Key Takeaways
- Following 14 defaults in March, the global corporate default tally rose to 37 this year--tied with 2016 for the highest year-to-date default tally since 2009.
- The U.S. and Europe are driving defaults, with both regions well above prior years' totals.
- The media and entertainment sector led defaults in March, with five.
- Distressed exchanges are responsible for nearly half of the defaults so far in 2023 and are at their highest year-to-date level.
S&P Global Ratings' 2023 global corporate default tally has reached 37 following 14 defaults in March:
- U.S.-based pharmaceutical manufacturer Akorn Operating Co. LLC
- U.S.-based hospital chain Community Health Systems Inc.
- U.S.-based marketing service provider LendingTree Inc.
- U.S.-based tech-enabled, data-driven consumer loyalty solutions provider Loyalty Ventures Inc.
- U.S.-based commercial bank Silicon Valley Bank
- U.S.-based commercial bank SVB Financial Group
- U.S.-based manufacturer and distributer of beauty and personal care products Bioplan USA Inc.
- Brazilian-based airline Gol Linhas Aéreas Inteligentes S.A.
- French-based visual and animation studio effects provider Technicolor Creative Studios
- Irish-based manufacture and market distributor of pharmaceutical products Mallinckrodt PLC
- Luxembourg-based chemical company Flint HoldCo S.a.r.l.
- U.S.-based theater advertising company National CineMedia Inc.
- U.K.-based travel retail platform provider Toro Private Holdings I Ltd.
- U.S.-based fitness technology company Wahoo Fitness Acquisition LLC
The global corporate default tally is the highest year-to-date tally (through March 31) since 2009. The current total is tied with 2016, when stress in the U.S. oil and gas sector led to an elevated number of defaults.
By region, nearly two-thirds of defaults this month were from the U.S., where credit conditions deteriorated further in March amid banking-sector turmoil and expectations that the U.S. will slip into a shallow recession (see "Credit Conditions North America Q2 2023: Coalescing Stresses," March 28, 2023). Meanwhile in Europe, there were an additional four defaults in March, more than doubling its previous monthly tally. Given our expectation that economic conditions will continue to deteriorate through 2023, we expect the U.S. speculative-grade corporate default rate could reach 4% by December, while the European corporate speculative-grade default rate could reach 3.25% (see "Growing Strains Could Push The U.S. Speculative-Grade Corporate Default Rate To 4% By December 2023" and "The European Speculative-Grade Corporate Default Rate Could Rise To 3.25% By December 2023, Amid Uncertain Backdrop," Feb. 16, 2023).
Chart 1
Media And Health Care Led Defaults In March
The media and entertainment sector continued to lead defaults in March, with over 30% of the total. Both uneven recovery from the COVID-19 pandemic and persistently high inflation have contributed to an elevated number of 'B-' and lower rated issuers in the sector and, thus, an increase in defaults. Given the sector still has a high number of weakest links--issuers rated 'B-' or lower with negative outlooks or on CreditWatch negative--we expect more defaults from this sector in the coming months. The health care sector also had three defaults in March--all of which have defaulted at least one other time over the past three years.
Distressed Exchanges Remain The Primary Reason For Default
Distressed exchanges remain the preferred method of restructuring, accounting for five out of 14 defaults in March. The number of distressed exchanges has risen in recent years as distressed issuers view out-of-court restructuring more favorably than other options, such as a traditional bankruptcy. With 16 distressed exchanges so far in 2023, the year-to-date total is nearly 50% higher than the 2009 and 2016 year-to-date tallies (see chart 3).
Table 1
Rising weakest links could create further default pressure in the coming months | ||||||
---|---|---|---|---|---|---|
Region | 12-month-trailing speculative-grade default rate (%) | Weakest links | ||||
U.S. | 2.5* | 193 | ||||
Emerging markets | 2.01 | 28 | ||||
Europe | 3.0* | 50 | ||||
Other developed | 2.2 | 10 | ||||
Global | 2.1 | 281 | ||||
*Trailing-12-month speculative grade default rates are from March 31, 2022-March 31, 2023, and are preliminary and subject to change. Other trailing-12-month speculative-grade default rates are from Feb. 28, 2022- Feb. 28, 2023. Weakest link data is as of Feb. 28, 2023. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Credit Research and S&P Global Market Intelligence’s CreditPro®. |
Chart 2
Chart 3
Chart 4
Table 2
Global corporate defaults so far in 2023 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Date | Parent company | Country/market | Subsector | To | From | Reason | ||||||||
1/3/2023 |
Moran Foods, LLC (SAL Acquisition Corp.) |
U.S. | Retail/restaurants | SD | CCC+ | Distressed exchange | ||||||||
1/16/2023 |
Americanas S.A. (Lojas Americanas S.A.) |
Brazil | Retail/restaurants | D | B | Missed principal and interest payments | ||||||||
1/19/2023 |
Party City Holdings, Inc. (PC Nextco Holdings LLC) |
U.S. | Retail/restaurants | D | CCC | Bankruptcy | ||||||||
1/20/2023 |
Mexarrend, S.A.P.I. de C.V. |
Mexico | Financial institutions | D | CC | Missed principal and interest payments | ||||||||
1/24/2023 |
Serta Simmons Bedding LLC |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
1/27/2023 |
Bed Bath & Beyond Inc. |
U.S. | Retail/restaurants | D | CC | Missed principal and interest payments | ||||||||
1/30/2023 |
Cooper-Standard Holdings Inc. |
U.S. | Automotive | SD | CC | Distressed exchange | ||||||||
1/31/2023 |
Missouri TopCo Ltd. |
U.K. | Consumer products | SD | CCC- | Distressed exchange | ||||||||
2/3/2023 |
Oi S.A. |
Brazil | Telecommunications | D | CCC- | Missed principal and interest payments | ||||||||
2/9/2023 |
KNB Holdings Corp. |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
2/10/2023 |
Yak Access LLC |
U.S. | Capital goods | D | CCC | Distressed exchange | ||||||||
2/14/2023 |
K&N Parent Inc. |
U.S. | Automotive | D | CCC- | Distressed exchange | ||||||||
2/15/2023 |
99 cents only stores LLC |
U.S. | Retail/restaurants | SD | CCC+ | Missed payments | ||||||||
2/15/2023 |
Avaya Holdings Corp. |
U.S. | High technology | D | CC | Bankruptcy | ||||||||
2/15/2023 |
Diamond Sports Group LLC |
U.S. | Media and entertainment | D | CCC- | Missed payments | ||||||||
2/16/2023 |
Confidential |
Confidential | Media and entertainment | D | CC | Confidential | ||||||||
2/17/2023 |
AMC Entertainment Holdings Inc. |
U.S. | Media and entertainment | SD | CC | Distressed exchange | ||||||||
2/17/2023 |
Premier Brands Group Holdings LLC |
U.S. | Consumer products | SD | CCC | Distressed exchange | ||||||||
2/22/2023 |
Altisource Portfolio Solutions S.A. |
Luxembourg | Financial institutions | SD | CC | Distressed exchange | ||||||||
2/22/2023 |
Foodco Bondco SAU |
Spain | Retail/restaurants | SD | CCC- | Missed payments | ||||||||
2/24/2023 |
Bausch Health Cos. Inc. |
Canada | Health care | SD | CCC+ | Distressed exchange | ||||||||
2/28/2023 |
Equinox Holdings Inc. |
U.S. | Media and entertainment | SD | CCC- | Distressed exchange | ||||||||
2/28/2023 |
Rising Tide Holdings Inc. |
U.S. | Retail/restaurants | SD | CC | Distressed exchange | ||||||||
3/1/2023 |
Akorn Operating Co. LLC |
U.S. | Health care | D | CCC+ | Bankruptcy | ||||||||
3/2/2023 |
Community Health Systems Inc. |
U.S. | Health care | SD | B- | Distressed exchange | ||||||||
3/6/2023 |
LendingTree Inc. |
U.S. | Media and entertainment | SD | B- | Distressed exchange | ||||||||
3/10/2023 |
Loyalty Ventures Inc. |
U.S. | Media and entertainment | D | CCC+ | Bankruptcy | ||||||||
3/10/2023 |
Silicon Valley Bank |
U.S. | Financial institutions | D | BBB | Regulatory | ||||||||
3/14/2023 |
Bioplan USA Inc. |
U.S. | Media and entertainment | D | CCC | Out-of-court restructuring | ||||||||
3/14/2023 |
Gol Linhas Aereas Inteligentes S.A. |
Brazil | Transportation | SD | CC | Distressed exchange | ||||||||
3/14/2023 |
Technicolor Creative Studios SA |
France | Media and entertainment | D | CCC- | Missed interest payments | ||||||||
3/16/2023 |
Mallinckrodt plc |
Ireland | Health care | SD | B- | Distressed exchange | ||||||||
3/17/2023 |
National CineMedia Inc. |
U.S. | Media and entertainment | D | CCC- | Missed payments | ||||||||
3/17/2023 |
SVB Financial Group |
U.S. | Financial institutions | D | NR | Regulatory | ||||||||
3/23/2023 |
Flint HoldCo S.a.r.l. |
Luxembourg | Chemicals, packaging, and environmental services | SD | CCC | Missed payments | ||||||||
3/31/2023 |
Toro Private Holdings I Ltd. |
U.K. | Transportation | SD | CCC+ | Distressed exchange | ||||||||
3/31/2023 |
Wahoo Fitness Acquisition LLC |
U.S. | Consumer products | D | CCC- | Missed payments | ||||||||
Data as of March 31, 2023. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®. |
Related Research
- Toro Private Holdings (Travelport) Downgraded To 'SD' On Distressed Debt Exchange, March 31, 2023
- Wahoo Fitness Acquisition Rating Lowered To 'D' From 'CCC-' On Forbearance Agreement; Debt Rating Cut To 'D' From 'CCC', March 31, 2023
- This Month In Credit, March 28, 2023
- Flint Downgraded To 'SD' On Missed Revolver Payment; First-Lien Term Loan Downgraded To 'CC', Second Lien To 'C', March 23, 2023
- Mallinckrodt PLC Downgraded To 'SD' On Below-Par Debt Repurchases; 2029 Secured Note Rating Lowered To 'D', March 16, 2023
- Brazilian Airline Gol Credit Rating Cut To 'SD' From 'CC' On Completion Of Distressed Debt Restructuring, March 15, 2023
- Bioplan USA Inc. Downgraded To 'D' From 'CCC' On Restructuring; Debt Ratings Lowered To 'D', March 14, 2023
- Technicolor Creative Studios Downgraded To 'D', March 14, 2023
- Loyalty Ventures Inc. Rating Lowered To 'D' From 'CCC+' On Bankruptcy Filing, March 11, 2023
- Silicon Valley Bank Rating Lowered To 'D' And SVB Financial Group Rating Lowered To 'CC'; Ratings Subsequently Withdrawn, March 11, 2023
- LendingTree Inc. Downgraded To ‘SD’ From 'B-' On Distressed Debt Repurchase, March 7, 2023
- Community Health Systems Inc. Downgraded To 'SD' From 'B-'; Rating On Junior-Priority Secured Notes Lowered To 'D', March 3, 2023
- Akorn Operating Co. LLC Downgraded To 'D' From 'CCC+' Following Chapter 7 Bankruptcy Filing; Ratings To Be Withdrawn, March 2, 2023
Default Studies
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (financial and nonfinancial)
- 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 European Corporate Default And Rating Transition Study
- 2022 Annual Japanese Corporate And Public Finance 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 Emerging And Frontier Markets Corporate Default And Rating Transition Study
- 2021 Annual Greater China Corporate Default And Rating Transition Study
Structured finance
- 2021 Annual Global Structured Finance Default And Rating Transition Study
- 2022 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
Sovereign and international public finance
- 2021 Annual International Public Finance Default And Rating Transition Study
- 2021 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
- 2021 Annual Global Sovereign Default And Rating Transition Study
This report does not constitute a rating action.
Credit Research & Insights: | 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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