(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. )
Key Takeaways
- 2022 ended with 83 defaults compared with 72 in 2021, and 226 in 2020.
- The U.S. led both the December and full year default tally with four and 36 respectively, but the region's default tally is at its lowest levels since 2014.
- Conversely, defaults in emerging markets increased to 26 from 15 in 2021. Defaults in Europe had a smaller year-on-year increase, but it is noteworthy that 70% of defaults in Europe were in the last six months of 2022.
- Consumer products and home builder and real estate sectors accounted for more than one-third of all defaults in 2022, while distressed exchanges were the leading reason for nearly half of all defaults.
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
Chart 2
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
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
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
- Diebold Nixdorf Inc. Issuer Credit Rating Lowered To 'SD' From 'CC' On Distressed Exchange; Debt Ratings Lowered To 'D', Dec. 31, 2022
- Ukrainian Railways JSC FC Rating Lowered To 'SD' On Approved Debt Restructuring, Dec. 26, 2022
- BW Homecare Holdings LLC (Elara Caring) Downgraded To 'SD' From 'CCC-'; Secured Debt Ratings Lowered To 'D' , Dec. 23, 2022
- Mongolian Mining Corp. Downgraded To 'SD' From 'CC' On Completion Of Distressed Exchange; Issue Rating Lowered To 'D', Dec. 12, 2022
- Kawasan Industri Jababeka Downgraded To 'SD' On Distressed Exchange; Issue Rating Lowered To 'D', Dec. 9, 2022
- Rite Aid Corp. Issuer Credit Rating Lowered To 'SD' From 'CC' On Distressed Exchange, Dec. 7, 2022
- Weakest Links Are Expected To Continue Rising In 2023, Dec. 13, 2022
Default Studies
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (Financial and Non-Financial)
- 2021 Annual Global Financial Services Default And Rating Transition Study
- 2021 Annual Global Corporate Default And Rating Transition Study
- 2021 Annual U.S. Corporate Default And Rating Transition Study
- 2021 Annual Japanese Corporate Default And Rating Transition Study
- 2021 Annual European Corporate Default And Rating Transition Study
- 2021 Annual Asia Corporate Default And Rating Transition Study
- 2021 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2021 Annual Greater China Corporate Default And Rating Transition Study
- 2021 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study
Structured Finance
- 2021 Global Structured Finance Defaults And Rating Transition Study
- 2021 Annual Japanese Structured Finance Default And Rating Transition Study
- 2021 Annual European Structured Finance Default And Rating Transition Study
- 2021 Annual Taiwan Structured Finance Default And Rating Transition Study
- 2021 Annual Mexican Structured Finance Default And Rating Transition Study
- 2021 Annual Global Leveraged Loan CLO Default And Rating Transition Study
Public Finance
- 2021 Annual U.S. Public Finance Default And Rating Transition Study
- 2021 Annual International Public Finance Default And Rating Transition Study
- 2021 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
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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