Key Takeaways
- Fusion Connect Inc. is the first telecommunications defaulter of 2022 after completing a distressed exchange.
- So far in 2022, two out of three defaults have resulted from distressed exchanges, which are the leading reason for default in recent years.
- The U.S. speculative-grade default rate has dropped to 1.5%, its lowest since July 2014.
- Defaults to date in 2022 remain below 2021 levels.
The 2022 global corporate default tally reached three after U.S.-based competitive telecommunications services provider Fusion Connect Inc. converted about $256 million of its senior secured first-lien term loan due 2025 into new junior convertible preferred stock (see "Fusion Connect Inc. Rating Lowered 'SD' (Selective Default); Debt Rating To 'D'; Ratings Withdrawn At Issuer's Request," Jan. 24, 2022). This was the second distressed exchange of the year, following one from the homebuilders and real estate sector. Distressed exchanges have been the leading reason for default globally since 2017, and in 2021 they made up over 50% of all defaults (see chart 1).
As defaults have slowed since the pandemic highs of 2020, the U.S. trailing-12-month speculative-grade default rate has also dropped. It fell to 1.5% as of Dec. 31, 2021, its lowest level since July 2014, while the European trailing-12-month speculative-grade default rate dropped to 1.8%, its lowest level since July 2016 (see chart 2). So far defaults in January 2022 remain lower than at this point in 2021. If this trend continues, we can expect speculative-grade default rates to drop further.
Table 1
Defaults So Far In 2022 Remain Far Below Defaults At This Point In 2021 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Global corporate default summary | ||||||||||||
Region | 12-month-trailing speculative-grade default rate (%) | 2022 year-to-date default tally | 2021 year-to-date default tally | 2021 full-year default tally | Weakest links tally | |||||||
U.S. | 1.5 | 2 | 6 | 40 | 131 | |||||||
Emerging markets | 1.8 | 1 | 0 | 15 | 18 | |||||||
Europe | 1.8 | 0 | 1 | 14 | 49 | |||||||
Other developed | 2.2 | 0 | 0 | 3 | 9 | |||||||
Global | 1.7 | 3 | 7 | 72 | 207 | |||||||
Trailing-12-month speculative grade default rates from Dec. 31, 2020-Dec. 31, 2021. Year-to-date data as of Jan. 26, 2022. Weakest link data as of Dec. 31, 2021. Other developed region consists of Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. |
Chart 1
Chart 2
Chart 3
Table 2
Global Corporate Defaults 2022 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Date | Parent company | Country/market | Subsector | To | From | Reason | ||||||||
1/4/2022 |
ION Geophysical Corp. |
U.S. | Oil and gas | D | CCC | Missed principal and interest payments | ||||||||
1/13/2022 |
R&F Properties (HK) Co. Ltd. |
Hong Kong | Homebuilders/real estate companies | SD | CC | Distressed exchange | ||||||||
1/24/2022 |
Fusion Connect Inc. |
U.S. | Telecommunications | SD | CC | Distressed exchange | ||||||||
SD--Selective default. Data as of Jan. 26, 2022. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. |
Related Research
- Industry Top Trends 2022: Oil And Gas, Jan. 25, 2022
- Industry Top Trends 2022: Real Estate, Jan. 25, 2022
- Industry Top Trends 2022: Telecommunications, Jan. 25, 2022
- Fusion Connect Inc. Rating Lowered 'SD' (Selective Default); Debt Rating To 'D'; Ratings Withdrawn At Issuer's Request, Jan. 24, 2022
- R&F Properties (HK) Co. Ltd. Downgraded To 'SD' On Completion Of Distressed Tender And Extension, Jan. 13, 2022
- ION Geophysical Corp. Downgraded To 'D' On Missed Interest And Principal Payments, Jan. 4, 2022
- Global Credit Outlook 2022: Aftershocks, Future Shocks, And Transitions, Nov. 30, 2021
- The Economic Impact Of Default Is Falling As Selective Defaults Rise, Sept. 16, 2021
Default Studies
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (financial and nonfinancial)
- 2020 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study
- 2020 Annual Australia And New Zealand Corporate Default And Rating Transition Study
- 2020 Annual Infrastructure Default And Rating Transition Study
- 2020 Annual Global Financial Services Default And Rating Transition Study
- 2020 Annual Latin American Corporate Default And Rating Transition Study
- 2020 Annual Greater China Corporate Default And Rating Transition Study
- 2020 Annual European Corporate Default And Rating Transition Study
- 2020 Annual Asia Corporate Default And Rating Transition Study
- 2020 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2020 Annual U.S. Corporate Default And Rating Transition Study
- 2020 Annual Global Corporate Default And Rating Transition Study
- 2020 Annual Japanese Issuer Credit Rating Transition Study
- 2019 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
Structured finance
- 2020 Annual Mexican Structured Finance Default And Rating Transition Study
- 2020 Annual European Structured Finance Default And Rating Transition Study
- 2020 Annual Global Leveraged Loan CLO Default And Rating Transition Study
- 2020 Annual Taiwan Structured Finance Default And Rating Transition Study
- 2020 Annual Global Structured Finance Default And Rating Transition Study
- 2020 Annual Japanese Structured Finance Default And Rating Transition Study
U.S. public finance
Sovereign and international public finance
- 2020 Annual International Public Finance Default And Rating Transition Study
- 2020 Annual Sovereign Default And Rating Transition Study
This report does not constitute a rating action.
Credit Markets Research: | Nicole Serino, New York + 1 (212) 438 1396; nicole.serino@spglobal.com |
Secondary Contact: | Patrick Drury Byrne, Dublin (00353) 1 568 0605; patrick.drurybyrne@spglobal.com |
Research Contributor: | Yogesh Kumar, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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