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Default, Transition, and Recovery: Corporate Default Forecast Points To Increasing Defaults Despite Current Multiyear Low

The 2022 global corporate default tally remained at 31 this week, with no defaults since our last report. The total is at its lowest year-to-date level since 2014. However, risks to credit conditions are increasing, including persistent inflation, lower growth forecasts, and rising financing costs.

We expect both the U.S. and European 12-month-trailing speculative-grade default rates to rise to 3% by March 2023 from 1.4% and 0.7%, respectively, as of March 2022. (For details, see "The European Speculative-Grade Corporate Default Rate Could Rise To 3% By March 2023," May 18, 2022, and "The U.S. Speculative-Grade Corporate Default Rate Could Reach 3% By 2023 As Risks Continue To Increase," May 19, 2022.)

This Week's Observations

  • Regionally, defaults in the U.S. and Europe are currently 38% and 55% lower than levels at the same time last year, respectively, but we expect the pace of defaults in these regions to pick up.
  • The homebuilders and utilities sectors are the only sectors with default totals so far this year that are higher than the previous two years.

Table 1

The 2022 Year-To-Date Global Corporate Default Total Remains Unchanged This Week
Region 12-month-trailing speculative-grade default rate (%) 2022 YTD 2021 YTD 2021 Weakest links
U.S. 1.3* 15 24 40 121
Emerging markets 2.0 11 6 15 64
Europe 0.9* 5 11 14 61
Other developed 1.5 0 1 3 10
Global 1.4 31 42 72 256
*Trailing-12-month speculative-grade default rates for March 31, 2021–March 31, 2022, and for the U.S. and Europe for April 30, 2022-April 30, 2022, are preliminary and subject to change. Year-to-date data as of May 18. Weakest link data is as of March 8, 2022. 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

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Chart 2

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Table 2

Defaults Of 'CCC+' And Lower Rated Issuers Have Increased 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 Consumer products SD CCC- Missed principal payments
2/1/2022

TPC Group Inc. (TPC Group LLC)

U.S. Health care D CCC Missed interest payments
2/4/2022 Confidential Confidential Consumer products D NR Confidential
2/9/2022 Confidential Confidential Consumer products 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
2/11/2022 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
2/17/2022

U.S. TelePacific Holdings Corp.

U.S. Telecommunications SD CCC- Distressed exchange
3/15/2022

Diamond Sports Group LLC (Sinclair Broadcast Group Inc.)

U.S. Media and entertainment SD CC Distressed exchange
3/21/2022

Mulhacen Pte. Ltd.

Singapore Financial institutions D CC Distressed exchange
3/24/2022

MHP SE

Ukraine Consumer products SD B- Missed interest payments
4/1/2022

Ruby Pipeline LLC

U.S. Utilities D CC Missed principal payments
4/7/2022

Owl Finance Ltd. (Hibu Group Ltd.)

U.K. Media and entertainment SD CC Distressed exchange
4/7/2022

PSS Industrial Group Corp

U.S. Utilities D CCC- Missed principal and interest payments
4/8/2022

Guangzhou R&F Properties Co. Ltd.

China Homebuilders/real estate companies SD CC Distressed exchange
4/8/2022

Kernel Holding S.A.

Ukraine Consumer products SD B- Missed interest payments
4/11/2022 Confidential Cayman Islands Homebuilders/real estate companies SD CC Confidential
4/11/2022

Promotora de Informaciones S.A.

Spain Media and entertainment SD CC Distressed exchange
4/12/2022

Dunn Paper Holdings Inc.

U.S. Chemicals, packaging, and environmental services D CCC Missed interest payments
4/12/2022

Grupo Kaltex S.A. de C.V.

Mexico Consumer products D CCC- Missed principal payments
4/12/2022

Petropavlovsk PLC

U.K. Metals, mining, and steel SD CCC- Missed interest payments
4/13/2022 Confidential Confidential High technology D CCC Confidential
4/14/2022

EuroChem Group AG

Switzerland Chemicals, packaging, and environmental services SD CCC- Missed interest payments
4/22/2022

Wesco Aircraft Holdings Inc. (Wolverine Intermediate Holding Corp.)

U.S. Aerospace and defense SD CCC+ Distressed exchange
5/3/2022

Envision Healthcare Corp. (Envision Healthcare Holdings Inc.)

U.S. Health care SD CCC Distressed exchange
5/6/2022

Safari Beteiligungs Gmbh (Dice Midco Sarl)

Germany Media and entertainment SD CC Distressed exchange
5/10/2022

Talen Energy Supply LLC (Talen Energy Corp.)

U.S. Utilities D CCC Bankruptcy
Data as of May 18, 2022. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro®.

Related Research

Default Studies

More analysis and statistics are available in our annual default studies, published on RatingsDirect:

Corporate (financial and nonfinancial)
Structured finance
U.S. public finance
Sovereign and international public finance

This report does not constitute a rating action.

Credit Markets Research:Nicole Serino, New York + 1 (212) 438 1396;
nicole.serino@spglobal.com
Patrick Drury Byrne, Dublin (00353) 1 568 0605;
patrick.drurybyrne@spglobal.com
Vaishali Singh, Pune;
vaishali.singh2@spglobal.com

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