This Weeks Observations:
- Emerging markets based Credito Real S.A.B. de C.V., SOFOM, E.N.R becomes the first default of 2022 where an environmental, social, and governance (ESG) credit factor was considered a key driver.
- By region, the U.S. leads the tally with five, followed by emerging markets with four, while Europe and the other developed region (Australia, Canada, Japan, and New Zealand) have yet to experience a default in 2022.
- S&P Global expect the U.S. trailing-12-month speculative-grade corporate default rate to reach 3% by December 2022 from 1.5% in December 2021.
The 2022 global corporate default tally reached nine after Mexico-based non-bank financial institution Credito Real S.A.B. de C.V., SOFOM, E.N.R. defaulted due to a missed interest payment on Feb. 9, 2022 (see "Credito Real Credit Issuer Rating Cut To 'SD' And Rating On CHF170M Senior Notes Cut To 'D' On Missed Principal Payment," Feb. 10, 2022). Our downgrade of Credito Real to 'SD' from 'CCC-' marks the first default in 2022 influenced by ESG credit factors —governance (risk management, culture, and oversight).
Over the course of 2021, potential downgrades influenced by ESG factors were more than twice as likely to lead to a downgrade. Moving into 2022, ESG considerations, especially in the continuing context of the pandemic, are more of a risk than an opportunity to credit quality (see "ESG Factors Influence Close To 1 In 4 Potential Downgrades As 2022 Unfolds," Feb. 3, 2022).
Table 1
The U.S. Region Leads The 2022 Default Tally So Far With Five, Followed By Emerging Market With Four | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Region | 12-month trailing speculative-grade default rate (%) | 2022 YTD | 2021 YTD | 2021 | Weakest links | |||||||
U.S. | *1.5 | 5 | 9 | 40 | 131 | |||||||
Emerging market | 1.8 | 4 | 1 | 15 | 18 | |||||||
Europe | *1.7 | 0 | 3 | 14 | 49 | |||||||
Other developed | 2.2 | 0 | 0 | 3 | 9 | |||||||
Global | 1.7 | 9 | 13 | 72 | 207 | |||||||
Note: *Trailing-12-month speculative grade default rates from Jan. 31, 2021 – Jan. 31, 2022, are preliminary and subject to change. Year-to-date data as of Feb. 16, 2022. Weakest link data is as of Dec. 31, 2021. Other developed region includes 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
Table 2
Global Corporate Defaults Tally At Nine So Far In 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 | ||||||||
1/4/2022 | Confidential | Confidential | Utilities | D | NR | Confidential | ||||||||
1/13/2022 |
R&F Properties (HK) Co. Ltd. |
Hong Kong | Homebuilders/real estate companies | SD | CC | Distressed exchange | ||||||||
1/19/2022 | Confidential | Confidential | Homebuilders/real estate companies | SD | CCC- | Confidential | ||||||||
1/24/2022 |
Fusion Connect Inc. |
U.S. | Telecommunications | SD | CC | Distressed exchange | ||||||||
2/1/2022 |
Future Retail Ltd. |
India | Retail/restaurants | SD | CCC- | Missed principal payments | ||||||||
2/1/2022 |
TPC Group Inc. (TPC Group LLC) |
U.S. | Chemicals, packaging, and environmental services | D | CCC | Missed interest payments | ||||||||
2/9/2022 | Confidential | Confidential | Retail/restaurants | SD | CCC | Confidential | ||||||||
2/10/2022 |
Credito Real S.A.B. de C.V., SOFOM, E.N.R. |
Mexico | Financial institutions | SD | CCC- | Missed principal payments | ||||||||
Data as of Feb. 9, 2022. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®. |
Related Research
- The U.S. Speculative-Grade Corporate Default Rate Could Reach 3% By Year-End As Risks Continue To Increase, Feb. 17, 2022
- Credito Real Credit Issuer Rating Cut To 'SD' And Rating On CHF170M Senior Notes Cut To 'D' On Missed Principal Payment
- ESG Factors Influence Close To 1 In 4 Potential Downgrades As 2022 Unfolds , Feb. 3, 2022
- Industry Top Trends 2022: Aerospace and Defense , Jan. 25, 2022
- Omicron Is Fueling Uncertainty Across Inflation-Ridden Emerging Markets, Says Report, Jan. 20, 2022
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 Contacts: | Patrick Drury Byrne, Dublin (00353) 1 568 0605; patrick.drurybyrne@spglobal.com |
Yogesh Kumar, Pune; yogesh.kumar2@spglobal.com |
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