Among Speculative-Grade Emerging Market Issuers (1997-2020)
Rating: Speculative-grade
(%)		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10
1997	46	0.00	6.52	19.57	19.57	26.09	32.61	36.96	36.96	36.96	36.96
1998	144	9.03	16.67	18.06	25.00	33.33	37.50	37.50	37.50	37.50	37.50
1999	210	8.10	11.43	18.57	29.52	33.33	33.33	33.33	33.33	33.33	33.81
2000	245	2.45	9.80	20.82	24.49	24.49	24.49	24.49	24.90	25.31	26.12
2001	276	6.88	18.48	22.10	22.10	22.10	22.10	22.46	22.46	23.55	23.91
2002	306	17.32	21.24	21.57	21.57	21.57	21.90	21.90	22.88	23.20	23.20
2003	339	3.83	4.72	5.01	5.01	5.31	5.31	6.19	6.78	6.78	6.78
2004	361	0.83	1.11	1.11	1.39	1.39	2.22	3.05	3.05	3.32	3.88
2005	415	0.24	0.24	0.48	0.48	1.93	2.89	3.13	3.86	4.34	4.58
2006	458	0.44	0.66	0.87	3.28	4.15	4.59	5.90	6.55	6.77	7.21
2007	495	0.20	0.81	4.65	5.86	6.46	7.68	8.69	8.89	9.49	10.10
2008	545	2.20	7.52	8.81	9.36	11.01	11.93	12.11	13.03	13.39	13.58
2009	535	6.17	7.48	8.04	9.72	10.84	11.21	12.15	12.71	12.90	13.64
2010	511	1.57	2.15	4.11	5.28	6.07	7.05	7.63	7.83	8.61	9.39
2011	517	0.77	3.48	5.03	6.19	8.32	9.28	9.48	10.25	11.03	12.19
2012	548	2.37	4.38	5.47	8.03	8.94	9.31	10.22	10.95	12.04
2013	603	1.82	2.82	5.80	7.63	8.13	8.79	9.45	10.78
2014	680	1.32	4.85	6.91	7.50	8.24	8.97	10.74
2015	694	3.75	6.77	7.49	8.36	9.37	11.10
2016	724	3.31	4.01	4.97	5.80	7.60
2017	755	0.66	1.59	2.65	4.50
2018	792	1.14	2.78	5.05
2019	795	1.89	4.53
2020	768	3.13
Summary statistics
Marginal average		2.73	2.36	1.93	1.59	1.27	0.91	0.81	0.66	0.56	0.58
Cumulative average		2.73	5.02	6.85	8.33	9.50	10.32	11.05	11.63	12.13	12.63
Standard deviation		3.90	5.78	7.34	8.73	10.02	10.90	11.31	11.41	11.57	11.79
Median		2.04	4.53	5.64	7.63	8.63	9.31	10.48	10.95	12.47	13.58
Minimum		0.00	0.24	0.48	0.48	1.39	2.22	3.05	3.05	3.32	3.88
Maximum		17.32	21.24	22.10	29.52	33.33	37.50	37.50	37.50	37.50	37.50
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 23

Static Pool Cumulative Corporate Default Rates Among Speculative-Grade Frontier Market Issuers (1997-2020)
Rating: Speculative-grade
(%)		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10
1997	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5	0.00	20.00	20.00	20.00	20.00	40.00	40.00	40.00	40.00	40.00
1999	8	25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
2000	5	0.00	0.00	0.00	20.00	20.00	20.00	20.00	20.00	20.00	20.00
2001	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	20.00
2005	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	16.67
2006	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	16.67	16.67
2007	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67
2008	8	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00	25.00
2009	8	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00	25.00	25.00
2010	9	0.00	0.00	0.00	0.00	0.00	0.00	22.22	22.22	22.22	22.22
2011	11	0.00	0.00	9.09	9.09	9.09	27.27	27.27	27.27	27.27	27.27
2012	11	0.00	9.09	9.09	9.09	27.27	36.36	36.36	36.36	36.36
2013	12	8.33	8.33	8.33	25.00	41.67	41.67	41.67	41.67
2014	14	0.00	0.00	14.29	28.57	35.71	35.71	35.71
2015	16	0.00	18.75	31.25	37.50	37.50	43.75
2016	19	15.79	26.32	31.58	31.58	36.84
2017	17	17.65	23.53	23.53	29.41
2018	18	5.56	5.56	11.11
2019	19	5.26	10.53
2020	16	6.25
Summary statistics
Marginal average		5.13	4.35	4.42	4.46	5.07	4.20	1.90	3.19	3.57	2.70
Cumulative average		5.13	9.25	13.26	17.13	21.33	24.64	26.08	28.43	30.99	32.86
Standard deviation		6.79	9.48	12.25	14.42	17.82	19.61	18.67	17.88	16.32	14.67
Median		0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	18.33	20.00
Minimum		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum		25.00	26.32	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 24

Average Three-Year Emerging Market Corporate Transition Matrix (1997-2020)
(%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	54.05	40.54	0.00	0.00	0.00	0.00	0.00	0.00	5.41
	(52.86)	(52.08)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
AA	5.81	63.07	26.56	0.00	0.00	0.00	0.00	0.00	4.56
	(15.48)	(25.69)	(24.18)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.80)
A	0.00	2.03	76.01	12.11	1.02	0.42	0.05	0.05	8.32
	(0.00)	(2.16)	(7.41)	(5.00)	(1.51)	(0.77)	(0.17)	(0.17)	(3.50)
BBB	0.00	0.02	5.69	67.16	10.26	1.00	0.56	1.00	14.32
	(0.00)	(0.10)	(4.09)	(6.67)	(6.41)	(1.42)	(1.39)	(2.83)	(3.26)
BB	0.00	0.00	0.11	10.16	53.14	8.12	1.13	3.00	24.34
	(0.00)	(0.00)	(0.21)	(4.42)	(6.05)	(3.38)	(1.70)	(4.97)	(4.65)
B	0.00	0.00	0.00	0.49	11.98	41.67	4.44	9.32	32.10
	(0.00)	(0.00)	(0.00)	(0.82)	(8.01)	(5.56)	(3.24)	(6.28)	(3.95)
CCC/C	0.00	0.00	0.00	0.16	1.25	30.89	8.74	24.49	34.48
	(0.00)	(0.00)	(0.00)	(0.65)	(1.81)	(14.84)	(5.83)	(16.15)	(13.01)
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 25

Average Three-Year Frontier Market Corporate Transition Matrix (1997-2020)
(%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	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)	(0.00)
AA	0.00	40.00	30.00	0.00	0.00	0.00	0.00	0.00	30.00
	(0.00)	(46.23)	(48.61)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(42.43)
A	0.00	15.79	57.89	10.53	0.00	0.00	0.00	0.00	15.79
	(0.00)	(29.27)	(45.15)	(26.91)	(0.00)	(0.00)	(0.00)	(0.00)	(33.73)
BBB	0.00	0.00	0.00	62.50	0.00	0.00	0.00	0.00	37.50
	(0.00)	(0.00)	(0.00)	(36.98)	(0.00)	(0.00)	(0.00)	(0.00)	(36.98)
BB	0.00	0.00	0.00	4.05	44.59	21.62	1.35	1.35	27.03
	(0.00)	(0.00)	(0.00)	(11.36)	(26.74)	(16.79)	(5.14)	(5.14)	(20.42)
B	0.00	0.00	0.00	0.00	0.93	55.56	12.96	13.89	16.67
	(0.00)	(0.00)	(0.00)	(0.00)	(3.93)	(20.67)	(14.04)	(15.14)	(22.49)
CCC/C	0.00	0.00	0.00	0.00	0.00	5.88	5.88	58.82	29.41
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(13.73)	(11.45)	(29.69)	(38.08)
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 26

Average Five-Year Emerging Market Corporate Transition Matrix (1997-2020)
(%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	31.25	62.50	0.00	0.00	0.00	0.00	0.00	0.00	6.25
	(49.55)	(51.75)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(25.88)
AA	10.95	48.26	36.32	0.50	0.00	0.00	0.00	0.00	3.98
	(20.72)	(20.53)	(25.35)	(2.36)	(0.00)	(0.00)	(0.00)	(0.00)	(6.06)
A	0.00	3.03	66.13	15.22	2.17	0.11	0.17	0.06	13.10
	(0.00)	(2.22)	(7.11)	(4.38)	(2.43)	(0.25)	(0.35)	(0.19)	(3.99)
BBB	0.00	0.02	7.71	54.00	11.86	1.57	0.72	2.26	21.86
	(0.00)	(0.14)	(4.16)	(4.21)	(5.67)	(1.50)	(0.98)	(4.57)	(3.62)
BB	0.00	0.00	0.28	12.81	38.05	8.30	0.72	5.68	34.16
	(0.00)	(0.00)	(0.64)	(4.94)	(7.49)	(3.12)	(1.28)	(7.34)	(6.43)
B	0.00	0.00	0.00	1.26	12.42	27.13	2.70	12.85	43.65
	(0.00)	(0.00)	(0.00)	(1.30)	(7.63)	(5.98)	(2.11)	(7.90)	(4.38)
CCC/C	0.00	0.00	0.00	0.17	4.28	24.14	3.94	26.88	40.58
	(0.00)	(0.00)	(0.00)	(0.68)	(5.23)	(12.06)	(6.27)	(16.29)	(14.46)
Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Table 27

Average Five-Year Frontier Market Corporate Transition Matrix (1997-2020)
(%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	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)	(0.00)
AA	0.00	12.50	37.50	0.00	0.00	0.00	0.00	0.00	50.00
	(0.00)	(23.39)	(52.29)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(46.77)
A	0.00	31.25	43.75	0.00	0.00	0.00	0.00	0.00	25.00
	(0.00)	(40.50)	(48.10)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(41.02)
BBB	0.00	0.00	0.00	40.00	0.00	0.00	0.00	0.00	60.00
	(0.00)	(0.00)	(0.00)	(24.49)	(0.00)	(0.00)	(0.00)	(0.00)	(24.49)
BB	0.00	0.00	0.00	5.63	30.99	30.99	1.41	4.23	26.76
	(0.00)	(0.00)	(0.00)	(12.52)	(22.56)	(19.19)	(5.25)	(10.47)	(22.83)
B	0.00	0.00	0.00	0.00	1.20	33.73	9.64	30.12	25.30
	(0.00)	(0.00)	(0.00)	(0.00)	(4.46)	(17.53)	(14.52)	(22.02)	(21.61)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	50.00	50.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(36.80)	(36.80)
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. Max O. Lorenz developed the Lorenz curve as a graphical representation of the proportionality of a distribution.

To build the Lorenz curve, we ordered the observations 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 and the Gini coefficient--which is a summary statistic of the Lorenz curve--would 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 the Gini coefficient would be 1.0 (see chart 13).

We calculate the Gini coefficients 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.

Appendix IV: Defaults In Profile

In 2020, there were 26 emerging and frontier market corporate issuer defaults (including five from confidentially rated issuers). These defaulters had a total of US$14.72 billion of debt outstanding (including confidential issuer debt). This appendix provides summaries of the events leading up to each default and, in some cases, events following the default. We also list the defaulting instruments that S&P Global Ratings rates for each company.

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. to 'D' from 'CCC-' following the company's failure to pay interest due on Jan. 10, 2020, on its US$300 million bonds.

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

Table 28

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/--

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 also signed a letter of intent to acquire a 26%-38% stake in Alderon Iron Ore Corp., which would be conducted by its subsidiary.

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

Table 29

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/--

Grain Insurance Co. JSC

On March 20, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Kazakhstan-based Grain Insurance Co. JSC to 'D' from 'B' after the issuer missed payments to counterparties. In addition, on March 13, 2020, the issuer's license was suspended by the Kazakh insurance regulator due to a breach of regulatory ratios.

On July 9, 2020, S&P Global Ratings withdrew its issuer credit rating at the company's request.

Table 30

Issuer Credit Rating - Grain Insurance Co. JSC
Date	To
09-Jul-2020	NR/--/--
20-Mar-2020	D/--/--
08-Nov-2012	B/Stable/--
08-Nov-2012	B/Developing/--
08-Nov-2012	B/Positive/--
08-Nov-2012	B/Stable/--

Vestel Elektronik Sanayi Ve Ticaret A.S.

On April 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Turkey-based household appliance manufacturer Vestel Elektronik Sanayi Ve Ticaret A.S. to 'SD' from 'CCC+' after the issuer postponed a portion of its financial obligation due in June for three to six months.

The issuer had limited refinancing options owing to the disruptions caused by the coronavirus and the presence of foreign currency-denominated debt--about 40%.

On April 17, 2020, we raised the issuer credit rating to 'CCC-' after the issuer was able to shift a huge portion of debt maturing in the second quarter of 2020 to the next quarter.

Subsequently, on June 29, 2020, S&P Global Ratings withdrew its ratings on the issuer.

Table 31

Issuer Credit Rating - Vestel Elektronik Sanayi Ve Ticaret A.S.
Date	To
29-Jun-2020	NR/--/--
17-Apr-2020	CCC-/Negative/--
10-Apr-2020	SD/NM/--
18-Sep-2018	CCC+/Stable/--
03-Feb-2017	B-/Negative/--
17-Sep-2015	B-/Stable/--
31-Oct-2014	B-/Positive/--
30-Nov-2012	B-/Stable/--
20-Jan-2012	B-/Positive/--
22-Feb-2010	B-/Stable/--
22-Dec-2008	B-/Negative/--
21-Dec-2007	B/Negative/--
22-Jun-2007	B+/Stable/--
30-Jan-2007	B+/Positive/--
27-Sep-2005	B+/Negative/--
22-Apr-2005	B+/Stable/--
01-Oct-2004	B/Positive/--
07-Nov-2002	B-/Stable/--
10-Jul-2002	B-/Negative/--
03-Dec-2001	B-/Stable/--
11-Jul-2001	B-/Negative/--
30-Apr-2001	B-/Stable/--
17-Apr-2001	B-/Watch Neg/--
23-Feb-2001	B/Watch Neg/--
21-Feb-2001	B+/Watch Neg/--
05-Dec-2000	B+/Stable/--
09-Jun-2000	B+/Positive/--

NMC Health PLC

• US$400 million 5.95% sukuk due Nov. 21, 2023

On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on United Arab Emirates-based health care service provider NMC Health PLC to 'D' from 'CCC-' after the issuer missed interest payments on its bank loans. An administrator was appointed by the court after the lenders moved to court.

On May 14, 2020, we withdrew the ratings on the issuer.

Earlier, on March 3, 2020, we had lowered the long-term issuer credit rating to 'CCC-' from 'BB' after the issuer announced financial statement discrepancies and asked its lenders to support an informal standstill request.

Table 32

Issuer Credit Rating - NMC Health PLC
Date	To
14-May-2020	NR/--/--
14-Apr-2020	D/--/--
03-Mar-2020	CCC-/Watch Neg/--
12-Feb-2020	BB/Watch Neg/--
15-Jan-2020	BB+/Negative/--
20-Apr-2018	BB+/Stable/--

O1 Properties Ltd.

• RUB15 billion 13.00% notes due Oct. 2, 2020
• US$350 million 8.25% notes due Sept. 27, 2021
• US$355 million 7.00% notes due Jan. 29, 2021
• US$150 million 6.00% notes due May 18, 2021

On April 16, 2020, S&P Global Ratings lowered the issuer credit ratings on Cyprus-based real estate market investor O1 Properties Ltd. to 'D' from 'CC' after the issuer missed a coupon payment on US$350 million Eurobonds. This nonpayment was considered a general default, and the company was not expected to be able to pay most of its obligations.

Earlier, on April 10, 2020, we had lowered the rating on the issuer to 'CC' from 'CCC-' after it was unable to obtain mezzanine debt lenders' consent to extend the loan and had insufficient liquidity.

On Sept. 25, 2020, we withdrew our 'D' long-term issuer and issue credit ratings at the issuer's request. At the time of the withdrawal, our 'D' rating reflected the nonpayment of the coupon on the $350 million Eurobond in April 2020, followed by a nonpayment of its mezzanine loan. Furthermore, weak liquidity supported our view of O1 Properties' general default. We expected the company would not be able to pay most of its obligations as they came due unless a major debt restructuring it was working on allowed it to extend major debt maturities, including the $350 million Eurobond repayment due in September 2021.

Table 33

Issuer Credit Rating - O1 Properties Ltd.
Date	To
25-Sep-2020	NR/--/--
16-Apr-2020	D/--/--
10-Apr-2020	CC/Negative/--
19-Feb-2020	CCC-/Watch Neg/--
07-Jun-2019	CCC/Positive/--
29-Mar-2019	CCC/Watch Dev/--
14-Dec-2018	CCC/Watch Neg/--
13-Jun-2018	B-/Watch Neg/--
12-Mar-2018	B/Watch Neg/--
20-Feb-2018	B/Negative/--
21-Jun-2017	B+/Stable/--
15-Apr-2015	B+/Negative/--
20-Jan-2015	B+/Watch Neg/--
01-Jul-2013	B+/Stable/--

Enjoy S.A.

• US$300 million 10.50% notes due May 16, 2022

On April 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chilean casino operator Enjoy S.A. to 'D' from 'B-' after the company announced suspension of its shareholder meeting to treat a capital increase while the board decided to file for judicial reorganization. The issuer's financial and operational situation had worsened because of the coronavirus pandemic.

Table 34

Issuer Credit Rating - Enjoy S.A.
Date	To
24-Apr-2020	D/--/--
23-Mar-2020	B-/Watch Neg/--
23-Dec-2019	B-/Negative/--
28-Nov-2019	B-/Watch Neg/--
16-Aug-2019	B/Negative/--
31-Jan-2018	B/Stable/--
25-Aug-2017	B-/Watch Pos/--
11-May-2017	B-/Positive/--

Avianca Holdings S.A.

• US$550 million 8.375% notes due May 10, 2020
• US$550 million 9.00% notes due May 10, 2023
• US$495 million floating-rate first-lien bank loan due Aug. 18, 2022

On May 11, 2020, S&P Global Ratings lowered its issuer credit rating on Colombia-based air transportation company Avianca Holdings S.A. to 'D' from 'CCC-' after the issuer and its subsidiaries and affiliates voluntarily filed for bankruptcy under Chapter 11 in New York to preserve its business structure amid the severe impact of COVID-19 on the global air transportation industry. This also followed the issuer's missed $65.6 million principal payment on its 8.375% unsecured notes due on May 10, 2020.

Earlier, on May 5, 2020, we had lowered the issuer credit rating on Avianca to 'CCC-' from 'CCC' and kept the ratings on CreditWatch with negative implications. The CreditWatch negative reflected Avianca's weakening liquidity and that the absence of extraordinary financial support from shareholders or the Colombian government could force the company to default on the repayment of its 8.375% senior unsecured notes due 2020.

Table 35

Issuer Credit Rating - Avianca Holdings S.A.
Date	To
11-May-2020	D/--/--
05-May-2020	CCC-/Watch Neg/--
20-Mar-2020	CCC/Watch Neg/--
20-Dec-2019	B-/Stable/--
23-Jul-2019	SD/NM/--
13-May-2019	CCC+/Watch Neg/--
13-Apr-2016	B/Stable/--
05-May-2015	B+/Stable/--
28-Mar-2014	B+/Positive/--
25-Apr-2013	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 an interest payment on its domestic medium-term notes due 2022. Subsequently, we withdrew the ratings due to insufficient information.

Table 36

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/--

Aeropuertos Argentina 2000 S.A.

• US$400 million 6.875% bonds due Feb. 1, 2027
• US$350 million variable-rate notes due 2027

On May 19, 2020, S&P Global Ratings lowered the issuer credit rating on Argentine airport operator Aeropuertos Argentina 2000 S.A. to 'SD' from 'CC'. The rating action followed the issuer's exchange of its senior secured notes due 2027 for new notes, including the payment-in-kind of four quarterly principal and interest payments in the next 12 months, to be repaid pro rata during the remaining term of the notes. We considered this exchange tantamount to default.

On May 21, 2020, after the settlement of the exchange, we raised the issuer credit rating to 'CCC+' from 'SD'.

On Sept. 18, 2020, we placed the issuer credit ratings on CreditWatch with negative implications after Argentina's central bank tightened foreign exchange access regulations.

Table 37

Issuer Credit Rating - Aeropuertos Argentina 2000 S.A.
Date	To
18-Sep-2020	CCC+/Watch Neg/--
21-May-2020	CCC+/Negative/--
19-May-2020	SD/NM/--
29-Apr-2020	CC/Negative/--
30-Aug-2019	B-/Negative/--
20-Aug-2019	B/Negative/--
13-Nov-2018	B+/Stable/--
03-Sep-2018	BB-/Watch Neg/--
30-Oct-2017	BB-/Stable/--
04-Apr-2017	B+/Stable/--
03-Feb-2016	B-/Stable/--
18-Jun-2014	CCC-/Negative/--
13-Sep-2013	CCC+/Negative/--
01-Nov-2012	B-/Negative/--
24-Apr-2012	B/Negative/--
26-Nov-2010	B/Stable/--

Latam Airlines Group S.A.

• US$500 million 7.25% senior notes due June 9, 2020
• US$700 million 6.875% notes due April 11,2024
• US$600 million 7.00% notes due March 1, 2026
• US$275 million first-lien senior secured delayed-draw term loan due June 29, 2021

On May 27, 2020, S&P Global Ratings lowered its issuer credit rating on Chile-based Latam Airlines Group S.A. to 'D' from 'CCC-' after the issuer volunteered a reorganization process under Chapter 11 of the Bankruptcy Code in the U.S. We considered the debt restructuring under Chapter 11 to constitute a default.

On Aug. 17, 2020, we withdrew the rating on the company at its request.

Table 38

Issuer Credit Rating - Latam Airlines Group S.A.
Date	To
17-Aug-2020	NR/--/--
27-May-2020	D/--/--
22-May-2020	CCC-/Watch Neg/--
15-May-2020	CCC+/Watch Neg/--
27-Mar-2020	B/Watch Neg/--
17-Mar-2020	BB-/Watch Neg/--
17-Mar-2017	BB-/Stable/--
28-Mar-2016	BB-/Negative/--
25-Nov-2015	BB/Negative/--
07-Oct-2014	BB/Stable/--
10-Jun-2013	BB/Positive/--

Grupo Famsa S.A.B. de C.V.

• US$80.922 million 9.75% notes due Dec. 15, 2024
• US$250 million 7.25% notes due June 1, 2020
• MXN1,000 unsecured term loan due June 21, 2025

On June 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mexican retailer Grupo Famsa S.A.B. de C.V. (GFamsa) to 'SD' from 'CCC-'. The company missed its interest and principal payments on its 7.25% senior unsecured notes on June 1, 2020.

On Aug. 7, 2020, we lowered the issuer credit rating to 'D' from 'SD' following GFamsa's bankruptcy filing in both Mexico and the U.S. On Dec. 12, 2020, we withdrew the issuer credit ratings on the company at its request.

Table 39

Issuer Credit Rating - Grupo Famsa S.A.B. de C.V.
Date	To
14-Dec-2020	NR/--/--
07-Aug-2020	D/--/--
02-Jun-2020	SD/NM/--
13-Dec-2019	CCC-/Negative/--
04-Oct-2019	CCC+/Negative/--
01-Nov-2018	B-/Negative/--
30-May-2017	B/Negative/--
29-Aug-2016	B/Stable/--
31-May-2016	B/Watch Neg/--
11-Feb-2016	B/Stable/--
29-Aug-2014	B/Negative/--
09-May-2013	B/Positive/--
12-Jul-2010	B/Stable/--

Grupo Posadas S.A.B. de C.V.

• US$400 million 7.875% notes due June 30, 2022

On July 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mexican lodging company Grupo Posadas S.A.B. de C.V. to 'D' from 'CC' after the issuer missed interest payments on senior unsecured notes due June 2022, which represented over 98% of total debt due, and announced it wouldn't make the payments within the grace period. The decision to miss interest payments of about US$15.5 million was based on prioritization of liquidity toward its operations.

Table 40

Issuer Credit Rating - Grupo Posadas S.A.B. de C.V.
Date	To
01-Jul-2020	D/--/--
26-Jun-2020	CC/Watch Neg/--
25-Mar-2020	CCC+/Negative/--
27-Nov-2019	B/Negative/--
30-Nov-2018	B+/Stable/--
27-Nov-2017	B+/Positive/--
29-Nov-2016	B+/Stable/--
03-May-2016	B+/Positive/--
21-Dec-2012	B/Stable/--
17-Jul-2012	CCC+/Watch Pos/--
27-Dec-2011	CCC+/Negative/--
12-May-2011	B-/Negative/--
12-Nov-2010	B-/Watch Neg/--
14-Jan-2010	B+/Stable/--
18-Dec-2009	B+/Negative/--
15-Jun-2009	B+/Watch Neg/--
08-May-2009	BB-/Watch Neg/--
07-Jan-2009	BB-/Negative/--
13-Oct-2008	BB-/Watch Neg/--
06-Jun-2007	BB/Stable/--
31-Aug-2006	BB-/Positive/--
03-Feb-2006	BB-/Stable/--
01-Dec-2005	BB-/Watch Neg/--
15-Jul-2004	BB-/Stable/--

Grupo Aeromexico S.A.B. de C.V.

• US$400 million 7.00% notes due Feb. 5, 2025

On July 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mexican commercial aviation services provider Grupo Aeromexico S.A.B. de C.V. to 'D' from 'B-' after the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. The company aimed to restructure its debt, capital structure, and business model to adapt to post-COVID-19 prospects.

Table 41

Issuer Credit Rating - Grupo Aeromexico S.A.B. de C.V.
Date	To
01-Jul-2020	D/--/--
21-May-2020	B-/Negative/--
20-Mar-2020	B+/Watch Neg/--
24-Jan-2020	BB-/Negative/--

PT Modernland Realty Tbk.

• US$150 million 10.75% notes due Aug. 30, 2021
• US$240 million 6.95% notes due April 13, 2024

On July 8, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Indonesia-based property developer PT Modernland Realty Tbk. to 'SD' from 'CCC-' after the issuer missed principal payment on its IDR150 billion domestic notes and entered a 10-day grace period. It had other coupon payments of US$8 million each in August and October.

On Oct. 15, 2020, S&P Global Ratings lowered the issuer credit rating to 'D' from 'SD' because the company remained in default on both its rated obligations.

Table 42

Issuer Credit Rating - PT Modernland Realty Tbk.
Date	To
15-Oct-2020	D/--/--
08-Jul-2020	SD/NM/--
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/--

Seadrill Partners LLC

• US$2.9 billion term loan B bank loan due Feb. 21, 2021

On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Marshall Islands-based offshore driller Seadrill Partners LLC, a subsidiary of Seadrill Ltd., to 'SD' from 'CCC' after the issuer missed its interest payment due June 30, 2020, and announced that it would use a 30-day grace period to delay the payment.

Table 43

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/--

Oi S.A.

• US$1.654 billion bonds due July 27, 2025
• BRL4.168 billion senior unsecured notes due Feb. 25, 2035
• US$128 million term A capex due March 15, 2023
• US$128 million term B capex due March 15, 2024
• US$397.36 million term capex due Nov. 30, 2023

On Oct. 9, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Brazil-based telecom operator Oi S.A. to 'SD' from 'CC' after the issuer announced that the judicial court ratified the amendment to the company's judicial reorganization plan, which was approved by the majority of its creditholders on Sept. 8, 2020. The amendment includes a discount on debt for some of its debtholders, which we assess as equivalent to default.

On Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on approval of the reorganizational plan amendment.

Table 44

Issuer Credit Rating - Oi S.A.
Date	To
15-Oct-2020	CCC+/Stable/--
09-Oct-2020	SD/--/--
01-Oct-2020	CC/Negative/--
05-Sep-2019	CCC+/Negative/--
28-Sep-2018	B-/Negative/--
15-Nov-2016	B/Stable/--
02-Nov-2016	BB-/Watch Neg/--
14-Apr-2016	BB-/Stable/--
08-May-2014	B+/Stable/--

Banco Hipotecario S.A.

• US$350 million 9.75% notes due Nov. 30, 2020
• US$78.336 million 9.75% senior unsecured notes due Oct. 14, 2025
• ARS6.3 billion senior unsecured notes due Nov. 7, 2022
• ARS3.75 billion senior unsecured notes due Feb. 15, 2021
• ARS2.9 billion senior unsecured notes due Feb. 11, 2022
• ARS390.5 million senior unsecured notes due Aug. 11, 2021

On Oct. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Argentina-based Banco Hipotecario S.A. to 'SD' from 'CC' after the issuer announced that 46.7% of the bondholders of its outstanding US$279.8 million series 29 notes due on Nov. 30, 2020, accepted the exchange offer originally launched in early September. The transaction, which was settled on Oct. 14, was considered distressed as opposed to opportunistic.

On Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' because the issuer had enough liquidity to pay the remainder of the bond's maturity.

On Dec. 16, 2020, S&P Global Ratings withdrew the issuer credit ratings at the issuer's request.

Table 45

Issuer Credit Rating - Banco Hipotecario S.A.
Date	To
16-Dec-2020	NR/--/--
15-Oct-2020	CCC+/Stable/--
14-Oct-2020	SD/--/--
09-Sep-2020	CC/Negative/--
08-Apr-2020	CCC/Negative/--
16-Mar-2020	CCC/Watch Neg/--
02-Sep-2019	B-/Watch Neg/--
20-Aug-2019	B-/Negative/--
13-May-2019	B-/Stable/--
13-Nov-2018	B/Stable/--
03-Sep-2018	B+/Watch Neg/--
30-Oct-2017	B+/Stable/--
04-Apr-2017	B/Stable/--
05-Feb-2016	B-/Stable/--
18-Jun-2014	CCC-/Negative/--
13-Sep-2013	CCC+/Negative/--
01-Nov-2012	B-/Negative/--
24-Apr-2012	B/Negative/--
14-Sep-2010	B/Stable/--
24-Apr-2009	B-/Stable/--
24-Apr-2009	SD/--/--
30-Mar-2009	CC/Negative/--
31-Oct-2008	B-/Stable/--
12-Aug-2008	B/Stable/--
25-Apr-2008	B+/Negative/--
09-Oct-2006	B+/Stable/--
23-Mar-2006	B/Stable/--
17-May-2005	B-/Stable/--
02-Nov-2004	CCC+/Stable/--
16-Jan-2004	SD/--/--
16-Aug-2002	D/--/--
03-Dec-2001	SD/--/--
10-Oct-2001	CCC+/Negative/--
12-Jul-2001	B-/Negative/--
07-Jun-2001	B/Negative/--
08-May-2001	B/Watch Neg/--
26-Mar-2001	B+/Watch Neg/--
19-Mar-2001	BB-/Watch Neg/--
25-Jan-2001	BB-/Stable/--
14-Jan-1999	BB-/Negative/--
02-Apr-1997	BB/Stable/--
26-Jun-1996	BB-/Stable/--

Corp Group Banking S.A.

• US$500 million 6.75% notes due March 15, 2023

On Oct. 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chile-based bank holding company Corp Group Banking S.A. to 'D' from 'CC' after the issuer missed its US$16.9 million semiannual interest payment on its bond. The 30-day grace period ended on Oct. 15, 2020.

Table 46

Issuer Credit Rating - Corp Group Banking S.A.
Date	To
16-Oct-2020	D/--/--
06-Oct-2020	CC/Watch Neg/--
24-Aug-2020	CCC-/Watch Neg/--
15-Apr-2020	CCC-/Negative/--
08-Apr-2020	CC/Negative/--
16-Mar-2020	CCC-/Negative/--
18-Dec-2019	CCC/Negative/--
30-Jan-2018	CCC+/Negative/--
02-Mar-2017	B-/Negative/--
13-Jun-2016	B/Negative/--
07-Apr-2016	B+/Watch Neg/--
30-Jan-2014	BB-/Watch Dev/--
23-Aug-2013	BB-/Stable/--
18-Jan-2013	BB/Watch Neg/--

PT Alam Sutera Realty Tbk.

• US$370 million 6.625% notes due April 24, 2022
• US$175 million 11.50% callable notes due April 22, 2021
• US$171 million 6.00% first-lien notes due May 2, 2024
• US$251 million 6.25% first-lien notes due Nov. 2, 2025

On Oct. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Indonesia-based retailer PT Alam Sutera Realty Tbk. to 'D' from 'CC' after the issuer completed a distressed debt exchange for both its US$115 million notes due in April 2021 and US$370 million notes due in April 2022.

On Nov. 3, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'D' on the completed exchange offer.

Table 47

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/--

IRSA Inversiones y Representaciones S.A.

• US$360 million 8.75% notes due March 23, 2023

On Nov. 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Argentina-based diversified real estate company IRSA Inversiones y Representaciones S.A. to 'SD' from 'CC' following the settlement of a distressed exchange offer for 98.3% of its outstanding US$181.5 million series I 10.00% senior unsecured notes due Nov. 14, 2020.

On Nov. 17, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on lower refinancing risk.

On Dec. 28, 2020, S&P Global Ratings withdrew its rating at the issuer's request.

Table 48

Issuer Credit Rating - IRSA Inversiones y Representaciones S.A.
Date	To
28-Dec-2020	NR/--/--
17-Nov-2020	CCC+/Negative/--
12-Nov-2020	SD/NM/--
26-Oct-2020	CC/Negative/--
18-Sep-2020	CCC-/Watch Neg/--
28-May-2020	CCC-/Negative/--
17-Mar-2020	CCC+/Watch Neg/--
20-Aug-2019	B-/Negative/--
13-Nov-2018	B/Stable/--
03-Sep-2018	B+/Watch Neg/--
28-Jun-2018	B+/Stable/--
13-Jun-2017	B/Stable/--
03-Feb-2016	B-/Stable/--
18-Jun-2014	CCC-/Negative/--
13-Sep-2013	CCC+/Negative/--
01-Nov-2012	B-/Negative/--
24-Apr-2012	B/Negative/--
17-Dec-2010	B/Stable/--
14-Sep-2010	B-/Watch Pos/--
05-Nov-2008	B-/Stable/--
12-Jan-2007	B+/Stable/--
12-Oct-2001	NR/NR/--
10-Oct-2001	CCC+/Negative/--
08-Aug-2001	B-/Watch Neg/--
13-Jul-2001	B-/Negative/--
07-Jun-2001	B/Negative/--
08-May-2001	B/Watch Neg/--
26-Mar-2001	B+/Watch Neg/--
19-Mar-2001	BB-/Watch Neg/--
19-Mar-2001	BB+/Watch Neg/--
11-Jan-2001	BB-/Stable/--
01-Nov-2000	BB/Watch Neg/--
10-Feb-2000	BB/Stable/--
22-Jul-1999	BB/Negative/--
01-Jun-1999	BB/Stable/--

Related Research

• 2020 Annual Global Corporate Default And Rating Transition Study, April 7, 2021

Ratings Performance Analytics:	Jon Palmer, CFA, New York 212 438 1989; jon.palmer@spglobal.com
	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
Research Contributors:	Nivritti Mishra Richhariya, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai
	Tanya Dias, CRISIL Global Analytical Center, an S&P affiliate, Mumbai