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Default, Transition, and Recovery: Gaps Open As Global Corporate Defaults Increase By 15% In 2022

(Editor's Note: With 2023 unlikely to provide a clean break from the turmoil of 2022, dive deeper into how ratings performed last year and which trends to watch with our Ratings Performance Insights mini-series. The series is designed to support your decision-making and provide clarity on the credit markets with data-driven analyses, particularly in challenging conditions. Along with our latest defaults research, look forward to our 2022 Year In Review, Q1 2023 Global Credit Markets Update, and the launch of This Month In Credit, which will provide a comprehensive overview of current ratings conditions. This mini-series will culminate in our 2023 Ratings Performance Insights webinar on Jan. 31, 2023. )

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S&P Global Ratings' 2022 global corporate default tally has reached 83 after six companies defaulted in December:

  • U.S.-based drugstore retailer Rite Aid Corp..
  • Indonesia-based integrated township developer PT Kawasan Industri Jababeka Tbk.
  • Mongolia-based coal miner Mongolian Mining Corp.
  • U.S. based health care service provider BW Homecare Holdings LLC
  • U.S. based automated teller machine (ATM), point-of-sale terminal manufacturer, seller, and servicer Diebold Nixdorf Inc.
  • and one confidential issuer.

With six defaults in December, the global default tally ended the year 15% above 2021 levels. Although the U.S. led defaults in December (4), the region's year-end tally (36) was its lowest since 2014. Meanwhile, defaults in Europe (17), were more than 20% above 2021 levels, and the second highest default count since 2009. In addition, more than 70% of European defaults were in the last six months of 2022, highlighting a sharply worsening trend as the year progressed. Defaults in emerging markets were also elevated at 26 compared with previous year levels-- led by an increase in Asia-Pacific homebuilders. The other developed region (4) finished the year only one default higher than 2021 levels, led by Canada-based issuers.

We believe the U.S. speculative-grade corporate default rate could reach 3.75% by September 2023, while the European corporate speculative-grade default rate could reach 3.25% in the same period.

Chart 1

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Chart 2

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Table 1

Global Corporate Default Summary
Region 12-Month Trailing Speculative-Grade Default Rate (%) Weakest Links
U.S. *1.7 181
Emerging market 2.0 22
Europe *2.2 52
Other developed 2.3 8
Global 1.8 263
Note:* Trailing-12-month speculative grade default rates for from Dec. 31, 2022- Dec. 31, 2022 are preliminary and subject to change.Trailing-12-month speculative grade default rates for from Nov. 30, 2022- Nov. 30, 2022. Year-to-date data as of Dec. 31, 2022. Weakest link data is as of Nov. 25, 2022. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially-rated issuers. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Consumer Products And Homebuilders Led Defaults In 2022

Consumer products and home builders and real estate sectors together accounted for nearly one -third of defaults in 2022, compared with just over 25% of total defaults in 2021(see chart 3). Defaults from consumer-driven sectors are expected continue in 2023, given the high number of weakest links--issuers rated 'B-' and below with either a negative outlook or CreditWatch placement--as consumers' budget-conscious behavior, price inflation, and supply chain constraints are affecting some lower rated issuers in the sector. For the homebuilder and real estate sector, all defaults have been from Asia-Pacific based issuers driven by persistent issues affecting China's property developers (see "Weakest Links Are Expected To Continue Rising In 2023," Dec. 13, 2022).

Chart 3

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The Number Of Distress Exchanges Continue To Grow

Distressed exchanges led in December with five defaults, and in 2022, comprised 45% of total defaults. Distressed exchanges have become more prevalent in 2022 as distressed companies used them to restructure out of court and negotiate directly with investors to address liquidity or solvency needs. We expect this trend to continue into 2023, as economies slow, financing conditions tighten, and speculative-grade credit quality deteriorates.

Chart 4

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Table 2

Global Corporate Defaults In 2022
Date Parent company Country/Market Subsector To From Reason
Jan-22 ION Geophysical Corp. U.S. Oil and gas D CCC Missed principal and interest payments
Jan-22 Confidential Confidential Utilities D NR Confidential
Jan-22 R&F Properties (HK) Co. Ltd. Hong Kong Homebuilders/real estate companies SD CC Distressed exchange
Jan-22 Confidential Confidential Homebuilders/real estate companies SD CCC- Confidential
Jan-22 Fusion Connect Inc. U.S. Telecommunications SD CC Distressed exchange
Feb-22 Future Retail Ltd. India Consumer Products SD CCC- Missed principal payments
Feb-22 TPC Group Inc., (TPC Group LLC) U.S. Health care D CCC Missed interest payments
Feb-22 Confidential Confidential Consumer Products D NR Confidential
Feb-22 Confidential Confidential Consumer Products SD CCC Confidential
Feb-22 Credito Real, S.A.B. de C.V., SOFOM, E.N.R. Mexico Financial Institutions SD CCC- Missed principal payments
Feb-22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
Feb-22 U.S. TelePacific Holdings Corp. U.S. Telecommunications SD CCC- Distressed exchange
Mar-22 Diamond Sports Group, LLC (Sinclair Broadcast Group Inc.) U.S. Media and Entertainment SD CC Distressed exchange
Mar-22 Mulhacen Pte. Ltd. Singapore Financial Institutions D CC Distressed exchange
Mar-22 MHP SE Ukraine Consumer Products SD B- Missed interest payments
Apr-22 Ruby Pipeline LLC U.S. Utilities D CC Missed principal payments
Apr-22 Owl Finance Ltd. (Hibu Group Ltd.) U.K. Media and entertainment SD CC Distressed exchange
Apr-22 PSS Industrial Group Corp U.S. Utilities D CCC- Missed principal and interest payments
Apr-22 Guangzhou R&F Properties Co. Ltd. China Homebuilders/real estate companies SD CC Distressed exchange
Apr-22 Kernel Holding S.A. Ukraine Consumer products SD B- Missed interest payments
Apr-22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
Apr-22 Promotora de Informaciones S.A. Spain Media and entertainment SD CC Distressed exchange
Apr-22 Dunn Paper Holdings Inc. U.S. Chemicals, packaging, and environmental services D CCC Missed interest payments
Apr-22 Grupo Kaltex, S.A. de C.V. Mexico Consumer products D CCC- Missed principal payments
Apr-22 Petropavlovsk PLC U.K. Metals, mining, and steel SD CCC- Missed interest payments
Apr-22 Confidential Confidential High technology D CCC Confidential
Apr-22 EuroChem Group AG Switzerland Chemicals, packaging, and environmental services SD CCC- Missed interest payments
Apr-22 Confidential Confidential Aerospace and defense SD CCC+ Confidential
May-22 Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) U.S. Health Care SD CCC Distressed exchange
May-22 Safari Beteiligungs Gmbh (Dice Midco Sarl) Germany Media & Entertainment SD CC Distressed exchange
May-22 Talen Energy Supply LLC (Talen Energy Corp.) U.S. Utlities D CCC Bankruptcy
May-22 Confidential Confidential Financial institutions SD CCC- Confidential
Jun-22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
Jun-22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
Jun-22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
Jun-22 Revlon Inc. U.S. Consumer products D CCC- Bankruptcy
Jun-22 Greenland Holding Group Co. Ltd. China Homebuilders/real estate companies SD CC Distressed exchange
Jun-22 Rite Aid Corp. U.S. Retail/restaurants SD CC Distressed exchange
Jul-22 Canopy Growth Corp. Canada Consumer products SD CCC Distressed exchange
Jul-22 SAS AB Sweden Transportation D CC Bankruptcy
Jul-22 SK HoldCo LLC U.S. Automotive SD CC Distressed exchange
Jul-22 PT Sawit Sumbermas Sarana Tbk Indonesia Forest products and building materials SD CC Distressed exchange
Jul-22 Mountain Province Diamonds Inc. Canada Metals, mining, and steel SD CCC- Distressed exchange
Aug-22 Output Services Group, Inc. U.S. Consumer products D CC Bankruptcy
Aug-22 Unifin Financiera, S.A.B. de C.V. Mexico Financial institutions D B+ Missed principal and interest payments
Aug-22 Dawn Acquisitions LLC (Infra Colodata Holdings LLC) U.S. Telecommunications SD CCC Distressed exchange
Aug-22 Confidential Confidential Retail/restaurants SD CCC- Confidential
Aug-22 Altera Infrastructure L.P. Marshall Islands Midstream D NR Bankruptcy
Aug-22 Endo International PLC Ireland Health Care D CC Bankruptcy
Aug-22 GEO Group (The) Inc. U.S. Consumer products SD CC Distressed exchange
Aug-22 Carestream Health Inc. U.S. Health Care D CC Bankruptcy
Aug-22 Confidential Confidential Homebuilders/real estate companies SD CCC Confidential
Aug-22 Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) U.S. Health Care SD CCC Distressed exchange
Sep-22 Bright Bidco B.V. Netherlands Automotive D CCC Bankruptcy
Sep-22 Vue International Bidco plc (Vue Entertainment International Ltd) U.K. Media and entertainment D CC Distressed exchange
Sep-22 Cineworld Group PLC U.K. Media and entertainment D CCC Bankruptcy
Sep-22 Confidential Confidential Retail/Restaurants SD CC Confidential
Sep-22 Phoenix Services International LLC U.S. Metals, mining, and steel D CCC+ Bankruptcy
Sep-22 Isagenix Worldwide, Inc U.S. Consumer products D CCC Missed principal and interest payments
Sep-22 Bausch Health Companies Inc. Canada Health care SD CC Distressed exchange
Sep-22 Schur Flexibles GmbH Germany Chemicals, packaging, and environmental services SD CC Distressed exchange
Oct-22 Transocean Ltd. Switzerland Oil and gas SD CC Distressed exchange
Oct-22 E-House (China) Enterprise Holdings Ltd. China Consumer products D NR Bankruptcy
Oct-22 Metalcorp Group S.A. Luxembourg Metals, mining, and steel SD B Missed principal payments
Oct-22 Turkiston Bank Uzbekistan Financial institutions D CCC+ Bankruptcy
Oct-22 K&N Parent, Inc. U.S. Automotive D CCC Distressed exchange
Oct-22 Fly Leasing Ltd Bermuda Transportation SD CCC- Distressed exchange
Oct-22 Confidential Confidential Homebuilders/real estate companies SD CC Confidential
Oct-22 Mitel Networks (International) Ltd U.K. High Technology SD CCC Distressed exchange
Nov-22 Vericast Corp. U.S. Media and entertainment SD CC Distressed exchange
Nov-22 Bed Bath & Beyond Inc. U.S. Retail/Restaurants SD CC Distressed exchange
Nov-22 Canopy Growth Corp. (B) Canada Consumer products SD CC Distressed exchange
Nov-22 Greenland Holding Group Co. Ltd.(B) China Homebuilders/real estate companies SD CC Missed principal payments
Nov-22 Confidential Confidential Consumer products SD CC Confidential
Nov-22 L1R HB Finance Ltd U.K. Retail/Restaurants SD CC Distressed exchange
Nov-22 Neovia Logistics, LP U.S. Transportation D CC Distressed exchange
Nov-22 CORESTATE Capital Holding S.A. Luxembourg Financial institutions D CC Missed principal and interest payments
Dec-22 Rite Aid Corp.(B) U.S. Retail/Restaurants SD CC Distressed exchange
Dec-22 Confidential Confidential Media and Entertainment SD CC Confidential
Dec-22 PT Kawasan Industri Jababeka Tbk. Indonesia Homebuilders/real estate companies SD CC Distressed exchange
Dec-22 Mongolian Mining Corp. Cayman Islands Metals, mining, and steel SD CC Distressed exchange
Dec-22 BW Homecare Holdings LLC U.S. Health care SD CCC- Distressed exchange
Dec-22 Diebold Nixdorf Inc. U.S. High Technology SD CC Distressed exchange
Data as of Dec. 31, 2022. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research and Insights and S&P Global Market Intelligence's CreditPro® Copyright © 2018 by Standard & Poor’s Financial Services LLC. All rights reserved.

Related Research

Default Studies

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

Corporate (Financial and Non-Financial)

Structured Finance

Public Finance

Sovereign and International Public Finance

This report does not constitute a rating action.

Primary Credit Analysts: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, Pune;
vaishali.singh2@spglobal.com

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