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Default, Transition, and Recovery: Europe And Emerging Markets Are Default Hotspots

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S&P Global Ratings' 2022 global corporate default tally has increased to 68 after seven companies defaulted in October:

  • U.K.-based business communications MLN UK Holdco Ltd.
  • Bermuda based aircraft services provider Fly Leasing Ltd.
  • U.S.-based car and truck parts provider K&N Parent Inc.
  • Uzbekistan-based bank Private Joint-Stock Commercial Bank Turkiston
  • Switzerland-domiciled offshore contract driller Transocean Ltd.
  • Luxembourg-based nonferrous and ferrous metal trader and recycler Metalcorp Group S.A.
  • One confidential issuer

With seven defaults in October, global levels remain higher than at this point in 2021. Emerging markets exhibit the greatest underperformance versus 2021 with a total only seven fewer defaults than the U.S., which has a significantly larger issuer base.

For the second consecutive month, Europe co-leads monthly defaults and has surpassed its 2021 year-to-data level of 14. In the U.S., defaults remain low at 17% below the previous year's level. Nonetheless, we expect the number of defaults to continue to rise across regions for the remainder of 2022 amid worsening credit conditions, which could erode margins and limit lower-rated companies' ability to access funding.

Chart 1

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By sector, homebuilders and real estate, and consumer products lead with 11 defaults each. While consumer product defaults are spread across multiple regions, the majority of homebuilder and real estate defaults come from the emerging markets region due to an increase in China-based homebuilder defaults as the sector continues to be hit by weaker sales and delays to housing construction and delivery. Media and entertainment (primarily leisure) defaults, however, are largely European-based as issuers face the consequences of higher inflation as consumer-driven sectors remain most exposed to the reduction in real disposable incomes.

Chart 2

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Table 1

Global Corporate Default Summary
Region Trailing-12-month speculative-grade default rate (%) Weakest links
U.S. 1.6* 144
Emerging market 1.9 22
Europe 1.8* 43
Other developed 2.3 11
Global 1.6 220
*Trailing-12-month speculative-grade default rates for from Oct. 31, 2022, to Oct. 31, 2022, are preliminary and subject to change. All other trailing-12-month speculative-grade default rates are from Sept. 30, 2022, to Sept. 30, 2022. Weakest link data is as of Sept. 15, 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®.

We continued to see an increase in distressed exchanges in October. Four of the defaults in October were from distressed exchanges. Distressed exchanges have become more prevalent in recent years as a way for distressed companies to restructure out of court and negotiate with investors to address liquidity or solvency needs. As financing conditions continue to tighten and speculative-grade credit deteriorates, we can expect the number of distressed exchanges to continue to rise, and in 2022 to date, it represents the primary reason for defaults.

Chart 3

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Chart 4

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Table 2

So Far In 2022, Total Global Default Tally Reaches 68
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 Confidential 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 Confidential Confidential Aerospace and defense SD CCC+ Confidential
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 & Entertainment SD CC Distressed exchange
5/10/2022 Talen Energy Supply LLC (Talen Energy Corp.) U.S. Utlities D CCC Bankruptcy
5/26/2022 Confidential Confidential Financial institutions SD CCC- Confidential
6/1/2022 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
6/10/2022 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
6/13/2022 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
6/16/2022 Revlon Inc. U.S. Consumer products D CCC- Bankruptcy
6/21/2022

Greenland Holding Group Co. Ltd.

China Homebuilders/real estate companies SD CC Distressed exchange
6/30/2022

Rite Aid Corp.

U.S. Retail/restaurants SD CC Distressed exchange
7/6/2022

Canopy Growth Corp.

Canada Consumer products SD CCC Distressed exchange
7/7/2022

SAS AB

Sweden Transportation D CC Bankruptcy
7/14/2022 SK HoldCo LLC U.S. Automotive SD CC Distressed exchange
7/18/2022 PT Sawit Sumbermas Sarana Tbk Indonesia Forest products and building materials SD CC Distressed exchange
7/28/2022

Mountain Province Diamonds Inc.

Canada Metals, mining, and steel SD CCC- Distressed exchange
8/9/2022 Output Services Group, Inc. U.S. Consumer products D CC Bankruptcy
8/9/2022 Unifin Financiera, S.A.B. de C.V. Mexico Financial institutions D B+ Missed principal and interest payments
8/11/2022 Dawn Acquisitions LLC (Infra Colodata Holdings LLC) U.S. Telecommunications SD CCC Distressed exchange
8/12/2022 Confidential Confidential Retail/restaurants SD CCC- Confidential
8/12/2022 Altera Infrastructure L.P. Marshall Islands Midstream D NR Bankruptcy
8/17/2022 Endo International PLC Ireland Health Care D CC Bankruptcy
8/19/2022 GEO Group (The) Inc. U.S. Consumer products SD CC Distressed exchange
8/23/2022

Carestream Health Inc.

U.S. Health Care D CC Bankruptcy
8/29/2022 Confidential Confidential Homebuilders/real estate companies SD CCC Confidential
8/30/2022 Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) U.S. Health Care SD CCC Distressed exchange
9/1/2022

Bright Bidco B.V.

Netherlands Automotive D CCC Bankruptcy
9/1/2022 Vue International Bidco plc (Vue Entertainment International Ltd) U.K. Media and entertainment D CC Distressed exchange
9/9/2022

Cineworld Group PLC

U.K. Media and entertainment D CCC Bankruptcy
9/27/2022 Confidential Confidential Retail/Restaurants SD CC Confidential
9/28/2022

Phoenix Services International LLC

U.S. Metals, mining, and steel D CCC+ Bankruptcy
9/30/2022 Isagenix Worldwide, Inc U.S. Consumer products D CCC Missed principal and interest payments
9/30/2022 Bausch Health Companies Inc. Canada Health care SD CC Distressed exchange
9/30/2022

Schur Flexibles GmbH

Germany Chemicals, packaging, and environmental services SD CC Distressed exchange
10/3/2022

Transocean Ltd.

Switzerland Oil and gas SD CC Distressed exchange
10/6/2022 Metalcorp Group S.A. Luxembourg Metals, mining, and steel SD B Missed principal payments
10/11/2022

Turkiston Bank

Uzbekistan Financial institutions D CCC+ Bankruptcy
10/13/2022 K&N Parent, Inc. U.S. Automotive D CCC Distressed exchange
10/19/2022 Fly Leasing Ltd Bermuda Transportation SD CCC- Distressed exchange
10/25/2022 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
10/31/2022 Mitel Networks (International) Ltd U.K. High Technology SD CCC Distressed exchange
Data as of Oct. 31, 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
Research Contributor:Vaishali Singh, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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