Defaults Ticked Up In 2022

Defaults rose in 2022 amid rising risks across regions and sectors as interest rates rose in response to soaring inflation. Amid a reduction in disposable incomes, consumer/service led with 21 defaults globally. The U.S. led defaults by region (accounting for 36) followed by emerging markets (25), Europe (17), and other developed (five).

Downgrades increased in 2022 but were outpaced by upgrades by a ratio of 1.34 to 1. While credit quality continued to improve during the year, our rated corporate issuers overall remain weaker than prior to the 2020 recession, with 15% rated 'B-' and lower as of January 2023.

The global speculative-grade default rate rose slightly to 1.9%. This is just the ninth time in the 42 years covered in this study that the default rate was below 2% (see chart 1 and table 1).

This default and rating transition study includes industrials, utilities, financial institutions (banks, brokerages, asset managers, and other financial entities), and insurance companies globally with long-term local currency ratings from S&P Global Ratings. We calculated all default rates on an issuer-weighted basis. The default rates that we refer to as weighted averages in this study use the number of issuers at the beginning of each year as the basis for each year's weight. (For a detailed explanation of our data sources and methodology, see Appendix I.)

Table 1

Global corporate default summary
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)	Total debt outstanding (bil. $)
1981	2	0	2	0.15	0.00	0.63	0.06
1982	18	2	15	1.22	0.19	4.46	0.90
1983	12	1	10	0.77	0.09	2.98	0.37
1984	14	2	12	0.93	0.17	3.31	0.36
1985	19	0	18	1.13	0.00	4.37	0.31
1986	34	2	30	1.74	0.15	5.75	0.46
1987	19	0	19	0.95	0.00	2.83	1.60
1988	32	0	29	1.39	0.00	3.88	3.30
1989	44	3	35	1.79	0.22	4.70	7.28
1990	70	2	56	2.74	0.14	8.12	21.15
1991	93	2	65	3.26	0.14	11.05	23.65
1992	39	0	32	1.50	0.00	6.12	5.40
1993	26	0	14	0.60	0.00	2.50	2.38
1994	21	1	15	0.63	0.05	2.12	2.30
1995	35	1	29	1.05	0.05	3.54	8.97
1996	20	0	16	0.51	0.00	1.81	2.65
1997	23	2	20	0.63	0.08	2.01	4.93
1998	56	4	48	1.28	0.14	3.67	11.27
1999	109	5	92	2.15	0.17	5.57	39.38
2000	136	7	109	2.48	0.24	6.24	43.28
2001	229	7	172	3.77	0.23	9.84	118.79
2002	226	13	159	3.60	0.42	9.50	190.92
2003	119	3	89	1.93	0.10	5.07	62.89
2004	56	1	38	0.78	0.03	2.02	20.66
2005	40	1	31	0.60	0.03	1.50	42.00
2006	30	0	26	0.48	0.00	1.19	7.13
2007	24	0	21	0.37	0.00	0.91	8.15
2008	127	14	89	1.80	0.42	3.71	429.63
2009	268	11	223	4.17	0.33	9.90	627.70
2010	83	0	64	1.20	0.00	3.02	97.48
2011	53	1	44	0.80	0.03	1.85	84.30
2012	83	0	66	1.14	0.00	2.59	86.70
2013	81	0	62	1.03	0.00	2.24	97.29
2014	60	0	45	0.69	0.00	1.44	91.55
2015	113	0	94	1.36	0.00	2.78	110.31
2016	163	1	143	2.08	0.03	4.24	239.79
2017	95	0	83	1.20	0.00	2.47	104.57
2018	82	0	71	1.02	0.00	2.07	131.65
2019	118	2	92	1.30	0.06	2.54	183.21
2020	226	0	198	2.75	0.00	5.51	353.43
2021	72	0	60	0.84	0.00	1.68	66.28
2022	83	0	71	0.98	0.00	1.92	106.98
*This column includes companies that were no longer rated one year prior to default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Defaults increased across several sectors, and only energy and natural resources and transportation saw fewer defaults year over year. Even as defaults are rising, most sectors continue to show low default rates relative to long-term weighted averages--real estate is the lone exception (see chart 2).

S&P Global Ratings Credit Research & Insight's default studies show a clear correlation between ratings and defaults: Generally, the frequency of defaults among investment-grade ratings is low and is higher among speculative-grade ratings.

All defaulters that were rated at the start of 2022 were rated speculative grade, and 62% were rated in the 'CCC'/'C' category. Even for this category, the default rate in 2022--13.8%--is markedly lower than its long-term weighted average.

With defaults concentrated in the lowest rating levels, the one-year Gini ratio remained high in 2022 at 83.2% (see chart 3). The Gini ratio is a measure of the rank-ordering power of ratings over a given time horizon. It shows the ratio of actual rank-ordering performance to theoretically perfect rank ordering. In 2022, the one-year Gini ratio remained above the one-year weighted average of 82.4% (see table 2).

Table 2

Global average Gini coefficients by broad sector (1981-2022)
	--Time horizon--
Sector	One-year	Three-year	Five-year	Seven-year
Global
Weighted average	82.38	75.39	71.62	69.13
Average	85.42	78.68	74.51	71.38
Standard deviation	(5.38)	(5.09)	(5.29)	(5.19)
Financial
Weighted average	80.19	70.27	63.38	58.87
Average	83.66	76.90	69.65	63.88
Standard deviation	(19.70)	(14.85)	(16.91)	(17.15)
Nonfinancial
Weighted average	80.36	72.53	68.70	66.30
Average	84.35	76.72	72.61	69.59
Standard deviation	(5.93)	(5.18)	(5.29)	(5.00)
Numbers in parentheses are standard deviations. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

As the Gini ratios show, corporate ratings have served as effective measures of relative credit risk over time, particularly in low-default years (For details on the Gini methodology, refer to Appendix II.)

Cumulative default rates are another measure of ratings performance over time. Cumulative default rates show that lower ratings have historically corresponded to higher default rates over both short and long time horizons (see chart 4).

Transition rates, which gauge rating changes--both upgrades and downgrades--during a given period, are another useful measure of ratings performance. Rating transition rates show that higher ratings tend to be more stable while speculative-grade ratings ('BB+' or lower) generally experience more volatility.

Sample size is important to consider when analyzing transition rates. For example, since the global financial crisis, many higher-rated companies were downgraded such that there are very few 'AAA' rated issuers today. Rating categories with smaller populations will exhibit relatively high transition rates even when a small number of issuers is upgraded or downgraded.

Transition tables also include default rates for a given time horizon. The default rates in these tables show the rank-ordering power of ratings. In 2022, all defaults were limited to the 'BB', 'B' and 'CCC'/'C' categories. Each of these speculative-grade categories had higher default rates year over year (see tables 3 and 4).

Table 3

Global corporate annual default rates by rating category (%)
	AAA	AA	A	BBB	BB	B	CCC/C
1981	0.00	0.00	0.00	0.00	0.00	2.33	0.00
1982	0.00	0.00	0.21	0.35	4.24	3.18	21.43
1983	0.00	0.00	0.00	0.34	1.16	4.70	6.67
1984	0.00	0.00	0.00	0.68	1.14	3.49	25.00
1985	0.00	0.00	0.00	0.00	1.50	6.53	15.38
1986	0.00	0.00	0.18	0.34	1.33	8.45	23.08
1987	0.00	0.00	0.00	0.00	0.38	3.13	12.28
1988	0.00	0.00	0.00	0.00	1.05	3.68	20.37
1989	0.00	0.00	0.18	0.61	0.73	3.40	33.33
1990	0.00	0.00	0.00	0.58	3.57	8.56	31.25
1991	0.00	0.00	0.00	0.55	1.69	13.84	33.87
1992	0.00	0.00	0.00	0.00	0.00	6.99	30.19
1993	0.00	0.00	0.00	0.00	0.70	2.61	13.33
1994	0.00	0.00	0.14	0.00	0.28	3.08	16.67
1995	0.00	0.00	0.00	0.17	1.00	4.58	28.00
1996	0.00	0.00	0.00	0.00	0.45	2.91	8.00
1997	0.00	0.00	0.00	0.25	0.19	3.52	12.00
1998	0.00	0.00	0.00	0.41	0.82	4.64	42.86
1999	0.00	0.17	0.18	0.20	0.95	7.31	33.82
2000	0.00	0.00	0.27	0.37	1.16	7.71	35.96
2001	0.00	0.00	0.27	0.34	2.98	11.45	45.45
2002	0.00	0.00	0.00	1.02	2.90	8.20	44.44
2003	0.00	0.00	0.00	0.23	0.59	4.08	32.73
2004	0.00	0.00	0.08	0.00	0.44	1.45	16.18
2005	0.00	0.00	0.00	0.07	0.31	1.74	9.09
2006	0.00	0.00	0.00	0.00	0.30	0.82	13.33
2007	0.00	0.00	0.00	0.00	0.20	0.25	15.24
2008	0.00	0.38	0.39	0.49	0.81	4.11	27.27
2009	0.00	0.00	0.22	0.55	0.75	10.92	49.46
2010	0.00	0.00	0.00	0.00	0.58	0.87	22.83
2011	0.00	0.00	0.00	0.07	0.00	1.68	16.42
2012	0.00	0.00	0.00	0.00	0.30	1.58	27.52
2013	0.00	0.00	0.00	0.00	0.10	1.52	24.67
2014	0.00	0.00	0.00	0.00	0.00	0.78	17.51
2015	0.00	0.00	0.00	0.00	0.16	2.41	26.67
2016	0.00	0.00	0.00	0.06	0.47	3.75	33.17
2017	0.00	0.00	0.00	0.00	0.08	1.00	26.56
2018	0.00	0.00	0.00	0.00	0.00	0.94	27.18
2019	0.00	0.00	0.00	0.11	0.00	1.49	29.61
2020	0.00	0.00	0.00	0.00	0.93	3.53	47.88
2021	0.00	0.00	0.00	0.00	0.00	0.52	11.04
2022	0.00	0.00	0.00	0.00	0.31	1.09	13.84
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 4

Descriptive statistics on one-year global default rates (%)
	AAA	AA	A	BBB	BB	B	CCC/C
Minimum	0.00	0.00	0.00	0.00	0.00	0.25	0.00
Maximum	0.00	0.38	0.39	1.02	4.24	13.84	49.46
Weighted long-term average	0.00	0.02	0.05	0.14	0.59	3.07	25.70
Median	0.00	0.00	0.00	0.03	0.53	3.29	24.83
Standard deviation	0.00	0.06	0.10	0.25	0.98	3.24	11.83
2008 default rates	0.00	0.38	0.39	0.49	0.81	4.11	27.27
Latest four quarters (2022Q1-2022Q4)	0.00	0.00	0.00	0.00	0.31	1.09	13.84
Difference between last four quarters and weighted average	0.00	(0.02)	(0.05)	(0.14)	(0.28)	(1.98)	(11.86)
# of standard deviations		(0.28)	(0.50)	(0.57)	(0.28)	(0.61)	(1.00)
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Annual Global Trends: Defaults Rise

The number of defaulters that began the year with active ratings rose to 71 in 2022 from 60 in 2021, and the total amount of affected debt rose to $107 billion from $66.3 billion (see charts 5 and 6).

The U.S. accounted for both the most defaulters and the largest amount of affected debt in 2022. The U.S. has the largest number of rated corporate issuers globally and represented 46% of the total when the year began. With highly developed capital markets, it also has the highest number of speculative-grade issuers, accounting for 52% of global speculative-grade issuers at the beginning of the year.

Table 5

Largest global rated defaulters by year
Largest corporate defaulters by outstanding debt amount
Year defaulted	Issuer	Amount (mil. $)
1994	Confederation Life Insurance	2,415
1995	Grand Union Co./Grand Union Capital	2,163
1996	Tiphook Finance	700
1997	Flagstar Corp.	1,021
1998	Service Merchandise Co.	1,326
1999	Integrated Health Services Inc.	3,394
2000	Owens Corning	3,299
2001	Enron Corp.	10,779
2002	WorldCom Inc.	30,000
2003	Parmalat Finanziaria SpA	7,177
2004	RCN Corp.	1,800
2005	Calpine Corp.	9,559
2006	Pliant Corp.	1,644
2007	Movie Gallery Inc.	1,225
2008	Lehman Brothers Holdings Inc.	144,426
2009	Ford Motor Co.	70,989
2010	Energy Future Holdings Corp.	47,648
2011	Texas Competitive Electric Holdings Co. LLC	32,460
2012	BTA Bank J.S.C.	10,184
2013	Texas Competitive Electric Holdings Co. LLC	31,628
2014	Texas Competitive Electric Holdings Co. LLC	28,651
2015	Arch Coal Inc.	6,025
2016	Petroleos de Venezuela, S.A.	19,859
2017	Petroleos de Venezuela, S.A.	17,617
2018	iHeartCommunications Inc.	20,176
2019	Community Health Systems Inc.	23,432
2020	Frontier Communications Corp.	22,453
2021	China Evergrande Group	11,025
2022	Bausch Health Cos. Inc.	25,365
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Credit quality improved but remains weaker than 2019 levels

While the global default rate rose, credit quality continued to improve, with more upgrades than downgrades in 2022. Even so, the upgrade rate fell to 8.3% while the downgrade rate rose to 6.2% year over year (see table 6).

Table 6

Summary of annual corporate rating changes (%)*
Year	Issuers as of Jan. 1	Upgrades	Downgrades§	Defaults	Withdrawn ratings	Changed ratings	Unchanged ratings	Downgrade/upgrade ratio
1981	1,349	9.86	13.27	0.15	2.08	25.35	74.65	1.35
1982	1,398	5.65	12.73	1.22	5.44	25.04	74.96	2.25
1983	1,420	7.18	11.97	0.77	5.14	25.07	74.93	1.67
1984	1,510	11.06	10.13	0.93	2.78	24.90	75.10	0.92
1985	1,598	7.76	13.70	1.13	4.01	26.60	73.40	1.77
1986	1,835	7.25	15.59	1.74	6.81	31.39	68.61	2.15
1987	1,991	7.18	12.00	0.95	9.14	29.28	70.72	1.67
1988	2,081	8.84	11.87	1.39	8.02	30.13	69.87	1.34
1989	2,123	9.70	11.07	1.79	7.58	30.15	69.85	1.14
1990	2,118	6.19	15.34	2.74	6.52	30.78	69.22	2.48
1991	2,054	6.09	14.26	3.26	3.55	27.17	72.83	2.34
1992	2,138	9.59	11.51	1.50	3.93	26.52	73.48	1.20
1993	2,323	8.61	9.26	0.60	8.22	26.69	73.31	1.08
1994	2,555	7.16	9.39	0.63	4.58	21.76	78.24	1.31
1995	2,863	9.08	9.92	1.05	4.58	24.62	75.38	1.09
1996	3,119	9.68	7.82	0.51	7.02	25.04	74.96	0.81
1997	3,479	9.23	7.96	0.63	7.47	25.29	74.71	0.86
1998	4,070	7.54	11.62	1.28	7.94	28.38	71.62	1.54
1999	4,520	5.95	12.04	2.15	8.96	29.09	70.91	2.02
2000	4,671	6.89	12.70	2.48	7.09	29.16	70.84	1.84
2001	4,746	5.96	16.65	3.77	7.50	33.88	66.12	2.79
2002	4,781	5.25	19.16	3.60	7.20	35.20	64.80	3.65
2003	4,777	6.49	14.61	1.93	7.31	30.33	69.67	2.25
2004	5,015	8.79	7.60	0.78	7.22	24.39	75.61	0.86
2005	5,307	12.89	9.23	0.60	8.37	31.09	68.91	0.72
2006	5,468	12.33	8.72	0.48	8.67	30.19	69.81	0.71
2007	5,654	13.58	9.30	0.37	10.59	33.85	66.15	0.68
2008	5,732	7.90	15.98	1.80	7.61	33.29	66.71	2.02
2009	5,614	4.81	19.11	4.17	8.78	36.87	63.13	3.97
2010	5,312	11.88	8.73	1.20	6.46	28.28	71.72	0.74
2011	5,625	12.20	11.96	0.80	7.75	32.71	67.29	0.98
2012	5,808	8.35	12.22	1.14	6.87	28.58	71.42	1.46
2013	6,042	11.44	9.33	1.03	6.69	28.48	71.52	0.82
2014	6,490	9.11	8.44	0.69	7.15	25.39	74.61	0.93
2015	6,910	7.34	11.79	1.36	8.22	28.71	71.29	1.61
2016	6,912	7.83	12.15	2.08	8.28	30.34	69.66	1.55
2017	6,892	8.82	8.68	1.20	9.04	27.74	72.26	0.98
2018	6,976	8.99	8.76	1.02	7.98	26.75	73.25	0.97
2019	7,240	6.30	8.95	1.30	7.85	24.39	75.61	1.42
2020	7,209	2.77	18.45	2.75	6.81	30.78	69.22	6.65
2021	7,120	10.22	5.56	0.84	8.44	25.07	74.93	0.54
2022	7,274	8.32	6.23	0.98	8.40	23.92	76.08	0.75
Weighted average		8.45	11.29	1.48	7.51	28.73	71.27	1.64
Average		8.38	11.57	1.45	7.00	28.40	71.60	1.62
Median		8.33	11.71	1.17	7.39	28.43	71.57	1.34
Standard deviation		2.32	3.32	0.96	1.84	3.41	3.41	1.11
Minimum		2.77	5.56	0.15	2.08	21.76	63.13	0.54
Maximum		13.58	19.16	4.17	10.59	36.87	78.24	6.65
*This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. §Excludes downgrades to 'D', shown separately in the default column. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Large downgrades rose on Russia-Ukraine conflict

The number of large downgrades, which we define as more than six notches, rose sharply to 56 in 2022 from just one in 2021. Large upgrades were little changed in 2022 with four.

Most of these large downgrades were Russian issuers that faced multi-notch downgrades before the ratings were withdrawn (see chart 7). For these counts of large downgrades, we include movements to 'D' (default) in addition to what we normally report as downgrades.

Companies that experience large downgrades are often outliers, especially in years of high credit stability. The average number of notches for an upgrade increased slightly to 1.18 in 2022 from 1.15 in 2021, while the average number of notches for a downgrade increased to 1.95 notches from 1.45 notches (see chart 8). The large increase in the average number of notches for a downgrade in 2022 is largely a result of the multi-notch downgrades related to the Russia-Ukraine conflict.

Annual speculative-grade default rates increased in all regions except other developed in 2022. Even so, all regional speculative-grade default rates remained below long-term averages (see table 7 and chart 21).

Table 7

Annual corporate speculative-grade default rate by geographic region (%)
Year	U.S. and tax havens*	Europe§	Emerging and frontier markets	Other†
1981	0.63	0.00	N/A	0.00
1982	4.49	0.00	N/A	0.00
1983	3.02	0.00	N/A	0.00
1984	3.37	0.00	0.00	0.00
1985	4.47	0.00	N/A	0.00
1986	5.84	0.00	N/A	0.00
1987	2.87	0.00	N/A	0.00
1988	3.93	0.00	N/A	0.00
1989	4.36	0.00	N/A	37.50
1990	7.94	0.00	N/A	28.57
1991	10.73	50.00	N/A	25.00
1992	6.27	0.00	N/A	0.00
1993	2.40	20.00	0.00	0.00
1994	2.21	0.00	0.00	0.00
1995	3.66	9.09	0.00	0.00
1996	1.86	0.00	0.00	2.70
1997	2.18	0.00	0.00	1.92
1998	3.26	0.00	8.90	1.22
1999	5.25	6.32	7.35	4.55
2000	7.38	2.56	2.08	5.61
2001	10.55	8.46	6.62	11.43
2002	7.25	12.59	17.43	5.22
2003	5.60	3.73	3.87	4.31
2004	2.44	1.61	0.84	1.84
2005	2.02	0.95	0.24	1.20
2006	1.37	1.80	0.43	0.68
2007	1.02	0.96	0.20	2.05
2008	4.30	2.50	2.19	4.17
2009	11.81	8.08	5.96	8.89
2010	3.47	1.02	1.55	7.26
2011	2.16	1.58	0.39	3.33
2012	2.66	2.23	2.36	3.32
2013	2.19	2.88	1.81	2.67
2014	1.61	0.97	1.31	2.10
2015	2.86	2.11	3.15	2.72
2016	5.20	1.95	3.67	4.20
2017	3.08	2.59	0.92	2.60
2018	2.41	1.95	1.26	2.64
2019	3.10	2.23	2.00	0.72
2020	6.64	5.34	3.25	4.36
2021	1.54	1.80	1.88	1.54
2022	1.65	2.16	2.39	1.53
Average	4.07	2.90	3.04	3.51
Median	3.18	2.11	2.00	2.70
Standard deviation	2.66	2.91	3.70	2.51
Minimum	0.63	0.00	0.00	0.68
Maximum	11.81	12.59	17.43	11.43
Descriptive statistics for regions other than the U.S. are calculated from 1996 to 2022 due to sample size considerations. *U.S., Bermuda, and Cayman Islands. §Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova Republic of, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, U.K. †Australia, Brunei Darussalam, Canada, Israel, Japan, Republic of Korea, New Zealand, and Singapore. N/A--Not available. Sources: S&P Global Ratings Credit Research Insights and S&P Global Market Intelligence's CreditPro®.

The road to default is dominated by lower ratings

Our data on defaulted corporate issuers globally shows that defaults among speculative-grade entities tend to be clustered in the third year after the initial rating, particularly in the 'B' rating category (see chart 9). For example, among defaulters that were rated 'B' at origination, the default rate climbs to a high of 18% in the third year and falls thereafter.

Defaulted issuers initially rated 'BB' show a similar pattern but peak at a lower rate over a longer period--three to four years after an initial rating. Defaulters initially rated 'CCC' show an opposite pattern, with the highest default rate observed in the first year. This is not surprising given S&P Global Ratings' criteria for assigning 'CCC'/'C' ratings (see "Criteria For Assigning ‘CCC+’, ‘CCC’, ‘CCC- ‘, And ‘CC’ Ratings," Oct. 1, 2012).

Of the 83 defaults in 2022, 94% (or 78) were originally rated speculative grade. This is reflected in the trailing-12-quarter median rating path for defaulters (see chart 10). The median rating was solidly speculative grade in the seven years preceding default. For most of that period, it was also one or more notches below the long-term median.

Financial services issuers are exposed to sudden declines in investor and stakeholder confidence that can lead to rapid declines in credit quality. This has resulted in more rapid descents into default historically (see chart 11). For example, during the global financial crisis, many highly rated banks defaulted shortly after initial downgrades. From 2020 to 2022, and for more than a decade after the global financial crisis, financial services defaulters experienced much more gradual paths to default.

Nonfinancial defaulters have had much smoother paths to default historically (see chart 12). A key factor influencing this is default frequency. Defaults are much more common among nonfinancial issuers than they are among financial services. In the 42 years covered in this study, 2,933 nonfinancial issuers defaulted, compared with just 320 financial services issuers. The larger sample size of nonfinancial defaulters leads to less bias from outliers.

We only include defaulters in our annual default rate calculations that are rated as of Jan. 1 in the year of default. If S&P Global Ratings withdraws its rating on an issuer prior to Jan. 1 of the year in which it defaults, it is not included in the annual default rate calculation for that year.

Issuers sometimes default after S&P Global Ratings withdraws its rating--we make our best effort to capture these defaults in our database. Although defaulters that are not rated (NR) as of Jan. 1 of a given year are excluded from annual default rate calculations, they are captured in longer-term default rates tied back to the year in which the defaulter was last rated.

Of the defaults in 2022, 4.8% were unrated just prior to default. This is well below the longer-term proportion of 15.6% (see chart 13). All 2022 defaulters with active ratings immediately prior to default were rated in the lowest rating categories--95% were rated in the 'CCC'/'C' category and 5% were rated in the 'B' category.

Table 8

2022 global publicly rated corporate defaults
Company name	Reason for default	Country	Industry	Debt amount outstanding (mil. $)	Default date	Rating one year prior to default	Rating three years prior to default	First rating	Date of first rating
ION Geophysical Corp.	Missed principal	U.S.	Energy and natural resources	116.2	1/4/2022	-	-	CCC	6/2/2021
R&F Properties (HK) Co. Ltd. (Guangzhou R&F Properties Co. Ltd.)	Distressed exchange	Hong Kong	Real estate	0.0	1/13/2022	B	B+	BB	10/11/2013
Fusion Connect Inc.	Distressed exchange	U.S.	Telecommunications	340.0	1/24/2022	CCC+		CCC+	2/12/2020
TPC Group Inc., (TPC Group LLC)	Missed interest	U.S.	Health care/chemicals	1,083.0	2/1/2022	CCC	B-	B+	4/20/2006
Future Retail Ltd.	Missed principal	India	Consumer/service sector	500.0	2/1/2022	-	-	CCC-	4/30/2021
Credito Real, S.A.B. de C.V., SOFOM, E.N.R. (Futu Iem, S.A.P.I. de C.V.)	Missed principal/interest	Mexico	Financial Institutions	1,941.3	2/10/2022	BB	BB+	BB-	3/8/2010
U.S. TelePacific Holdings Corp.	Distressed exchange	U.S.	Telecommunications	680.0	2/17/2022	B-	B	B-	7/14/2006
Diamond Sports Group, LLC (Sinclair Broadcast Group Inc.)	Distressed exchange	U.S.	Leisure time/media	1,825.0	3/15/2022	CCC+	-	BB-	7/9/2019
Mulhacen Pte. Ltd.	Distressed exchange	Singapore	Financial institutions	568.8	3/21/2022	CCC+	B+	B+	7/25/2018
MHP SE	Missed interest	Ukraine	Consumer/service sector	1,400.0	3/24/2022	B	B	B	3/7/2013
Ruby Pipeline LLC	Missed principal	U.S.	Energy and natural resources	825.0	4/1/2022	B-	BBB-	BBB-	2/10/2012
PSS Industrial Group Corp	Missed principal/interest	U.S.	Consumer/service sector	350.0	4/7/2022	CCC+	B-	B	1/9/2014
Owl Finance Ltd. (Hibu Group Ltd.)	Distressed exchange	U.K.	Leisure time/media	293.8	4/7/2022	CCC	-	CCC+	12/20/2019
Kernel Holding S.A.	Missed principal	Ukraine	Consumer/service sector	600.0	4/8/2022	B+	B	B	2/20/2017
Guangzhou R&F Properties Co. Ltd.	Distressed exchange	China	Real estate	0.0	4/8/2022	B	B+	BB	10/11/2013
Promotora de Informaciones S.A.	Distressed exchange	Spain	Leisure time/media	0.0	4/11/2022	CCC+	-	CCC+	1/7/2021
Petropavlovsk PLC	Missed interest	U.K.	Energy and natural resources	500.0	4/12/2022	B-	B-	B-	10/24/2017
Dunn Paper Holdings Inc.	Missed interest	U.S.	Aerospace/automotive/capital goods/metal	380.0	4/12/2022	B-	B	B	9/1/2016
Grupo Kaltex, S.A. de C.V.	Missed principal	Mexico	Consumer/service sector	320.0	4/12/2022	CCC	B-	B+	4/3/2017
EuroChem Group AG	Missed interest	Switzerland	Health care/chemicals	0.0	4/14/2022	BB-	BB-	BB	12/3/2014
Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) (A)	Distressed exchange	U.S.	Health care/chemicals	7,369.8	5/3/2022	CCC	-	CCC	5/4/2020
Safari Beteiligungs Gmbh (Dice Midco Sarl)	Distressed exchange	Germany	Leisure time/media	370.1	5/6/2022	CCC+	B	B	11/27/2017
Talen Energy Supply LLC (Talen Energy Corp.)	Chapter 11	U.S.	Utility	9,026.8	5/10/2022	B	B+	BBB	10/15/2001
Revlon Inc.	Chapter 11	U.S.	Consumer/service sector	2,750.0	6/16/2022	CCC-	-	CCC-	12/8/2020
Greenland Holding Group Co. Ltd.(A)	Distressed exchange	China	Real estate	0.0	6/21/2022	BB	BB	BBB	10/7/2013
Rite Aid Corp.(A)	Distressed exchange	U.S.	Consumer/service sector	3,244.0	6/30/2022	CCC+	-	CCC+	10/22/2019
SAS AB	Chapter 11	Sweden	Transportation	0.0	7/7/2022	CCC	-	B-	12/7/2020
Canopy Growth Corp.(A)	Distressed exchange	Canada	Consumer/service sector	0.0	7/6/2022	-	-	B-	8/18/2021
SK HoldCo LLC	Distressed exchange	U.S.	Aerospace/automotive/capital goods/metal	1,241.0	7/14/2022	CCC+	B-	B	9/9/2014
PT Sawit Sumbermas Sarana Tbk	Distressed exchange	Indonesia	Forest and building products/homebuilders	0.0	7/18/2022	CCC+	-	CCC+	8/18/2020
Mountain Province Diamonds Inc.	Distressed exchange	Canada	Energy and natural resources	330.0	7/28/2022	CCC-	B-	B-	12/20/2017
Unifin Financiera, S.A.B. de C.V.	Missed principal/interest	Mexico	Financial institutions	0.0	8/9/2022	BB-	BB	BB-	6/27/2014
Output Services Group, Inc.	Chapter 11	U.S.	Consumer/service sector	0.0	8/9/2022	CCC	B-	B	3/2/2018
Dawn Acquisitions LLC (Infra Colodata Holdings LLC)	Distressed exchange	U.S.	Telecommunications	600.0	8/11/2022	CCC	B	B	10/11/2018
Altera Infrastructure L.P.	Chapter 11	Marshall Islands	Energy and natural resources	0.0	8/12/2022	CCC+	B+	B+	6/15/2018
Endo International PLC	Chapter 11	Ireland	Health care/chemicals	0.0	8/17/2022	B-	B	BB+	11/15/2010
GEO Group (The) Inc.	Chapter 11	U.S.	Consumer/service sector	4,485.6	8/19/2022	CCC+	BB-	BB-	11/18/2002
Carestream Health Inc.	Chapter 11	U.S.	Health care/chemicals	1,066.0	8/23/2022	B-	B	B+	3/7/2007
Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) (B)	Distressed exchange	U.S.	Health care/chemicals	7,369.8	8/30/2022	-	-	CCC	5/16/2022
Vue International Bidco plc (Vue Entertainment International Ltd)	Distressed exchange	U.K.	Leisure time/media	693.8	9/1/2022	CCC+	B-	B	7/8/2013
Bright Bidco B.V.	Chapter 11	Netherlands	Aerospace/automotive/capital goods/metal	1,783.1	9/1/2022	CCC	B	B+	7/28/2017
Cineworld Group PLC	Chapter 11	U.K.	Leisure time/media	5,803.2	9/9/2022	CCC	-	CCC	11/27/2020
Eurotorg LLC	Distressed exchange	Belarus	Consumer/service sector	300.0	9/27/2022	B-	B-	B-	12/6/2017
Phoenix Services International LLC	Chapter 11	U.S.	Energy and natural resources	530.0	9/28/2022	B	B	B+	2/10/2012
Bausch Health Companies Inc.	Distressed exchange	Canada	Health care/chemicals	25,365.0	9/30/2022	B+	B	B+	8/10/1984
Isagenix Worldwide, Inc	Missed principal/interest	U.S.	Consumer/service sector	405.0	9/30/2022	B-	-	B-	4/30/2021
Schur Flexibles GmbH	Distressed exchange	Germany	Forest and building products/homebuilders	485.3	9/30/2022	NR	B	B	2/4/2019
Transocean Ltd.	Distressed exchange	Switzerland	Energy and natural resources	4,909.0	10/3/2022	CCC	-	CCC-	11/25/2020
E-House (China) Enterprise Holdings Ltd.	Chapter 15	China	Consumer/service sector	0.0	10/3/2022	B+	BB	BB	2/15/2019
Metalcorp Group S.A.	Missed principal	Luxembourg	Energy and natural resources	254.7	10/6/2022	B	-	B	6/3/2021
Turkiston Bank	Regulatory directive	Uzbekistan	Financial institutions	0.0	10/11/2022	CCC+	B-	B-	5/17/2012
K&N Parent, Inc.	Distressed exchange	U.S.	Aerospace/automotive/capital goods/metal	0.0	10/13/2022	CCC	B-	B	10/4/2016
Fly Leasing Ltd	Distressed exchange	Bermuda	Transportation	0.0	10/19/2022	BB-	BB	BB	7/19/2012
Mitel Networks (International) Ltd	Distressed exchange	U.K.	High tech/computers/office equipment	1,470.0	10/31/2022	CCC+	B	B	6/25/2018
Vericast Corp.	Distressed exchange	U.S.	Leisure time/media	2,781.5	11/7/2022	CCC+	CCC+	B+	11/15/2005
Bed Bath & Beyond Inc.	Distressed exchange	U.S.	Consumer/service sector	1,500.0	11/14/2022	B+	BB	BBB-	4/13/1999
Greenland Holding Group Co. Ltd.(B)	Missed principal	China	Real estate	0.0	11/15/2022	-	-	CCC-	6/29/2022
Canopy Growth Corp. (B)	Distressed exchange	Canada	Consumer/service sector	750.0	11/15/2022	-	-	CCC	7/21/2022
L1R HB Finance Ltd	Distressed exchange	U.K.	Consumer/service sector	0.0	11/16/2022	B-	B	B	9/26/2017
Neovia Logistics, LP	Distressed exchange	U.S.	Transportation	325.0	11/18/2022	CCC+	CCC+	CCC+	4/24/2017
CORESTATE Capital Holding S.A.	Missed principal/interest	Luxembourg	Financial institutions	482.9	11/29/2022	BB-	BB+	BB+	11/6/2017
Rite Aid Corp.(B)	Distressed exchange	U.S.	Consumer/service sector	3,019.0	12/6/2022	-	-	CCC+	7/1/2022
PT Kawasan Industri Jababeka Tbk.	Distressed exchange	Indonesia	Real estate	185.9	12/8/2022	B-	B	B+	7/9/2012
Mongolian Mining Corp.	Distressed exchange	Cayman Islands	Energy and natural resources	0.0	12/12/2022	B-	B-	B-	12/12/2017
BW Homecare Holdings LLC	Distressed exchange	U.S.	Health care/chemicals	0.0	12/22/2022	CCC	-	CCC	4/9/2020
Diebold Nixdorf Inc.	Distressed exchange	U.S.	High tech/computers/office equipment	2,920.4	12/30/2022	B-	B-	A	12/31/1980
Source: S&P Global Ratings.

Table 9

One-year global corporate default rates by rating modifier (%)
	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C
1981	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.28	0.00	0.00
1982	0.00	0.00	0.00	0.00	0.00	0.34	0.00	0.00	0.70	0.00	0.00	2.86	7.04	2.22	2.33	8.33	21.43
1983	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.37	2.17	0.00	1.59	1.25	10.00	5.26	6.67
1984	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.45	0.00	0.00	1.64	1.49	2.17	3.57	8.33	25.00
1985	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.67	1.49	1.37	2.63	13.11	8.33	15.38
1986	0.00	0.00	0.00	0.00	0.00	0.00	0.78	0.00	0.79	0.00	1.82	1.19	1.16	4.73	12.16	17.07	23.08
1987	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.84	1.33	5.95	6.98	12.28
1988	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.34	2.02	4.50	10.00	20.37
1989	0.00	0.00	0.00	0.00	0.00	0.00	0.58	0.90	0.80	0.00	0.00	0.00	2.04	0.43	7.80	5.00	33.33
1990	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.76	0.00	1.10	2.82	3.06	4.50	4.89	12.26	22.58	31.25
1991	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.83	0.75	0.00	3.77	1.12	1.05	8.72	16.25	32.43	33.87
1992	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.72	14.93	20.83	30.19
1993	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.96	0.00	1.29	5.88	4.17	13.33
1994	0.00	0.00	0.00	0.00	0.46	0.00	0.00	0.00	0.00	0.00	0.00	0.87	0.00	1.83	6.67	3.13	16.67
1995	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.65	0.00	1.57	1.12	2.77	8.00	7.50	28.00
1996	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.66	0.56	2.37	3.70	3.85	8.00
1997	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.37	0.35	0.00	0.00	0.00	0.41	0.72	5.34	14.58	12.00
1998	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.27	1.06	0.67	1.06	0.73	2.61	7.56	9.46	42.86
1999	0.00	0.00	0.00	0.36	0.00	0.25	0.28	0.00	0.28	0.31	0.55	1.34	0.91	4.24	10.45	15.60	33.82
2000	0.00	0.00	0.00	0.00	0.00	0.24	0.58	0.00	0.26	0.89	0.00	0.82	2.08	5.83	10.08	11.61	35.96
2001	0.00	0.00	0.00	0.00	0.57	0.25	0.00	0.24	0.49	0.28	0.52	1.22	5.65	5.63	17.32	22.63	45.45
2002	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.10	0.88	1.08	1.59	1.79	4.84	3.27	10.23	19.85	44.44
2003	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.20	0.54	0.51	0.98	0.28	1.73	5.37	9.52	32.73
2004	0.00	0.00	0.00	0.00	0.00	0.24	0.00	0.00	0.00	0.00	0.00	0.67	0.53	0.47	2.36	2.84	16.18
2005	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.17	0.00	0.38	0.00	0.51	0.79	2.65	2.96	9.09
2006	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.39	0.00	0.50	0.55	0.82	1.57	13.33
2007	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.32	0.24	0.19	0.00	0.90	15.24
2008	0.00	0.00	0.44	0.41	0.32	0.21	0.60	0.19	0.61	0.72	1.23	0.66	0.68	3.16	3.48	7.59	27.27
2009	0.00	0.00	0.00	0.00	0.30	0.40	0.00	0.42	0.19	1.13	0.00	1.05	0.98	6.00	10.89	17.83	49.46
2010	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.85	0.37	0.57	0.00	0.75	2.15	22.83
2011	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.20	0.00	0.00	0.00	0.42	1.29	4.53	16.42
2012	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.79	0.61	1.45	3.55	27.52
2013	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.26	0.77	0.84	4.13	24.67
2014	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.19	0.33	2.78	17.51
2015	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.26	0.22	1.76	2.05	4.31	26.67
2016	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.15	0.00	0.24	0.00	1.10	0.92	2.34	10.78	33.17
2017	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.22	0.00	0.41	0.44	2.89	26.56
2018	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.96	1.89	27.18
2019	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.38	0.00	0.00	0.00	1.17	0.68	3.33	29.61
2020	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.55	0.00	1.99	1.86	2.11	6.89	47.88
2021	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.14	0.26	0.41	11.04
2022	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.27	0.60	1.01	0.57	1.75	13.84
Average	0.00	0.00	0.01	0.02	0.04	0.05	0.07	0.11	0.20	0.23	0.47	0.65	1.17	2.02	5.50	8.34	24.32
Median	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.29	0.64	1.31	3.64	6.07	24.83
Standard deviation	0.00	0.00	0.07	0.08	0.13	0.11	0.19	0.28	0.34	0.41	0.86	0.80	1.59	1.96	4.90	7.36	11.83
Minimum	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	0.00	0.00	0.44	0.41	0.57	0.40	0.78	1.10	1.45	1.37	3.77	3.06	7.04	8.72	17.32	32.43	49.46
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Quarterly Trends

Quarterly rated global defaults increased in three consecutive quarters from first-quarter 2022 through third-quarter 2022 and remained near those levels in the fourth quarter (see chart 14). Affected debt amounts show a similar trend but fell in the fourth quarter (see chart 15).

The trailing-12-month and annual default rates are more standard measures, but default rates over shorter time frames provide a more immediate picture of credit market conditions. Nonannualized quarterly default rates in 2022 remained relatively constant from the second quarter through year-end (see chart 16).

Lower Ratings Remain Vulnerable To Default

On average, there is a correlation between initial ratings and time to default (see table 10).

Table 10

Time to default from original rating for global corporate defaulters (1981-2022)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating	Range
AAA	8	18.0	18.5	11.4	23.0
AA	32	17.4	19.6	10.6	37.8
A	102	14.4	11.2	9.5	40.4
BBB	228	9.4	7.6	6.8	36.1
BB	673	7.1	5.4	5.8	37.8
B	1,809	5.1	3.8	4.4	38.1
CCC/C	401	2.1	1.2	2.6	17.4
Total	3,253	5.9	4.0	5.8	42.0
*Or Dec. 31, 1980, whichever is later. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro® .

For example, for the entire pool of defaulters in this study (1981-2022), the average times to default for issuers originally rated in the 'A' and 'B' categories were 14.4 years and 5.1 years, respectively. Meanwhile, issuers in the 'CCC' rating category and lower had an average time to default of 2.1 years.

When an issuer emerges from default (including distressed exchanges), we consider it a separate entity, and its initial rating is the first after the default event (see table 11).

Table 11

Time to default from post-original ratings for global corporate defaulters (1981-2022)
Rating	Average years from rating category	Median years from rating category	Standard deviation of years from rating category
AAA	27.4	27.7	10.0
AA	14.9	15.8	9.4
A	11.5	9.8	8.3
BBB	8.4	6.5	6.9
BB	6.1	4.2	5.8
B	3.3	2.0	3.9
CCC/C	0.9	0.4	1.7
NR	5.3	3.1	5.9
Total	3.4	1.3	4.9
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

In both cases, the standard deviations of times to default generally fall when moving down the rating scale. Broadly speaking, the average and median times to default for each rating category are longer when based on the initial rating than when based on subsequent ratings.

Most issuers that defaulted within one year of an initial rating are from the lowest speculative-grade rating categories. For example, of the 291 companies that defaulted within 12 months of an initial rating, 93% (or 272) were rated in the 'B' or 'CCC'/'C' categories (see table 12).

Table 12

Cumulative defaulters by time horizon among global corporates, from original rating (1981-2022)*
	AAA	AA	A	BBB	BB	B	CCC/C	Total
No. of issuers defaulting within:
One year	0	0	0	3	16	96	176	291
Three years	0	1	6	29	155	664	323	1,178
Five years	0	3	13	71	310	1,159	363	1,919
Seven years	2	6	28	106	420	1,447	381	2,390
Total	8	32	102	228	673	1,809	401	3,253
% of total defaults per time frame
One year	0.0	0.0	0.0	1.0	5.5	33.0	60.5
Three years	0.0	0.1	0.5	2.5	13.2	56.4	27.4
Five years	0.0	0.2	0.7	3.7	16.2	60.4	18.9
Seven years	0.1	0.3	1.2	4.4	17.6	60.5	15.9
Total	0.2	1.0	3.1	7.0	20.7	55.6	12.3
*Or Dec. 31, 1980, whichever is later. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Issuers with higher initial ratings have historically defaulted over longer time frames. For example, of all issuers that defaulted from 1981-2022, only two were initially rated 'AAA' seven years before default.

In the 42 years covered in this study, only eight companies initially rated 'AAA' have defaulted; Macy's Inc., Ally Financial Inc., Ambac Assurance Corp., Mutual Benefit Life Insurance Co., Executive Life Insurance Co. CA, Confederation Life Insurance Co., Motors Liquidation Co. (formerly known as General Motors Corp.), and Eastman Kodak Co.

Table 13 shows cumulative defaults for all subsequent ratings (post initial rating). The total count is different from table 12 because issuers are generally captured multiple times as ratings transition.

Table 13

Cumulative defaulters by time horizon among global corporates, from post-original ratings (1981-2022)
	AAA	AA	A	BBB	BB	B	CCC/C	NR	Total
No. of issuers defaulting within:
One year	0	0	10	71	184	1,121	3,025	145	4,556
Three years	0	7	42	148	474	2,270	3,694	339	6,974
Five years	0	9	63	210	664	2,819	3,835	441	8,041
Seven years	0	15	78	277	809	3,087	3,890	512	8,668
Total	4	51	222	533	1,213	3,540	3,950	686	10,199
% of total defaults per time frame
One year	0.0	0.0	0.2	1.6	4.0	24.6	66.4	3.2
Three years	0.0	0.1	0.6	2.1	6.8	32.5	53.0	4.9
Five years	0.0	0.1	0.8	2.6	8.3	35.1	47.7	5.5
Seven years	0.0	0.2	0.9	3.2	9.3	35.6	44.9	5.9
Total	0.0	0.5	2.2	5.2	11.9	34.7	38.7	6.7
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Times to default in table 13 are from the date that each entity received a unique rating in its path to default. In contrast, table 21 reports transition-to-default rates using the static pool methodology (which calculates movements to default from the beginning of each static pool year). Data in table 13 also differs from the default rates in table 24 that are based on the static pool methodology. (For more information on methodologies and definitions, see Appendix I.)

Incidence of defaults arising disproportionately from low rating categories holds true over longer time horizons (see table 14). For example, of the 373 defaults recorded in the five-year pool that began January 2018, 98% (or 366) were rated speculative grade on Jan. 1, 2018. (See table 15 for the seven publicly rated investment-grade defaults during this period.)

Table 14

Defaults and survivor rates in latest one-year, three-year, and five-year pools
	--Latest one-year--			--Latest three-year--			--Latest five-year--
Rating	# of ratings as of 01/01/2022	# of defaults through December 2022	Non-default rate (%)	# of ratings as of 01/01/2020	# of defaults through December 2022	Non-default rate (%)	# of ratings as of 01/01/2018	# of defaults through December 2022	Non-default rate (%)
Global
AAA	8	0	100.0	8	0	100.0	9	0	100.0
AA	275	0	100.0	320	0	100.0	328	0	100.0
A	1,394	0	100.0	1,436	0	100.0	1,392	2	99.9
BBB	1,893	0	100.0	1,853	1	99.9	1,819	5	99.7
BB	1,276	4	99.7	1,287	30	97.7	1,320	30	97.7
B	2,110	23	98.9	2,069	133	93.6	1,913	228	88.1
CCC/C	318	44	86.2	236	135	42.8	195	108	44.6
Nonfinancials
AAA	5	0	100.0	5	0	100.0	6	0	100.0
AA	71	0	100.0	89	0	100.0	93	0	100.0
A	571	0	100.0	626	0	100.0	594	2	99.7
BBB	1,310	0	100.0	1,274	1	99.9	1,255	5	99.6
BB	997	2	99.8	1,008	27	97.3	1,037	25	97.6
B	1,891	22	98.8	1,817	126	93.1	1,667	212	87.3
CCC/C	297	41	86.2	233	133	42.9	179	103	42.5
Financials
AAA	3	0	100.0	3	0	100.0	3	0	100.0
AA	204	0	100.0	231	0	100.0	235	0	100.0
A	823	0	100.0	810	0	100.0	798	0	100.0
BBB	583	0	100.0	579	0	100.0	564	0	100.0
BB	279	2	99.3	279	3	98.9	283	5	98.2
B	219	1	99.5	252	7	97.2	246	16	93.5
CCC/C	21	3	85.7	3	2	33.3	16	5	68.8
The totals included may differ from the counts in table 1 because defaults that are not rated at the beginning of the pool year are excluded. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 15

Investment-grade defaults in the five-year 2018 static pool
Company name	Country	Industry	Default date	Rating one year prior to default	Rating three years prior to default	First rating	Date of first rating	Year of default
Bed Bath & Beyond Inc.	U.S.	Consumer/service sector	11/14/2022	B+	BB	BBB-	4/13/1999	2022
Distribuidora Internacional de Alimentacion S.A.	Spain	Consumer/service sector	9/15/2020	CCC	BBB-	BBB-	6/2/2014	2020
PG&E Corp. (A)	U.S.	Utility	1/29/2019	A-	BBB	BBB+	3/10/2009	2019
Pacific Gas & Electric Co. (A)	U.S.	Utility	1/16/2019	A-	BBB	BBB-	4/16/2004	2019
Ruby Pipeline LLC	U.S.	Energy and natural resources	4/1/2022	B-	BBB-	BBB-	2/10/2012	2022
Tupperware Brands Corp.	U.S.	Consumer/service sector	7/10/2020	BBB-	BBB-	BBB+	6/19/1996	2020
Washington Prime Group Inc.	U.S.	Real estate	3/17/2021	BB-	BBB-	BBB	4/21/2014	2021
Excludes confidentially rated defaults. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

The proportion of new speculative-grade ratings at 'B-' or lower in the U.S. and the year-end U.S. speculative-grade default rate show some correlation historically (see chart 17).

The growth of speculative-grade ratings, particularly at 'B-' and lower, is symptomatic of a weaker-rated population with fundamentally higher default risk. In 2022, the share of new speculative-grade issuers rated 'B- 'and lower rose slightly from the prior year to 43%. While this is below the all-time high of 57% in 2020, it is still very high.

More broadly, growth in speculative-grade ratings tends to precede peaks in the default rate. However, the relationship has evolved since the global financial crisis. This is, in part, a result of the dramatic shift in interest rates since 2008 (see charts 17, 22, 23, and 24). As a result of this dynamic, market participants have become more receptive to taking on higher risk.

Industry Variations: Consumer/Services Leads Defaults

Of the 71 defaulters rated at the beginning of 2022, 92% were nonfinancial issuers (see table 16). The nonfinancial sector tends to have a much larger share of issuers rated speculative grade, with 62% globally at the beginning of 2022, compared with 24% in financial services. Even so, the speculative-grade share in both sectors has grown since the global financial crisis.

Table 16

Cumulative global corporate default rates by sector (%)
Sector	2022	2021	Average (1981-2022)	Median	Standard deviation	Minimum	Maximum
Financial institutions
One-year	0.45	0.23	0.63	0.34	0.69	0.00	2.76
Three-year	0.82	1.05	1.83	1.30	1.53	0.00	6.44
10-year	2.92	2.79	4.60	4.11	2.46	1.66	10.00
Insurance
One-year	0.00	0.00	0.47	0.15	0.89	0.00	4.76
Three-year	0.12	0.24	1.42	0.89	1.63	0.12	7.14
10-year	0.36	0.25	4.44	4.08	3.28	0.25	14.71
All financials
One-year	0.28	0.14	0.55	0.40	0.52	0.00	2.06
Three-year	0.56	0.74	1.64	1.24	1.16	0.18	4.94
10-year	1.86	1.74	4.51	3.80	2.36	1.74	8.87
All nonfinancials
One-year	1.26	1.14	1.83	1.45	1.29	0.16	5.72
Three-year	5.68	5.90	5.16	4.15	2.73	1.89	12.51
10-year	9.30	9.21	11.22	10.45	3.11	6.96	19.46
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Defaults in nonfinancial sectors tend to be more cyclical than in financial sectors. While the one-year default rate for nonfinancial companies has climbed above 3.5% in four cyclical peaks (1991, 2001-2002, 2009, and 2020), the annual default rate for financial services has remained below 2% since 1990 (and below 1% for the past 13 years) (see chart 18).

The gap in default rates between nonfinancials and financials is even wider over longer time horizons (see chart 19).

Since 1981, six sectors have had average times to default that are below the overall average of 5.9 years--telecommunications, real estate, energy and natural resources, high technology/computers/office equipment, financial institutions, and leisure time/media (see table 17).

Table 17

Time to default from original rating* grouped by industry
	Median original rating (defaulters)	Median original rating (industry)	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating	Range (years)
Aerospace/automotive/capital goods/metal	B+	BB-	416	6.4	4.6	5.8	36.1
Consumer/service sector	B+	B+	636	6.6	4.7	6.4	39.3
Energy and natural resources	B	B+	447	4.6	3.4	4.7	35.4
Financial institutions	BB-	BBB	243	5.7	3.7	5.9	28.6
Forest and building products/homebuilders	B+	B+	181	6.2	4.5	5.5	28.2
Health care/chemicals	B+	B+	186	6.0	3.9	6.2	37.8
High tech/computers/office equipment	B+	B+	108	5.6	3.9	5.8	41.7
Insurance	BBB	A-	77	7.8	6.6	6.3	28.6
Leisure time/media	B	B+	424	5.8	4.0	5.4	34.1
Real estate	B+	BBB-	70	4.5	3.2	3.9	21.4
Telecommunications	B	B+	198	4.1	3.1	4.0	39.1
Transportation	B+	BB	174	6.4	4.3	6.4	36.3
Utility	BB+	BBB+	93	6.7	4.4	6.7	30.4
Total	B+	BB-	3,253	5.9	4.0	5.8	42.0
*Or Dec. 31, 1980, whichever is later. NR--Not rated. N/A--Not available. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Across sectors, the average difference between an industry's median initial rating and the median initial rating of its defaulters was about one notch. The largest gap was in financial institutions and real estate.

Table 18

Time to default from post-original ratings, grouped by industry
	Average years to default	Median years to default	Standard deviation of years to default
Aerospace/automotive/capital goods/metal	3.7	1.5	5.1
Consumer/service sector	4.0	1.8	5.6
Energy and natural resources	2.7	1.0	4.1
Financial institutions	3.2	1.1	4.9
Forest and building products/homebuilders	2.9	1.2	4.1
Health care/chemicals	3.5	1.4	5.3
High tech/computers/office equipment	3.9	1.8	5.4
Insurance	3.1	1.7	3.7
Leisure time/media	3.2	1.2	4.5
Real estate	2.3	1.0	3.7
Telecommunications	2.0	0.7	3.9
Transportation	4.4	1.6	6.1
Utility	3.3	0.9	5.1
Total	3.4	1.3	4.9
NR--Not rated. N/A--Not available. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro® .

Defaults in 2022 came from nearly all sectors but were heavily represented by consumer/services (with 21 defaults). No sector had 2022 default rates above 2%, and only real estate had a default rate in 2022 that was higher than its long-term weighted average (see table 19).

Table 19

Global corporate default rates by industry (%)
	2022	2021	Weighted average (1981-2022)	Median	Standard deviation	Minimum	Maximum
Aerospace/automotive/capital goods/metal	0.75	0.61	1.95	1.34	1.93	0.00	9.59
Consumer/service sector	1.95	1.66	2.40	1.83	1.62	0.00	6.44
Energy and natural resources	1.80	2.32	3.33	1.85	3.02	0.00	14.18
Financial institutions	0.45	0.23	0.62	0.34	0.69	0.00	2.76
Forest and building products/homebuilders	1.06	1.12	2.30	1.38	2.83	0.00	14.80
Health care/chemicals	1.33	0.58	1.39	0.89	1.25	0.00	4.65
High tech/computers/office equipment	0.83	0.30	1.18	0.91	1.46	0.00	5.03
Insurance	0.00	0.00	0.26	0.15	0.89	0.00	4.76
Leisure time/media	1.89	1.23	3.20	2.04	3.12	0.00	16.67
Real estate	1.38	1.34	0.82	0.00	2.60	0.00	12.00
Telecommunications	1.49	1.44	2.45	0.95	3.54	0.00	17.94
Transportation	1.07	2.54	1.99	1.78	1.58	0.00	6.12
Utility	0.16	0.16	0.42	0.17	0.74	0.00	4.43
Includes investment-grade-rated and speculative-grade rated entities. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

The variation in sector default rates stems from sample size differences, differences in ratings distributions, and business cycle risk. For example, leisure time/media has a much higher proportion of speculative-grade ratings than financial institutions (see chart 20).

The speculative-grade share of ratings has increased in five sectors over the past decade--consumer/service, health care/chemicals, leisure time/media, telecommunications, and aerospace/automotive/capital goods/metal.

About Half Of Corporate Issuers Are Speculative Grade

The global speculative-grade default rate increased slightly in 2022 amid tough macroeconomic conditions (see chart 21). Growth in the share of speculative-grade ratings since the global financial crisis fundamentally increases default risk, and this could contribute to a sharper rise in the default rate during a downturn, if all else remains equal.

Transition And Cumulative Default Rates Demonstrate Ratings Performance

Transition rates in 2022 continued to show a strong rank-ordering relationship between ratings and credit risk (see table 20). For instance, 95% of issuers rated 'A' at the beginning of 2022 were still rated 'A' as of year-end, while the comparable share of issuers rated 'B' was only 76%.

Table 20

2022 one-year corporate transition rates by region (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Global
AAA	87.50	12.50	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	95.27	1.09	0.00	0.00	0.00	0.00	0.00	3.64
A	0.00	0.86	94.98	1.72	0.00	0.00	0.00	0.00	2.44
BBB	0.00	0.05	1.64	91.71	1.11	0.05	0.00	0.00	5.44
BB	0.00	0.00	0.00	3.53	82.29	2.82	0.31	0.31	10.74
B	0.00	0.00	0.00	0.09	3.74	76.30	5.02	1.09	13.74
CCC/C	0.00	0.00	0.00	0.00	0.00	17.61	56.92	13.84	11.64
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	96.52	0.87	0.00	0.00	0.00	0.00	0.00	2.61
A	0.00	1.16	95.38	1.54	0.00	0.00	0.00	0.00	1.93
BBB	0.00	0.13	2.23	92.25	1.18	0.13	0.00	0.00	4.07
BB	0.00	0.00	0.00	4.65	84.39	3.16	0.56	0.19	7.06
B	0.00	0.00	0.00	0.00	3.18	77.10	6.03	0.73	12.96
CCC/C	0.00	0.00	0.00	0.00	0.00	18.60	56.98	12.79	11.63
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Europe
AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	94.87	1.28	0.00	0.00	0.00	0.00	0.00	3.85
A	0.00	0.75	95.01	1.00	0.00	0.00	0.00	0.00	3.24
BBB	0.00	0.00	1.14	94.29	0.91	0.00	0.00	0.00	3.65
BB	0.00	0.00	0.00	4.52	81.00	2.71	0.00	0.90	10.86
B	0.00	0.00	0.00	0.21	3.71	77.73	4.54	0.82	12.99
CCC/C	0.00	0.00	0.00	0.00	0.00	21.25	53.75	13.75	11.25
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Emerging and frontier markets
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	95.65	0.00	0.00	0.00	0.00	0.00	0.00	4.35
A	0.00	1.33	94.22	2.22	0.00	0.00	0.00	0.00	2.22
BBB	0.00	0.00	1.28	86.35	1.49	0.00	0.00	0.00	10.87
BB	0.00	0.00	0.00	1.89	77.83	2.59	0.00	0.24	17.45
B	0.00	0.00	0.00	0.36	5.07	67.03	2.90	2.90	21.74
CCC/C	0.00	0.00	0.00	0.00	0.00	7.41	64.81	16.67	11.11
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

On average from 1981 to 2022, higher ratings have shown greater stability (see table 21). When analyzing transition matrices that present averages computed over multiple static pools, the standard deviations associated with each transition point in the matrix can be large relative to averages.

Table 21

Global corporate average transition rates (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	87.09	9.05	0.52	0.05	0.10	0.03	0.05	0.00	3.10
	(7.19)	(7.21)	(0.82)	(0.24)	(0.27)	(0.17)	(0.34)	(0.00)	(2.43)
AA	0.47	87.42	7.64	0.46	0.05	0.06	0.02	0.02	3.87
	(0.53)	(5.20)	(4.19)	(0.67)	(0.19)	(0.20)	(0.06)	(0.07)	(1.76)
A	0.02	1.54	88.96	4.86	0.25	0.10	0.01	0.05	4.21
	(0.08)	(1.05)	(3.88)	(2.16)	(0.37)	(0.23)	(0.06)	(0.10)	(1.68)
BBB	0.00	0.08	3.13	86.95	3.38	0.40	0.09	0.14	5.83
	(0.03)	(0.14)	(1.60)	(4.00)	(1.62)	(0.63)	(0.20)	(0.24)	(1.50)
BB	0.01	0.02	0.10	4.49	78.30	6.50	0.53	0.59	9.47
	(0.05)	(0.08)	(0.23)	(1.95)	(4.51)	(3.13)	(0.68)	(0.79)	(2.12)
B	0.00	0.02	0.06	0.15	4.50	74.82	4.81	3.07	12.58
	(0.00)	(0.07)	(0.18)	(0.20)	(2.09)	(3.81)	(2.68)	(2.97)	(2.21)
CCC/C	0.00	0.00	0.08	0.15	0.46	13.72	44.74	25.70	15.16
	(0.00)	(0.00)	(0.37)	(0.57)	(0.83)	(7.44)	(8.71)	(11.97)	(4.67)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Three-year
AAA	65.59	22.13	2.32	0.32	0.26	0.08	0.11	0.13	9.06
	(11.65)	(12.28)	(1.74)	(0.76)	(0.53)	(0.29)	(0.41)	(0.37)	(5.27)
AA	1.09	67.39	18.00	1.89	0.32	0.20	0.02	0.11	10.98
	(0.86)	(9.59)	(6.15)	(1.42)	(0.49)	(0.43)	(0.07)	(0.18)	(3.91)
A	0.05	3.58	71.17	11.04	1.06	0.37	0.08	0.21	12.45
	(0.09)	(2.20)	(7.44)	(2.90)	(1.01)	(0.56)	(0.13)	(0.27)	(3.51)
BBB	0.01	0.23	7.70	67.33	6.64	1.37	0.24	0.71	15.76
	(0.06)	(0.36)	(2.98)	(7.73)	(1.96)	(1.25)	(0.34)	(0.89)	(3.26)
BB	0.01	0.04	0.41	10.09	49.58	11.19	1.13	3.34	24.20
	(0.05)	(0.12)	(0.64)	(3.61)	(7.74)	(2.55)	(0.84)	(3.27)	(3.48)
B	0.00	0.02	0.15	0.60	8.80	42.62	5.41	11.25	31.15
	(0.04)	(0.10)	(0.38)	(0.72)	(3.63)	(5.05)	(2.08)	(6.66)	(4.53)
CCC/C	0.00	0.00	0.10	0.47	1.42	16.03	9.77	43.12	29.09
	(0.00)	(0.00)	(0.45)	(1.08)	(1.52)	(6.88)	(5.42)	(11.74)	(7.70)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Five-year
AAA	49.59	28.82	4.74	0.79	0.34	0.16	0.08	0.34	15.14
	(11.86)	(13.42)	(2.74)	(1.53)	(0.54)	(0.40)	(0.27)	(0.59)	(6.63)
AA	1.35	52.81	23.94	3.34	0.52	0.34	0.04	0.30	17.37
	(0.99)	(9.75)	(5.20)	(1.87)	(0.63)	(0.58)	(0.10)	(0.38)	(4.63)
A	0.06	4.60	58.37	14.28	1.73	0.58	0.12	0.45	19.80
	(0.10)	(2.43)	(8.50)	(2.59)	(1.23)	(0.80)	(0.17)	(0.44)	(4.12)
BBB	0.02	0.36	10.00	54.54	7.38	1.87	0.32	1.51	23.99
	(0.06)	(0.50)	(2.88)	(8.35)	(1.57)	(1.41)	(0.37)	(1.42)	(4.34)
BB	0.01	0.06	0.82	12.05	34.13	11.05	1.13	6.28	34.47
	(0.05)	(0.16)	(0.93)	(3.16)	(7.77)	(1.94)	(0.86)	(4.82)	(3.78)
B	0.01	0.02	0.19	1.21	9.34	25.96	3.37	17.04	42.86
	(0.09)	(0.08)	(0.49)	(1.14)	(2.91)	(4.63)	(1.24)	(7.79)	(5.62)
CCC/C	0.00	0.00	0.08	0.64	2.46	12.10	2.63	46.81	35.27
	(0.00)	(0.00)	(0.42)	(1.55)	(1.92)	(4.58)	(3.23)	(11.06)	(8.24)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Seven-year
AAA	38.02	32.75	6.76	1.46	0.35	0.19	0.11	0.51	19.86
	(10.96)	(13.95)	(3.06)	(1.91)	(0.55)	(0.42)	(0.31)	(0.74)	(6.97)
AA	1.40	41.91	27.23	4.47	0.68	0.34	0.03	0.49	23.44
	(0.98)	(8.28)	(4.30)	(1.91)	(0.62)	(0.50)	(0.08)	(0.53)	(4.60)
A	0.06	5.00	49.14	16.02	2.20	0.70	0.12	0.77	26.00
	(0.11)	(1.99)	(8.21)	(1.97)	(1.33)	(0.86)	(0.17)	(0.60)	(4.11)
BBB	0.02	0.48	10.88	45.79	7.27	2.05	0.32	2.33	30.86
	(0.10)	(0.55)	(2.59)	(7.78)	(0.87)	(1.18)	(0.31)	(1.76)	(4.52)
BB	0.00	0.07	1.15	12.42	25.18	9.90	0.93	9.09	41.25
	(0.00)	(0.16)	(1.02)	(3.04)	(6.95)	(1.96)	(0.63)	(5.59)	(3.44)
B	0.00	0.01	0.24	1.66	8.36	17.26	1.89	21.11	49.46
	(0.07)	(0.07)	(0.52)	(1.38)	(2.18)	(4.07)	(0.62)	(7.76)	(5.56)
CCC/C	0.00	0.00	0.19	0.89	3.16	7.34	2.17	48.18	38.07
	(0.00)	(0.00)	(0.53)	(1.83)	(2.05)	(3.63)	(2.50)	(10.69)	(8.63)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

For example, issuers rated 'AAA' were still rated 'AAA' one year later 87% of the time, while issuers rated in the 'CCC'/'C' category were still rated in that category 45% of the time. This relationship between higher ratings and higher ratings stability holds even over longer time horizons (see table 21) and when broken out by region (see table 22).

Table 22

Average one-year corporate transition rates (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	87.37	8.65	0.58	0.04	0.17	0.04	0.04	0.00	3.11
	(10.16)	(10.31)	(1.16)	(0.21)	(0.41)	(0.27)	(0.27)	(0.00)	(2.48)
AA	0.49	87.46	7.26	0.54	0.07	0.10	0.03	0.03	4.01
	(0.52)	(6.15)	(4.56)	(0.82)	(0.22)	(0.28)	(0.11)	(0.15)	(2.37)
A	0.04	1.60	88.60	5.18	0.34	0.13	0.03	0.06	4.02
	(0.12)	(1.22)	(4.29)	(2.52)	(0.48)	(0.30)	(0.11)	(0.15)	(1.86)
BBB	0.01	0.11	3.31	86.98	3.50	0.53	0.09	0.19	5.28
	(0.05)	(0.17)	(1.85)	(4.73)	(1.80)	(0.81)	(0.16)	(0.30)	(1.86)
BB	0.02	0.04	0.15	4.64	77.91	7.47	0.56	0.71	8.50
	(0.08)	(0.11)	(0.28)	(2.33)	(5.34)	(4.03)	(0.66)	(0.83)	(2.41)
B	0.00	0.03	0.09	0.16	4.21	75.65	4.92	3.26	11.69
	(0.00)	(0.09)	(0.22)	(0.24)	(2.03)	(4.21)	(2.80)	(3.17)	(2.51)
CCC/C	0.00	0.00	0.13	0.19	0.54	12.93	44.70	27.41	14.10
	(0.00)	(0.00)	(0.48)	(0.71)	(1.04)	(8.21)	(8.34)	(12.81)	(4.91)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Europe
AAA	87.16	9.09	0.45	0.11	0.00	0.00	0.11	0.00	3.07
	(8.72)	(7.73)	(1.36)	(0.90)	(0.00)	(0.00)	(0.75)	(0.00)	(4.45)
AA	0.26	86.37	9.40	0.52	0.00	0.00	0.00	0.00	3.46
	(0.65)	(6.98)	(6.33)	(1.13)	(0.00)	(0.00)	(0.00)	(0.00)	(2.36)
A	0.01	1.70	88.36	5.05	0.14	0.03	0.00	0.03	4.69
	(0.04)	(1.73)	(4.90)	(3.36)	(0.32)	(0.39)	(0.00)	(0.08)	(1.93)
BBB	0.00	0.08	3.77	86.19	3.20	0.25	0.08	0.05	6.39
	(0.00)	(1.17)	(1.99)	(4.91)	(2.56)	(0.48)	(0.25)	(0.19)	(2.90)
BB	0.00	0.00	0.09	5.01	75.33	6.60	0.35	0.37	12.25
	(0.00)	(0.00)	(0.56)	(2.45)	(6.53)	(3.38)	(0.92)	(0.78)	(4.23)
B	0.00	0.00	0.02	0.20	4.69	73.96	4.97	1.85	14.32
	(0.00)	(0.00)	(0.18)	(0.45)	(3.16)	(6.27)	(3.12)	(2.93)	(4.82)
CCC/C	0.00	0.00	0.00	0.18	0.00	13.68	45.44	24.39	16.32
	(0.00)	(0.00)	(0.00)	(0.58)	(0.00)	(9.44)	(15.87)	(15.41)	(8.55)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
Emerging and frontier markets
AAA	86.00	10.00	0.00	0.00	0.00	0.00	0.00	0.00	4.00
	(35.52)	(30.71)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(20.06)
AA	1.40	86.55	9.24	0.00	0.00	0.00	0.00	0.00	2.80
	(7.95)	(16.64)	(13.89)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.90)
A	0.00	1.00	91.36	4.54	0.23	0.20	0.00	0.03	2.64
	(0.00)	(1.45)	(5.44)	(4.04)	(0.73)	(0.50)	(0.00)	(0.15)	(3.05)
BBB	0.00	0.01	1.79	87.42	4.39	0.30	0.14	0.10	5.84
	(0.00)	(0.08)	(1.93)	(5.27)	(3.98)	(1.16)	(0.95)	(0.34)	(2.39)
BB	0.00	0.00	0.03	3.64	80.30	4.72	0.58	0.55	10.19
	(0.00)	(0.00)	(1.20)	(2.49)	(4.28)	(2.51)	(1.81)	(1.13)	(3.52)
B	0.00	0.00	0.00	0.11	5.79	71.48	4.10	3.14	15.37
	(0.00)	(0.00)	(0.00)	(0.28)	(3.98)	(4.82)	(3.62)	(3.28)	(3.37)
CCC/C	0.00	0.00	0.00	0.00	0.38	16.56	46.75	18.22	18.09
	(0.00)	(0.00)	(0.00)	(0.00)	(0.92)	(12.80)	(16.21)	(14.68)	(10.26)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

The relationship is more discontinuous when we examine rating transitions across modifiers--these variations are, in part, a result of sample sizes (see table 23). For example, 'AA+' rated issuers were still rated 'AA+' one year later 80% of the time, while 81% of 'AA' rated issuers were still rated 'AA' one year later. In this case, the 'AA+' figure is derived from a much smaller sample than that for 'AA'.

Table 23

Average one-year transition rates for global corporates by rating modifier (1981-2022) (%)
	Rating
From/to	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC	D	NR
AAA	87.09	5.88	2.49	0.68	0.16	0.24	0.13	0.00	0.05	0.00	0.03	0.05	0.03	0.00	0.03	0.00	0.05	0.00	3.10
	(7.19)	(6.20)	(3.18)	(1.04)	(0.44)	(0.56)	(0.34)	(0.00)	(0.24)	(0.00)	(0.17)	(0.18)	(0.14)	(0.00)	(0.17)	(0.00)	(0.34)	(0.00)	(2.43)
AA+	2.16	80.11	10.37	3.31	0.66	0.31	0.18	0.04	0.09	0.04	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.73
	(3.66)	(11.89)	(7.32)	(4.01)	(2.23)	(0.79)	(0.46)	(0.23)	(0.63)	(0.21)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(2.92)
AA	0.41	1.37	81.06	8.35	2.61	1.11	0.34	0.37	0.12	0.08	0.05	0.03	0.02	0.02	0.00	0.02	0.05	0.02	3.98
	(0.51)	(1.67)	(8.84)	(6.15)	(2.58)	(1.22)	(0.57)	(0.80)	(0.34)	(0.23)	(0.16)	(0.12)	(0.10)	(0.12)	(0.00)	(0.09)	(0.15)	(0.08)	(2.51)
AA-	0.04	0.10	3.63	79.19	9.63	2.15	0.56	0.24	0.14	0.06	0.03	0.00	0.00	0.03	0.08	0.00	0.00	0.03	4.11
	(0.12)	(0.29)	(4.17)	(7.47)	(4.86)	(2.53)	(0.81)	(0.47)	(0.42)	(0.24)	(0.19)	(0.00)	(0.00)	(0.14)	(0.36)	(0.00)	(0.00)	(0.10)	(2.02)
A+	0.00	0.09	0.39	4.14	79.64	8.29	2.00	0.56	0.31	0.08	0.05	0.08	0.01	0.06	0.03	0.00	0.00	0.04	4.22
	(0.00)	(0.26)	(0.66)	(2.60)	(6.89)	(3.49)	(1.51)	(0.64)	(0.42)	(0.18)	(0.16)	(0.23)	(0.05)	(0.18)	(0.13)	(0.00)	(0.00)	(0.13)	(1.89)
A	0.03	0.04	0.20	0.38	5.12	79.75	6.47	2.26	0.79	0.24	0.09	0.09	0.06	0.07	0.02	0.00	0.01	0.05	4.32
	(0.12)	(0.13)	(0.48)	(0.47)	(2.14)	(5.87)	(3.03)	(1.71)	(0.90)	(0.37)	(0.19)	(0.26)	(0.27)	(0.27)	(0.09)	(0.00)	(0.05)	(0.11)	(2.10)
A-	0.03	0.01	0.05	0.13	0.37	6.16	79.19	7.12	1.79	0.51	0.12	0.12	0.10	0.09	0.03	0.01	0.03	0.05	4.09
	(0.17)	(0.04)	(0.14)	(0.26)	(0.58)	(3.12)	(6.46)	(2.97)	(1.55)	(0.60)	(0.31)	(0.32)	(0.22)	(0.27)	(0.07)	(0.07)	(0.13)	(0.17)	(1.80)
BBB+	0.00	0.01	0.05	0.05	0.19	0.67	6.65	77.18	7.81	1.45	0.32	0.25	0.11	0.13	0.09	0.02	0.05	0.09	4.87
	(0.00)	(0.04)	(0.15)	(0.16)	(0.40)	(0.92)	(2.95)	(7.00)	(3.56)	(1.36)	(0.49)	(0.53)	(0.20)	(0.38)	(0.27)	(0.08)	(0.16)	(0.24)	(1.97)
BBB	0.01	0.01	0.04	0.02	0.09	0.27	0.92	7.16	77.15	6.04	1.24	0.60	0.26	0.19	0.10	0.03	0.05	0.14	5.69
	(0.07)	(0.07)	(0.12)	(0.12)	(0.20)	(0.63)	(0.92)	(3.27)	(5.66)	(2.41)	(1.05)	(0.65)	(0.43)	(0.42)	(0.35)	(0.09)	(0.11)	(0.26)	(1.97)
BBB-	0.01	0.01	0.02	0.04	0.05	0.12	0.23	1.04	8.90	73.18	5.46	1.95	0.77	0.35	0.20	0.14	0.19	0.22	7.13
	(0.07)	(0.04)	(0.06)	(0.18)	(0.16)	(0.36)	(0.50)	(1.11)	(3.11)	(5.18)	(2.62)	(1.42)	(0.74)	(0.68)	(0.44)	(0.41)	(0.51)	(0.37)	(2.10)
BB+	0.04	0.00	0.00	0.02	0.02	0.07	0.07	0.38	1.44	10.73	66.59	7.44	2.48	0.93	0.48	0.21	0.31	0.29	8.49
	(0.20)	(0.00)	(0.00)	(0.11)	(0.10)	(0.34)	(0.25)	(0.65)	(1.77)	(4.41)	(7.37)	(4.37)	(1.90)	(1.47)	(0.99)	(0.35)	(0.85)	(0.57)	(2.63)
BB	0.00	0.00	0.03	0.01	0.00	0.05	0.04	0.14	0.57	1.83	9.67	65.38	8.57	2.31	1.00	0.36	0.47	0.45	9.11
	(0.00)	(0.00)	(0.19)	(0.06)	(0.00)	(0.33)	(0.19)	(0.38)	(0.94)	(2.06)	(4.07)	(5.10)	(3.57)	(1.53)	(1.22)	(0.58)	(0.89)	(0.64)	(2.88)
BB-	0.00	0.00	0.00	0.01	0.01	0.01	0.04	0.08	0.21	0.31	1.56	9.42	64.19	8.40	2.94	0.78	0.72	0.91	10.43
	(0.00)	(0.00)	(0.00)	(0.09)	(0.07)	(0.07)	(0.25)	(0.22)	(0.41)	(0.58)	(1.56)	(3.91)	(5.41)	(3.90)	(1.51)	(0.74)	(0.80)	(1.35)	(2.35)
B+	0.00	0.01	0.00	0.03	0.00	0.03	0.05	0.04	0.05	0.11	0.29	1.38	8.36	62.57	9.35	2.54	1.76	1.91	11.54
	(0.00)	(0.05)	(0.00)	(0.13)	(0.00)	(0.08)	(0.19)	(0.12)	(0.15)	(0.20)	(0.34)	(1.06)	(3.60)	(5.73)	(4.11)	(1.41)	(1.61)	(1.90)	(2.53)
B	0.00	0.00	0.01	0.01	0.00	0.03	0.03	0.02	0.04	0.03	0.09	0.22	1.04	7.23	61.69	10.03	3.89	2.85	12.80
	(0.00)	(0.00)	(0.08)	(0.05)	(0.00)	(0.17)	(0.32)	(0.07)	(0.26)	(0.09)	(0.26)	(0.49)	(1.10)	(3.09)	(6.63)	(4.80)	(2.99)	(3.79)	(2.53)
B-	0.00	0.00	0.00	0.00	0.01	0.02	0.00	0.05	0.05	0.07	0.06	0.14	0.35	1.93	9.60	56.20	11.97	5.53	14.03
	(0.00)	(0.00)	(0.00)	(0.00)	(0.25)	(0.24)	(0.00)	(0.27)	(0.15)	(0.36)	(0.37)	(0.71)	(0.76)	(2.01)	(4.73)	(6.96)	(5.68)	(5.58)	(3.84)
CCC/C	0.00	0.00	0.00	0.00	0.02	0.00	0.06	0.04	0.06	0.04	0.02	0.13	0.31	0.79	2.51	10.41	44.74	25.70	15.16
	(0.00)	(0.00)	(0.00)	(0.00)	(0.19)	(0.00)	(0.32)	(0.40)	(0.28)	(0.32)	(0.20)	(0.44)	(0.67)	(1.37)	(2.63)	(5.72)	(8.71)	(11.97)	(4.67)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Generally, the highest proportions of rating changes for either a rating category or rating modifier occur at adjacent rating categories and rating modifiers.

Table 24

Global corporate average cumulative default rates (1981-2022) (%)
	--Time horizon (years)--
Rating	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
AAA	0.00	0.03	0.13	0.24	0.34	0.45	0.50	0.58	0.64	0.69	0.72	0.75	0.77	0.83	0.89
AA	0.02	0.05	0.11	0.20	0.29	0.39	0.47	0.54	0.60	0.67	0.73	0.78	0.84	0.89	0.94
A	0.05	0.12	0.20	0.31	0.42	0.55	0.71	0.84	0.97	1.11	1.23	1.35	1.46	1.57	1.69
BBB	0.14	0.39	0.69	1.04	1.42	1.78	2.09	2.40	2.70	2.99	3.28	3.51	3.73	3.95	4.19
BB	0.59	1.84	3.28	4.70	6.04	7.27	8.33	9.31	10.18	10.94	11.58	12.19	12.73	13.18	13.67
B	3.07	7.18	10.85	13.80	16.12	17.98	19.46	20.64	21.72	22.72	23.58	24.25	24.88	25.47	26.03
CCC/C	25.70	35.37	40.48	43.43	45.63	46.68	47.78	48.53	49.14	49.70	50.12	50.52	51.05	51.49	51.55
Investment grade	0.08	0.22	0.39	0.59	0.80	1.02	1.22	1.40	1.58	1.76	1.93	2.07	2.20	2.34	2.48
Speculative grade	3.52	6.79	9.61	11.91	13.80	15.34	16.62	17.68	18.63	19.50	20.23	20.85	21.43	21.95	22.44
All rated	1.48	2.88	4.10	5.13	5.99	6.71	7.32	7.83	8.28	8.70	9.06	9.37	9.65	9.91	10.16
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 25

Average cumulative default rates for corporates by region (1981-2022) (%)
	--Time horizon (years)--
Rating	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
U.S.
AAA	0.00	0.04	0.17	0.29	0.42	0.54	0.58	0.66	0.75	0.83	0.87	0.92	0.96	1.04	1.13
AA	0.03	0.08	0.16	0.28	0.41	0.55	0.67	0.78	0.86	0.96	1.05	1.13	1.21	1.27	1.35
A	0.06	0.18	0.32	0.48	0.64	0.83	1.04	1.24	1.44	1.65	1.84	2.01	2.19	2.33	2.49
BBB	0.19	0.49	0.84	1.30	1.79	2.27	2.69	3.11	3.53	3.93	4.32	4.61	4.88	5.17	5.49
BB	0.71	2.20	3.97	5.68	7.26	8.77	10.07	11.29	12.37	13.35	14.18	14.97	15.68	16.24	16.83
B	3.26	7.70	11.72	14.94	17.48	19.57	21.22	22.53	23.70	24.79	25.72	26.44	27.13	27.79	28.40
CCC/C	27.41	38.30	44.13	47.66	50.30	51.51	52.88	53.67	54.39	54.98	55.55	55.97	56.48	56.91	56.91
Investment grade	0.11	0.29	0.50	0.77	1.06	1.35	1.62	1.89	2.15	2.40	2.64	2.83	3.01	3.20	3.39
Speculative grade	3.93	7.69	10.96	13.61	15.78	17.58	19.07	20.30	21.40	22.41	23.27	24.00	24.68	25.28	25.84
All rated	1.80	3.54	5.08	6.36	7.44	8.36	9.13	9.79	10.38	10.93	11.40	11.79	12.16	12.48	12.81
Europe
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	0.02	0.05	0.10	0.15	0.20	0.23	0.26	0.29	0.29
A	0.03	0.06	0.09	0.14	0.21	0.27	0.34	0.37	0.38	0.40
BBB	0.05	0.15	0.27	0.37	0.48	0.67	0.85	1.00	1.16	1.30
BB	0.37	1.21	1.99	2.73	3.57	4.28	4.92	5.42	5.82	6.21
B	1.85	4.88	7.76	10.17	12.17	13.57	14.60	15.28	16.01	16.59
CCC/C	24.39	34.20	38.73	42.23	44.10	44.80	45.23	45.73	45.73	46.48
Investment grade	0.03	0.08	0.14	0.20	0.27	0.37	0.46	0.52	0.58	0.63
Speculative grade	2.71	5.26	7.36	9.11	10.60	11.65	12.47	13.05	13.58	14.06
All rated	0.78	1.51	2.10	2.59	3.00	3.31	3.56	3.73	3.87	3.99
Emerging and frontier markets
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03
BBB	0.10	0.43	0.83	1.29	1.72	2.00	2.16	2.29	2.38	2.41
BB	0.55	1.61	2.71	3.80	4.74	5.43	6.03	6.54	6.99	7.28
B	3.14	6.44	8.98	11.06	12.62	13.80	14.85	15.77	16.54	17.35
CCC/C	18.22	23.15	25.40	26.01	27.12	27.94	28.63	29.55	30.16	30.62
Investment grade	0.08	0.30	0.57	0.88	1.17	1.36	1.47	1.56	1.62	1.65
Speculative grade	2.62	4.80	6.54	8.00	9.19	10.09	10.89	11.59	12.19	12.71
All rated	1.50	2.83	3.94	4.91	5.72	6.32	6.83	7.28	7.66	7.97
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Small sample sizes can result in historical default rates that seem counterintuitive. But these default rates do not imply that, for example, 'AAA' rated companies are riskier than 'AA+' rated companies, but rather that both are highly unlikely to default (see table 26).

Table 26

Global corporate average cumulative default rates by rating modifier (1981-2022) (%)
	--Time horizon (years)--
Rating	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
AAA	0.00	0.03	0.13	0.24	0.34	0.45	0.50	0.58	0.64	0.69	0.72	0.75	0.77	0.83	0.89
AA+	0.00	0.05	0.05	0.09	0.14	0.19	0.24	0.29	0.34	0.40	0.45	0.51	0.57	0.63	0.69
AA	0.02	0.03	0.08	0.21	0.34	0.46	0.57	0.68	0.76	0.85	0.92	0.98	1.07	1.12	1.18
AA-	0.03	0.08	0.15	0.22	0.29	0.39	0.45	0.49	0.54	0.59	0.64	0.69	0.71	0.75	0.78
A+	0.04	0.08	0.17	0.29	0.38	0.46	0.56	0.66	0.77	0.89	1.01	1.12	1.26	1.41	1.55
A	0.05	0.13	0.20	0.30	0.41	0.57	0.73	0.87	1.03	1.22	1.37	1.48	1.59	1.66	1.79
A-	0.05	0.15	0.23	0.33	0.46	0.60	0.80	0.95	1.06	1.16	1.26	1.37	1.48	1.58	1.66
BBB+	0.09	0.24	0.43	0.61	0.81	1.05	1.23	1.42	1.67	1.92	2.13	2.29	2.45	2.65	2.87
BBB	0.14	0.34	0.54	0.85	1.16	1.48	1.78	2.06	2.36	2.65	2.96	3.21	3.43	3.55	3.76
BBB-	0.22	0.64	1.18	1.80	2.44	3.01	3.51	3.96	4.33	4.66	5.01	5.31	5.58	5.99	6.31
BB+	0.29	0.90	1.63	2.39	3.13	3.85	4.47	4.90	5.43	5.95	6.31	6.77	7.20	7.53	8.04
BB	0.45	1.43	2.79	4.04	5.34	6.40	7.39	8.28	9.15	9.91	10.69	11.23	11.67	11.97	12.29
BB-	0.91	2.82	4.79	6.80	8.57	10.27	11.68	13.08	14.16	15.07	15.78	16.53	17.21	17.85	18.45
B+	1.91	5.20	8.45	11.22	13.43	15.14	16.68	17.98	19.18	20.29	21.24	21.91	22.65	23.34	24.01
B	2.85	6.69	10.13	12.99	15.32	17.35	18.78	19.84	20.87	21.89	22.55	23.22	23.72	24.14	24.58
B-	5.53	11.73	16.77	20.33	22.93	24.84	26.31	27.44	28.29	28.98	30.00	30.67	31.21	31.83	32.28
CCC/C	25.70	35.37	40.48	43.43	45.63	46.68	47.78	48.53	49.14	49.70	50.12	50.52	51.05	51.49	51.55
Investment grade	0.08	0.22	0.39	0.59	0.80	1.02	1.22	1.40	1.58	1.76	1.93	2.07	2.20	2.34	2.48
Speculative grade	3.52	6.79	9.61	11.91	13.80	15.34	16.62	17.68	18.63	19.50	20.23	20.85	21.43	21.95	22.44
All rated	1.48	2.88	4.10	5.13	5.99	6.71	7.32	7.83	8.28	8.70	9.06	9.37	9.65	9.91	10.16
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Gini Ratios And Lorenz Curves

A quantitative analysis of the performance of S&P Global Ratings' corporate ratings shows that they continue to correlate with default risk across several time horizons. As one measure of ratings performance, the cumulative share of defaulters was plotted against the cumulative share of issuers by rating in a Lorenz curve to visually render the accuracy of its rank ordering. (For definitions and methodology, refer to Appendix II.)

Over the long term, the global weighted average Gini coefficient was 82.4% over the one-year horizon, 75.4% over three years, 71.6% over five years, and 69.1% over seven years (see table 27). If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate entities and the cumulative share of all entities at each rating would be nearly the same, producing a Gini ratio of zero.

Table 27

Corporate Gini coefficients by region (1981-2022)
	--Time horizon--
Region	One-year	Three-year	Five-year	Seven-year
Global
Weighted average	82.38	75.39	71.62	69.13
Average	85.42	78.68	74.51	71.38
Standard deviation	(5.38)	(5.09)	(5.29)	(5.19)
U.S.
Weighted average	80.29	72.79	68.93	66.41
Average	84.37	76.58	72.11	68.85
Standard deviation	(6.73)	(6.50)	(6.50)	(6.06)
Europe
Weighted average	89.62	85.18	82.38	79.57
Average	91.23	87.21	82.42	77.00
Standard deviation	(5.06)	(5.31)	(6.10)	(10.41)
Numbers in parentheses are standard deviations. Average and standard deviation for Europe calculated for the period 1996-2022 due to sample size considerations. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 28

Gini coefficients for global corporates by broad sector (1981-2022)
	--Time horizon--
Sector	One-year	Three-year	Five-year	Seven-year
Financial
Weighted average	80.19	70.27	63.38	58.87
Average	83.66	76.90	69.65	63.88
Standard deviation	(19.70)	(14.85)	(16.91)	(17.15)
Nonfinancial
Weighted average	80.36	72.53	68.70	66.30
Average	84.35	76.72	72.61	69.59
Standard deviation	(5.93)	(5.18)	(5.29)	(5.00)
Numbers in parentheses are standard deviations. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

In line with expectations, the Gini coefficients decline over time because longer time horizons allow for greater credit deterioration among higher-rated entities. For example, in the one-year global Lorenz curve, 96.7% of defaults occurred in the speculative-grade category, which constituted just 40.7% of all corporate ratings (see chart 26).

One-year Gini coefficients appear to be broadly cyclical and negatively correlated with default rates (see chart 30). In an economic downturn, the risk that higher-rated issuers experience rapid credit deterioration rises; in periods with high default rates, there tends to be greater variation in the distribution of issuer ratings prior to default--and this reduces the Gini ratio.

Appendix I: Methodology And Definitions

This long-term corporate default and rating transition study uses the CreditPro database of long-term local currency issuer credit ratings. The analysis excludes public information ("pi") ratings and ratings based on the guarantee of another company or government entity. We also do not include short-term issuer credit ratings.

S&P Global Ratings does not require all issuers with rated debt to have an issuer credit rating. Therefore, if an issuer has rated debt but not an issuer credit rating, we assign a proxy rating so that the CreditPro corporate dataset accurately represents the complete universe of ratings. The local currency senior unsecured rating is the preferred debt rating used for the proxy because it is usually consistent with the issuer credit rating. In a small number of cases, we use the subordinated debt rating or the senior secured rating as the proxy.

An S&P Global Ratings issuer credit rating is a forward-looking opinion about an obligor's overall creditworthiness. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation because it does not take into account the nature and provisions of any single obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. Counterparty credit ratings, corporate credit ratings, and sovereign credit ratings are all forms of issuer credit ratings. Issuer credit ratings can be either long-term or short-term.

Our ongoing enhancement of the database used to generate this study could lead to outcomes that differ to some degree from those reported in previous studies. However, this poses no continuity problem because each study reports statistics back to Dec. 31, 1980. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.

Issuers included in this study

This study analyzes the rating histories of 22,926 companies that S&P Global Ratings rated as of Dec. 31, 1980, or that were first rated between that date and Dec. 31, 2022. These include industrials, utilities, financial institutions, and insurance companies around the world with long-term local currency ratings. Structured finance vehicles, public-sector issuers, and sovereign issuers are the subjects of separate default and transition studies, and we exclude them from this study.

In this study, the insurance industry includes life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, and title insurance. In addition to these subsectors, this study groups insurance service providers (such as insurance brokers and third-party administrators that are rated according to corporate criteria) with the insurance industry.

To avoid overcounting, we exclude subsidiaries with debt that is fully guaranteed by a parent or with default risk that is considered identical to that of a parent. The latter are companies with obligations that are not legally guaranteed by a parent but that have operating or financing activities that are so inextricably entwined with those of the parent that it would be impossible to imagine the default of one and not the other. At times, however, some of these subsidiaries might not yet have been covered by a parent's guarantee, or the relationship that combines the default risk of parent and subsidiary might have come to an end or might not have begun. We included such subsidiaries for the period during which they had a distinct and separate risk of default.

Issuers with withdrawn ratings

S&P Global Ratings withdraws ratings when an entity's entire debt is paid off or when the program or programs rated are terminated and the relevant debt extinguished. Others are withdrawn because of a lack of cooperation, particularly when a company is experiencing financial difficulties and refuses to provide all the information needed to continue surveillance on the ratings, or at the entity's request. For the purposes of this study, a corporate rating may also be withdrawn as a result of mergers and acquisitions.

Definition of default

An obligor rated 'SD' (selective default) or 'D' (default) is in default on one or more of its financial obligations, including rated and unrated financial obligations but excluding hybrid instruments classified as regulatory capital or in nonpayment according to terms. An obligor is considered in default unless S&P Global Ratings believes that such payments will be made within five business days of the due date in the absence of a stated grace period, or within the earlier of the stated grace period or 30 calendar days.

A 'D' rating is assigned when S&P Global Ratings believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. An 'SD' rating is assigned when S&P Global Ratings believes that the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. S&P Global Ratings lowers its rating on an obligor to 'D' or 'SD' if the obligor is conducting a distressed exchange offer.

'R' (regulatory intervention) indicates that an obligor is under regulatory supervision owing to its financial condition. This does not necessarily indicate a default event, but during the period of regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. On July 5, 2020, we removed the 'R' symbol from all rating scales.

We deem 'D', 'SD', and 'R' issuer ratings to be defaults for the purposes of this study. A default is assumed to take place on the earliest of:

• The date S&P Global Ratings revised the rating(s) to 'D', 'SD', or 'R';
• The date a debt payment was missed;
• The date a distressed exchange offer was announced; or
• The date the debtor filed for, or was forced into, bankruptcy.

When an issuer defaults, it is not uncommon for S&P Global Ratings to subsequently withdraw the 'D' rating. For the purposes of this study, if an issuer defaults, we end its rating history at 'D'. If any defaulting entity reemerges from bankruptcy--or otherwise restructures its defaulted debt instruments, thereby reestablishing regular, timely payment of all its debts--we reenter this issuer into the database as a new entity. Its rating history after the default event is included in all calculations as entirely separate from its experience leading up to its earlier default.

Many practitioners use statistics from this default study to estimate the "probability of default" and "probability of rating transition." It is important to note that S&P Global Ratings' credit ratings do not imply a specific probability of default.

Regional definitions

Within this study, tables and charts are often presented using specific geographic regions. Some countries can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country. The regions covered in this study are:

U.S. and tax havens:  U.S., Bermuda, and the Cayman Islands

Other developed:  Australia, Brunei Darussalam, Canada, Israel, Japan, Republic of Korea, New Zealand, Singapore

Europe:  Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova Republic of, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the U.K.

Emerging markets in this study consist of the following subregions:

Asia-Pacific:  Bangladesh, Bhutan, China, Fiji, Hong Kong, India, Indonesia, Macao Special Administrative Region of China, Malaysia, Mongolia, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Taiwan, Thailand, British Indian Ocean Territory, and Vietnam

EMEA:  Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia and Herzegovina, Bulgaria, Cote d'Ivoire, Croatia, Cyprus, Egypt, Estonia, Gabon, Georgia, Ghana, Hungary, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Mauritius, Montenegro, Morocco, Namibia, Nigeria, Oman, Poland, Qatar, Republic of Moldova, Romania, Russia, Saudi Arabia, Slovakia, South Africa, Tunisia, Turkey, Ukraine, United Arab Emirates, and Uzbekistan

Latin America and Caribbean:  Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, and Uruguay

Frontier markets in this study consist of the following subregions:

Asia-Pacific:  Cambodia and Marshall Islands

EMEA:  Liberia, Syrian Arab Republic, and Togo

Latin America and Caribbean:  Aruba, Bahamas, Curacao, Netherlands Antilles*, Turks and Caicos Islands, and Venezuela

*The Netherlands Antilles was dissolved in 2010.

Calculations

Static pool methodology.  S&P Global Ratings Credit Research & Insights conducts its default studies on the basis of groupings called static pools. For the purposes of this study, we form static pools by grouping issuers (for example, by rating category) at the beginning of each year, quarter, or month that the database covers. Each static pool is followed from that point forward. All companies included in the study are assigned to one or more static pools. When an issuer defaults, we assign that default to all of the static pools to which the issuer belonged.

We use the static pool methodology to avoid certain pitfalls in estimating default rates, such as by ensuring that default rates account for rating migration and allowing for default rates to be calculated across multiperiod time horizons. Some methods for calculating default and rating transition rates might charge defaults against only the initial rating on the issuer, ignoring more recent rating changes that supply more current information. Other methods may calculate default rates using only the most recent year's default and rating data, which may yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.

The pools are static in the sense that their membership remains constant over time. Each static pool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by every new update and because the criteria for inclusion or exclusion of companies in the default study are subject to minor revisions as time goes by, it is not possible to compare static pools across different studies. Therefore, every update revises results back to the same starting date of Dec. 31, 1980, so as to avoid continuity problems.

Entities that have had ratings withdrawn--that is, revised to not rated (NR)--are surveilled with the aim of capturing a potential default. Because static pools include only entities with active ratings as of the beginning date of a given pool, we exclude companies with withdrawn ratings, as well as those that have defaulted, from subsequent static pools. If the rating on an entity is withdrawn after the start date of a particular static pool and the entity subsequently defaults, we will include the entity in that static pool as a defaulter and categorize it in the rating category of which it was a member at that time.

For instance, the 1981 static pool consists of all companies rated as of 12:00:01 a.m. on Jan. 1, 1981. Adding those companies first rated in 1981 to the surviving members (those still actively rated and not in default) of the 1981 static pool forms the 1982 static pool. All rating changes that took place are reflected in the newly formed 1982 static pool through the ratings on these entities as of 12:00:01 a.m. on Jan. 1, 1982. We used the same method to form static pools for 1983-2022. From Jan. 1, 1981-Dec. 31, 2022, a total of 22,926 first-time-rated organizations were added to form new static pools, while we excluded 3,253 defaulting companies and 12,583 companies that are no longer rated (NR).

Consider the following example: An issuer is originally rated 'BB' in mid-1986 and is downgraded to 'B' in 1988. This is followed by a rating withdrawal in 1990 and a default in 1993. We would include this hypothetical company in the 1987 and 1988 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Likewise, it would be included in the 1989 and 1990 pools with the 'B' rating. It would not be part of the 1986 pool because it was not rated as of the first day of that year, and it would not be included in any pool after the last day of 1990 because the rating had been withdrawn by then. Yet each of the four pools in which this company was included (1987-1990) would record its 1993 default at the appropriate time horizon.

Default rate calculation.  We calculated annual default rates for each static pool, first in units and later as percentages with respect to the number of issuers in each rating category. We combined these percentages to obtain cumulative default rates for the 42 years the study covers (see tables 24-26 and 30-32).

Issuer-weighted default rates.  All default rates that appear in this study are based on the number of issuers rather than the dollar amounts affected by defaults or rating changes. Although dollar amounts provide information about the portion of the market that is affected by defaults or rating changes, issuer-weighted averages are more useful measures of the performance of ratings.

Average cumulative default rate calculation.  The cumulative default rates in this study average the experience of all static pools by first calculating marginal default rates for each possible time horizon and for each static pool, weight-averaging the marginal default rates conditional on survival (survivors being nondefaulters), and accumulating the average conditional marginal default rates (see tables 24-26 and 30-32). We calculated conditional default rates by dividing the number of issuers in a static pool that default at a specific time horizon by the number of issuers that survived (did not default) to that point in time. Weights are based on the number of issuers in each static pool. Cumulative default rates are one minus the product of the proportion of survivors (nondefaulters).

For instance, in table 32, the weighted average first-year default rate for all speculative-grade-rated companies for all 42 pools was 3.5%, meaning that an average of 96.5% survived one year. Similarly, the second- and third-year conditional marginal averages--shown in the "Summary statistics" section at the bottom portion of the table--were 3.4% for the first 41 pools (96.6% of those companies that did not default in the first year survived the second year) and 3.0% for the first 40 pools (97.0% of those companies that did not default by the second year survived the third year), respectively. Multiplying 96.5% by 96.6% results in a 93.2% survival rate to the end of the second year, which leads to a two-year average cumulative default rate of 6.79%. Multiplying 93.2% by 97.0% results in a 90.39% survival rate to the end of the third year, which results in a three-year average cumulative default rate of 9.61%.

Transition analysis

Transition rates compare issuer credit ratings at the beginning of a period with ratings at the end of the period. To compute one-year rating transition rates by rating category, we compared the rating on each entity at the end of a particular year with the rating at the beginning of the same year. An issuer that remained rated for more than one year was counted as many times as the number of years it was rated.

For instance, an issuer continually rated from the middle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transition matrices from 1985-1991. If the rating on the issuer was withdrawn in the middle of 1991, it would be included in the column representing transitions to NR in the 1991 transition matrix. Similarly, if it defaulted in the middle of 1991, it would be included in the column representing transitions to 'D' in the 1991 one-year transition matrix.

All 1981 static pool members still rated on Jan. 1, 2022, had 42 one-year transitions, while companies first rated on Jan. 1, 2022, had only one. Table 29 displays the summary of one-year transitions in the investment-grade and speculative-grade rating categories. Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. For each rating listed in the matrix's leftmost column, there are nine ratios listed in the rows, corresponding to the ratings from 'AAA' to 'D', plus an entry for NR (see table 22).

The only ratings considered in these calculations are those on entities at the beginning of each static pool and those at the end. All rating changes that occur in between are ignored. For example, if an entity was rated 'A' on Jan. 1, 2022, and was downgraded to 'BBB' in the middle of the year and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would be included only in the percentage of issuers that began the year as 'A' that ended the year as 'A'. This also applies to transition matrices that span longer time horizons. If an issuer defaults or if the rating on the issuer is withdrawn in the middle of the year, then it would be considered rated 'D' or not rated as of Dec. 31 of that particular year.

Table 29

Summary of one-year global corporate rating transitions
	--Investment-grade rating distribution at year-end--					--Speculative-grade rating distribution at year-end--
Year	Jan. 1 inv. grade	Inv. grade (%)	Spec. grade (%)*	Defaulted (%)§	Rating withdrawn (%)	Jan. 1 spec. grade	Inv. grade (%)†	Spec. grade (%)	Defaulted (%)	Rating withdrawn (%)
1981	1,031	97.38	1.36	0.00	1.26	318	4.72	89.94	0.63	4.72
1982	1,062	93.50	3.11	0.19	3.20	336	2.68	80.36	4.46	12.50
1983	1,084	94.28	2.12	0.09	3.51	336	3.27	83.33	2.98	10.42
1984	1,147	95.38	2.27	0.17	2.18	363	4.96	87.05	3.31	4.68
1985	1,186	93.17	3.54	0.00	3.29	412	3.88	85.68	4.37	6.07
1986	1,313	90.25	3.73	0.15	5.86	522	3.07	81.99	5.75	9.20
1987	1,320	90.30	3.11	0.00	6.59	671	3.58	79.43	2.83	14.16
1988	1,334	91.90	2.77	0.00	5.32	747	3.61	79.65	3.88	12.85
1989	1,379	93.47	2.68	0.22	3.63	744	5.24	75.13	4.70	14.92
1990	1,428	94.68	2.10	0.14	3.08	690	3.19	75.07	8.12	13.62
1991	1,466	96.32	1.77	0.14	1.77	588	3.06	77.89	11.05	7.99
1992	1,615	96.47	1.24	0.00	2.29	523	6.31	78.59	6.12	8.99
1993	1,764	92.74	1.53	0.00	5.73	559	4.65	76.74	2.50	16.10
1994	1,846	95.83	0.76	0.05	3.36	709	4.23	85.90	2.12	7.76
1995	2,043	95.45	1.17	0.05	3.33	820	3.78	85.00	3.54	7.68
1996	2,235	94.54	0.63	0.00	4.83	884	4.75	80.88	1.81	12.56
1997	2,485	93.32	1.17	0.08	5.43	994	4.33	81.09	2.01	12.58
1998	2,763	90.45	2.21	0.14	7.20	1,307	2.98	83.86	3.67	9.49
1999	2,869	90.66	1.64	0.17	7.53	1,651	1.64	81.34	5.57	11.45
2000	2,924	91.59	1.78	0.24	6.40	1,747	2.18	83.34	6.24	8.24
2001	2,998	90.66	2.67	0.23	6.44	1,748	1.49	79.35	9.84	9.32
2002	3,108	89.45	3.96	0.42	6.18	1,673	1.79	79.62	9.50	9.09
2003	3,023	92.42	2.51	0.10	4.96	1,754	1.54	82.04	5.07	11.35
2004	3,138	94.10	1.02	0.03	4.84	1,877	2.18	84.60	2.02	11.19
2005	3,247	92.98	1.57	0.03	5.42	2,060	3.11	82.38	1.50	13.01
2006	3,275	93.83	1.40	0.00	4.76	2,193	2.23	82.08	1.19	14.50
2007	3,353	90.13	1.76	0.00	8.11	2,301	3.13	81.75	0.91	14.21
2008	3,333	92.32	1.95	0.42	5.31	2,399	2.13	83.37	3.71	10.80
2009	3,361	89.53	3.36	0.33	6.78	2,253	1.29	77.05	9.90	11.76
2010	3,196	94.77	0.94	0.00	4.29	2,116	2.32	84.92	3.02	9.74
2011	3,245	93.41	1.76	0.03	4.81	2,380	2.35	84.03	1.85	11.76
2012	3,260	93.77	1.72	0.00	4.51	2,548	1.92	85.60	2.59	9.89
2013	3,270	95.02	1.38	0.00	3.61	2,772	2.09	85.35	2.24	10.32
2014	3,368	95.72	1.22	0.00	3.06	3,122	1.41	85.59	1.44	11.56
2015	3,524	92.93	2.55	0.00	4.51	3,386	1.36	83.79	2.78	12.08
2016	3,538	93.19	1.72	0.03	5.06	3,374	1.16	82.96	4.24	11.65
2017	3,529	94.19	1.45	0.00	4.36	3,363	1.43	82.16	2.47	13.95
2018	3,548	95.18	0.79	0.00	4.03	3,428	1.58	84.28	2.07	12.08
2019	3,617	95.11	0.66	0.06	4.17	3,623	0.99	84.96	2.54	11.51
2020	3,617	93.78	2.41	0.00	3.82	3,592	0.31	84.35	5.51	9.83
2021	3,540	95.42	0.93	0.00	3.64	3,580	1.37	83.77	1.68	13.18
2022	3,570	95.27	0.62	0.00	4.12	3,704	1.27	84.29	1.92	12.53
Weighted average	107,952	93.35	1.77	0.08	4.79	74,167	2.02	82.99	3.52	11.47
Median		93.64	1.74	0.03	4.51		2.33	83.15	3.00	11.48
Standard deviation		2.03	0.88	0.11	1.55		1.37	3.21	2.61	2.61
Minimum		89.45	0.62	0.00	1.26		0.31	75.07	0.63	4.68
Maximum		97.38	3.96	0.42	8.11		6.31	89.94	11.05	16.10
*Fallen angels that survived to Jan. 1 of the year after they were downgraded. §Investment-grade defaulters. †Rising stars. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Multiyear transitions.  Multiyear transitions were also calculated for periods of two up to 20 years. In this case, we compared the rating at the beginning of the multiyear period with the rating at the end. For example, three-year transition matrices were the result of comparing ratings at the beginning of the years 1981-2020 with the ratings at the end of the years 1983-2022. Otherwise, the methodology was identical to that used for single-year transitions.

We calculated average transition matrices on the basis of the multiyear matrices just described. These average matrices are a true summary, the ratios of which represent the historical incidence of the ratings listed in the first column changing to the ones listed in the top row over the course of the multiyear period (see tables 33-40). Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.

Rating modifiers

We use rating modifiers (plus and minus signs) to calculate upgrade and downgrade percentages, as well as the magnitude of rating changes, throughout this study. However, some transition tables may use full rating categories for practical reasons. In other words, the use of a rating category suggests that transitions, for example, to 'AA' from 'AA-' or to 'BBB+' from 'BBB-', are not considered to be rating transitions because the rating remained within the rating category.

Comparing transition rates with default rates

Rating transition rates may be compared with the marginal and cumulative default rates described in the previous sections. For example, the one-year default rate column of table 24 is equivalent to column 'D' of the average one-year transition matrix in table 21, as well as the cumulative average in the "Summary statistics" of the one-year column in table 32.

However, the two-year default rate column in table 24 is not the same as column 'D' of the average two-year transition matrix in table 34. This difference results from the different methods of calculating default rates. The default rates in table 34 are calculated as not conditional on survival, while those in table 24 are average default rates conditional on survival. The two-year default rates in table 24 are calculated in the same way as those in the cumulative average section for the two-year column in table 32, while those in the 'D' column of table 34 are equivalent to adding up all the defaults behind the two-year column's annual default rates in table 32, divided by the sum of all the issuers in table 32 for the years 1981-2022.

The links between transition matrices and average cumulative default rates are best illustrated through tables 30-32. The default rates in the columns of these tables, associated with each static pool year, are calculated in the same way as they would be for individual years' one-year transition matrices. Tables 30, 31, and 32 are broken out by the broadest rating classifications (all rated, investment grade, and speculative grade). These tables can also be constructed for each rating category.

As an example, the two-year column of table 32 shows the two-year default rates (not conditional on survival) for each static pool. These are calculated in the same way as the default column in table 20, though table 20 shows the one-year default rates for each rating category for 2022 exclusively. In the summary section at the bottom of tables 30-32, the first row shows the issuer-weighted averages of the marginal default rates. These marginal averages are then used to calculate the cumulative average default rates in the row directly beneath them, as explained in the "Average cumulative default rate" section above. These default rates are the same that appear in table 24 and are average cumulative default rates conditional on survival.

Standard deviations

Many of the tables and charts in this study display averages of default rates, transition rates, and Gini ratios. Often these are issuer-weighted averages. Prior studies have shown that fluctuations within default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. As a supplement to many of the averages and time series presented in this study, standard deviations are also shown to provide a gauge of the dispersion of data behind these averages.

For the transition matrices in tables 21-23 and 33-44, the standard deviation for each cell in a given matrix is a weighted standard deviation, calculated using the data from each of the underlying cohort years that contribute to the averages, weighted by that cohort year's issuer base for each rating level.

For the Gini ratios in tables 2, 27, and 28, the standard deviations are derived from the time series of Gini ratios for all of their constituent annual cohorts. As an example, the standard deviation applied to the seven-year weighted average global Gini ratio in table 2 (5.2%) was calculated from the time series of all available seven-year Gini ratios by cohort. In this case, these are the seven-year Gini ratios from the 1981 cohort through the 2016 seven-year cohort. We calculated standard deviations for Gini ratios in this study as the standard deviations of a sample, and not those of a population.

Time sample

This study limits the reporting of default rates to the 15-year time horizon. However, the data was gathered for 42 years, and all calculations are based on the rating experience of that period. In addition, average default statistics become less reliable at longer time horizons as the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.

Table 30

Static pool cumulative global corporate default rates among all ratings (1981-2022) (%)
		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1981	1,349	0.15	1.41	2.15	2.97	3.63	5.04	5.49	6.30	6.89	8.01	9.71	10.16	10.67	10.75	10.97
1982	1,398	1.22	1.93	2.79	3.51	4.94	5.29	6.08	6.58	7.73	9.59	10.09	10.66	10.73	10.94	10.94
1983	1,420	0.77	1.62	2.46	4.08	4.51	5.56	6.06	7.18	9.23	9.79	10.35	10.42	10.63	10.63	10.70
1984	1,510	0.93	1.99	3.84	4.30	5.36	6.09	7.28	9.01	9.60	10.20	10.26	10.46	10.46	10.60	10.60
1985	1,598	1.13	3.07	3.63	5.01	5.88	7.20	9.07	9.64	10.14	10.20	10.51	10.51	10.64	10.64	10.95
1986	1,835	1.74	2.34	3.65	4.52	5.94	7.85	8.50	9.05	9.21	9.48	9.59	9.81	9.92	10.19	10.57
1987	1,991	0.95	2.41	3.87	5.73	8.29	9.39	10.15	10.40	10.75	10.90	11.10	11.20	11.50	11.95	13.01
1988	2,081	1.39	3.03	5.19	8.27	9.37	10.14	10.38	10.86	11.00	11.29	11.48	11.82	12.49	13.41	14.42
1989	2,123	1.79	4.38	7.91	9.09	9.89	10.22	10.65	10.79	11.07	11.45	11.78	12.39	13.33	14.27	14.74
1990	2,118	2.74	6.14	7.55	8.36	8.69	9.16	9.25	9.63	10.10	10.48	11.24	12.18	13.22	13.74	13.88
1991	2,054	3.26	4.77	5.31	5.65	6.18	6.28	6.62	7.06	7.45	8.13	9.15	10.27	10.76	10.95	11.10
1992	2,138	1.50	2.01	2.34	2.95	3.09	3.41	3.84	4.16	4.86	5.85	6.97	7.39	7.58	7.72	7.86
1993	2,323	0.60	1.08	1.98	2.20	2.58	3.01	3.44	4.22	5.34	6.50	6.93	7.10	7.28	7.49	7.62
1994	2,555	0.63	1.76	2.15	2.62	3.09	3.95	4.97	6.30	7.51	8.02	8.26	8.41	8.69	8.81	9.39
1995	2,863	1.05	1.54	2.03	2.58	3.56	4.58	6.43	7.82	8.45	8.70	8.91	9.15	9.26	9.78	10.65
1996	3,119	0.51	1.09	1.83	2.98	4.01	5.74	7.28	7.98	8.27	8.50	8.72	8.85	9.39	10.26	10.39
1997	3,479	0.63	1.61	2.93	4.34	6.29	8.08	9.03	9.31	9.54	9.83	9.97	10.58	11.44	11.53	11.64
1998	4,070	1.28	3.24	5.23	7.86	10.07	11.33	11.82	12.14	12.46	12.60	13.24	14.20	14.30	14.42	14.55
1999	4,520	2.15	4.67	7.99	10.88	12.39	12.94	13.30	13.65	13.81	14.60	15.75	15.93	16.06	16.22	16.31
2000	4,671	2.48	6.06	9.25	10.96	11.67	12.12	12.48	12.70	13.57	14.96	15.14	15.31	15.46	15.61	15.67
2001	4,746	3.77	7.35	9.33	10.05	10.58	10.94	11.15	11.99	13.46	13.65	13.82	13.99	14.18	14.24	14.50
2002	4,781	3.60	5.63	6.42	6.88	7.24	7.45	8.39	9.98	10.19	10.35	10.54	10.79	10.86	11.11	11.38
2003	4,777	1.93	2.72	3.22	3.62	3.83	4.81	6.64	6.91	7.08	7.35	7.64	7.72	8.00	8.27	8.56
2004	5,015	0.78	1.32	1.71	1.95	2.99	4.99	5.32	5.54	5.84	6.12	6.20	6.48	6.76	7.04	7.18
2005	5,307	0.60	1.02	1.36	2.56	4.86	5.35	5.65	5.99	6.29	6.43	6.78	7.08	7.33	7.46	7.73
2006	5,468	0.48	0.88	2.32	5.03	5.65	6.07	6.57	6.93	7.08	7.46	7.85	8.08	8.23	8.49	8.81
2007	5,654	0.37	2.03	5.27	6.14	6.60	7.20	7.62	7.80	8.26	8.68	8.93	9.06	9.32	9.71	9.76
2008	5,732	1.80	5.57	6.65	7.10	7.83	8.23	8.50	9.02	9.49	9.75	9.98	10.24	10.76	10.83	10.97
2009	5,614	4.17	5.33	5.81	6.56	6.96	7.25	7.78	8.34	8.62	8.85	9.08	9.62	9.69	9.83
2010	5,312	1.20	1.90	2.75	3.22	3.61	4.18	4.93	5.29	5.53	5.84	6.49	6.55	6.68
2011	5,625	0.80	1.92	2.61	3.09	3.88	4.82	5.21	5.46	5.74	6.51	6.60	6.76
2012	5,808	1.14	2.07	2.57	3.46	4.56	5.10	5.46	5.79	6.59	6.70	6.85
2013	6,042	1.03	1.62	2.80	4.17	4.85	5.25	5.59	6.49	6.62	6.85
2014	6,490	0.69	1.97	3.56	4.42	4.98	5.45	6.55	6.69	7.00
2015	6,910	1.36	3.29	4.25	4.92	5.62	7.00	7.21	7.55
2016	6,912	2.08	3.11	3.89	4.60	6.16	6.44	6.80
2017	6,892	1.20	2.10	3.00	4.86	5.21	5.63
2018	6,976	1.02	2.12	4.27	4.74	5.35
2019	7,240	1.30	3.78	4.36	4.99
2020	7,209	2.75	3.44	4.15
2021	7,120	0.84	1.69
2022	7,274	0.98
Summary statistics
Marginal average		1.48	1.42	1.26	1.07	0.91	0.77	0.65	0.55	0.50	0.46	0.40	0.33	0.31	0.29	0.28
Cumulative average		1.48	2.88	4.10	5.13	5.99	6.71	7.32	7.83	8.28	8.70	9.06	9.37	9.65	9.91	10.16
Standard deviation		0.96	1.64	2.11	2.39	2.52	2.48	2.41	2.40	2.42	2.44	2.45	2.50	2.51	2.48	2.54
Median		1.17	2.10	3.64	4.60	5.49	6.09	7.00	7.80	8.36	8.85	9.65	10.24	10.64	10.64	10.95
Minimum		0.15	0.88	1.36	1.95	2.58	3.01	3.44	4.16	4.86	5.84	6.20	6.48	6.68	7.04	7.18
Maximum		4.17	7.35	9.33	10.96	12.39	12.94	13.30	13.65	13.81	14.96	15.75	15.93	16.06	16.22	16.31
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 31

Static pool cumulative global corporate default rates among all investment-grade ratings (1981-2022) (%)
		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1981	1,031	0.00	0.39	0.39	0.48	0.68	1.07	1.36	2.13	2.33	3.10	4.17	4.36	4.56	4.56	4.75
1982	1,062	0.19	0.28	0.38	0.56	1.04	1.32	2.07	2.26	3.11	4.24	4.52	4.80	4.80	4.99	4.99
1983	1,084	0.09	0.37	0.46	0.92	1.11	1.66	1.75	2.58	3.69	4.06	4.34	4.34	4.52	4.52	4.52
1984	1,147	0.17	0.26	0.61	0.78	1.22	1.39	2.09	3.05	3.40	3.66	3.66	3.84	3.84	3.92	3.92
1985	1,186	0.00	0.17	0.25	0.84	1.01	1.77	2.78	3.12	3.37	3.37	3.63	3.63	3.79	3.79	3.96
1986	1,313	0.15	0.15	0.53	0.69	1.22	2.13	2.51	2.67	2.67	2.89	2.89	3.05	3.12	3.27	3.58
1987	1,320	0.00	0.15	0.38	0.83	1.74	2.27	2.42	2.50	2.65	2.65	2.80	2.88	3.03	3.18	4.02
1988	1,334	0.00	0.22	0.37	0.97	1.50	1.65	1.72	1.87	1.87	2.02	2.02	2.17	2.32	3.00	3.82
1989	1,379	0.22	0.36	0.65	1.23	1.38	1.45	1.60	1.60	1.60	1.60	1.81	1.96	2.76	3.41	3.77
1990	1,428	0.14	0.35	0.77	0.98	1.05	1.19	1.19	1.19	1.26	1.54	1.89	2.59	3.15	3.50	3.57
1991	1,466	0.14	0.27	0.41	0.48	0.61	0.61	0.61	0.68	1.02	1.36	2.11	2.66	2.93	3.00	3.07
1992	1,615	0.00	0.06	0.12	0.25	0.25	0.25	0.31	0.56	0.80	1.36	1.86	2.11	2.17	2.29	2.48
1993	1,764	0.00	0.06	0.17	0.17	0.23	0.40	0.74	1.08	1.70	2.32	2.55	2.55	2.66	2.78	2.83
1994	1,846	0.05	0.16	0.16	0.27	0.38	0.81	1.08	1.68	2.28	2.55	2.60	2.65	2.82	2.87	3.25
1995	2,043	0.05	0.05	0.10	0.20	0.69	0.93	1.66	2.25	2.50	2.55	2.59	2.74	2.79	3.18	3.52
1996	2,235	0.00	0.04	0.09	0.49	0.81	1.52	2.06	2.28	2.37	2.42	2.55	2.55	2.95	3.40	3.45
1997	2,485	0.08	0.16	0.48	0.80	1.37	2.09	2.45	2.54	2.58	2.70	2.70	3.10	3.50	3.54	3.66
1998	2,763	0.14	0.43	0.80	1.38	2.39	2.82	3.00	3.11	3.18	3.18	3.66	4.20	4.27	4.42	4.56
1999	2,869	0.17	0.49	0.91	1.88	2.34	2.47	2.58	2.72	2.72	3.24	3.90	3.97	4.11	4.29	4.32
2000	2,924	0.24	0.58	1.54	2.02	2.12	2.26	2.39	2.39	2.98	3.66	3.73	3.90	4.04	4.07	4.14
2001	2,998	0.23	1.23	1.67	1.83	2.00	2.13	2.13	2.67	3.40	3.44	3.60	3.77	3.84	3.87	4.07
2002	3,108	0.42	0.77	0.90	1.03	1.09	1.09	1.64	2.28	2.32	2.45	2.61	2.70	2.73	2.93	3.02
2003	3,023	0.10	0.20	0.30	0.33	0.33	0.86	1.59	1.62	1.72	1.79	1.89	1.92	2.15	2.25	2.32
2004	3,138	0.03	0.10	0.13	0.13	0.64	1.27	1.34	1.43	1.53	1.63	1.63	1.85	1.94	1.98	2.01
2005	3,247	0.03	0.06	0.06	0.62	1.20	1.29	1.39	1.48	1.57	1.57	1.79	1.88	1.88	1.91	1.97
2006	3,275	0.00	0.00	0.49	0.92	1.01	1.10	1.16	1.25	1.25	1.44	1.50	1.50	1.50	1.53	1.59
2007	3,353	0.00	0.48	0.92	1.10	1.19	1.28	1.34	1.34	1.49	1.55	1.55	1.55	1.58	1.67	1.70
2008	3,333	0.42	0.81	0.96	1.08	1.17	1.23	1.23	1.38	1.50	1.50	1.53	1.56	1.62	1.65	1.71
2009	3,361	0.33	0.45	0.54	0.60	0.62	0.62	0.77	0.89	0.89	0.92	0.95	1.01	1.04	1.10
2010	3,196	0.00	0.03	0.06	0.09	0.09	0.25	0.38	0.38	0.44	0.50	0.53	0.56	0.63
2011	3,245	0.03	0.06	0.06	0.06	0.09	0.25	0.25	0.31	0.37	0.46	0.49	0.55
2012	3,260	0.00	0.00	0.00	0.03	0.21	0.21	0.28	0.34	0.43	0.49	0.55
2013	3,270	0.00	0.00	0.00	0.15	0.15	0.24	0.31	0.43	0.46	0.55
2014	3,368	0.00	0.00	0.15	0.15	0.24	0.33	0.48	0.50	0.62
2015	3,524	0.00	0.06	0.06	0.14	0.20	0.37	0.43	0.51
2016	3,538	0.03	0.03	0.11	0.17	0.37	0.40	0.48
2017	3,529	0.00	0.00	0.06	0.17	0.20	0.26
2018	3,548	0.00	0.06	0.11	0.14	0.20
2019	3,617	0.06	0.08	0.11	0.14
2020	3,617	0.00	0.00	0.03
2021	3,540	0.00	0.00
2022	3,570	0.00
Summary statistics
Marginal average		0.08	0.14	0.17	0.20	0.21	0.22	0.20	0.19	0.18	0.18	0.17	0.14	0.14	0.14	0.15
Cumulative average		0.08	0.22	0.39	0.59	0.80	1.02	1.22	1.40	1.58	1.76	1.93	2.07	2.20	2.34	2.48
Standard deviation		0.11	0.27	0.40	0.53	0.65	0.73	0.81	0.89	0.99	1.07	1.13	1.13	1.09	1.02	0.98
Median		0.03	0.15	0.34	0.56	0.91	1.19	1.37	1.62	1.80	2.32	2.55	2.65	2.88	3.18	3.58
Minimum		0.00	0.00	0.00	0.03	0.09	0.21	0.25	0.31	0.37	0.46	0.49	0.55	0.63	1.10	1.59
Maximum		0.42	1.23	1.67	2.02	2.39	2.82	3.00	3.12	3.69	4.24	4.52	4.80	4.80	4.99	4.99
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 32

Static pool cumulative global corporate default rates among all speculative-grade ratings (1981-2022) (%)
		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1981	318	0.63	4.72	7.86	11.01	13.21	17.92	18.87	19.81	21.70	23.90	27.67	28.93	30.50	30.82	31.13
1982	336	4.46	7.14	10.42	12.80	17.26	17.86	18.75	20.24	22.32	26.49	27.68	29.17	29.46	29.76	29.76
1983	336	2.98	5.65	8.93	14.29	15.48	18.15	19.94	22.02	27.08	28.27	29.76	30.06	30.36	30.36	30.65
1984	363	3.31	7.44	14.05	15.43	18.46	20.94	23.69	27.82	29.20	30.85	31.13	31.40	31.40	31.68	31.68
1985	412	4.37	11.41	13.35	16.99	19.90	22.82	27.18	28.40	29.61	29.85	30.34	30.34	30.34	30.34	31.07
1986	522	5.75	7.85	11.49	14.18	17.82	22.22	23.56	25.10	25.67	26.05	26.44	26.82	27.01	27.59	28.16
1987	671	2.83	6.86	10.73	15.35	21.16	23.40	25.34	25.93	26.68	27.12	27.42	27.57	28.17	29.21	30.70
1988	747	3.88	8.03	13.79	21.29	23.43	25.30	25.84	26.91	27.31	27.84	28.38	29.05	30.66	31.99	33.33
1989	744	4.70	11.83	21.37	23.66	25.67	26.48	27.42	27.82	28.63	29.70	30.24	31.72	32.93	34.41	35.08
1990	690	8.12	18.12	21.59	23.62	24.49	25.65	25.94	27.10	28.41	28.99	30.58	32.03	34.06	34.93	35.22
1991	588	11.05	15.99	17.52	18.54	20.07	20.41	21.60	22.96	23.47	25.00	26.70	29.25	30.27	30.78	31.12
1992	523	6.12	8.03	9.18	11.28	11.85	13.19	14.72	15.30	17.40	19.69	22.75	23.71	24.28	24.47	24.47
1993	559	2.50	4.29	7.69	8.59	10.02	11.27	11.99	14.13	16.82	19.68	20.75	21.47	21.82	22.36	22.72
1994	709	2.12	5.92	7.33	8.74	10.16	12.13	15.09	18.34	21.16	22.28	22.99	23.41	23.98	24.26	25.39
1995	820	3.54	5.24	6.83	8.54	10.73	13.66	18.29	21.71	23.29	24.02	24.63	25.12	25.37	26.22	28.41
1996	884	1.81	3.73	6.22	9.28	12.10	16.40	20.48	22.40	23.19	23.87	24.32	24.77	25.68	27.60	27.94
1997	994	2.01	5.23	9.05	13.18	18.61	23.04	25.45	26.26	26.96	27.67	28.17	29.28	31.29	31.49	31.59
1998	1,307	3.67	9.18	14.61	21.58	26.32	29.30	30.45	31.22	32.06	32.52	33.51	35.35	35.50	35.58	35.65
1999	1,651	5.57	11.93	20.29	26.53	29.86	31.13	31.92	32.65	33.07	34.34	36.34	36.71	36.83	36.95	37.13
2000	1,747	6.24	15.23	22.15	25.93	27.65	28.62	29.36	29.94	31.31	33.89	34.23	34.40	34.57	34.92	34.97
2001	1,748	9.84	17.85	22.48	24.14	25.29	26.03	26.60	27.97	30.72	31.18	31.35	31.52	31.92	32.04	32.38
2002	1,673	9.50	14.64	16.68	17.75	18.65	19.25	20.92	24.27	24.81	25.04	25.28	25.82	25.94	26.30	26.90
2003	1,754	5.07	7.07	8.27	9.29	9.86	11.63	15.34	16.02	16.31	16.93	17.56	17.73	18.07	18.64	19.33
2004	1,877	2.02	3.36	4.37	5.01	6.93	11.19	11.99	12.41	13.05	13.64	13.85	14.22	14.81	15.50	15.82
2005	2,060	1.50	2.52	3.40	5.63	10.63	11.75	12.38	13.11	13.74	14.08	14.66	15.29	15.92	16.21	16.80
2006	2,193	1.19	2.19	5.06	11.17	12.59	13.50	14.64	15.41	15.78	16.46	17.33	17.92	18.29	18.88	19.61
2007	2,301	0.91	4.30	11.60	13.47	14.47	15.82	16.78	17.21	18.12	19.08	19.69	19.99	20.60	21.43	21.51
2008	2,399	3.71	12.17	14.55	15.46	17.09	17.97	18.59	19.63	20.59	21.22	21.72	22.30	23.47	23.59	23.84
2009	2,253	9.90	12.61	13.67	15.45	16.42	17.13	18.24	19.44	20.15	20.68	21.22	22.46	22.59	22.86
2010	2,116	3.02	4.73	6.81	7.94	8.93	10.11	11.81	12.71	13.23	13.89	15.50	15.60	15.83
2011	2,380	1.85	4.45	6.09	7.23	9.03	11.05	11.97	12.48	13.07	14.75	14.92	15.21
2012	2,548	2.59	4.71	5.85	7.85	10.13	11.34	12.09	12.76	14.48	14.64	14.91
2013	2,772	2.24	3.54	6.10	8.91	10.39	11.15	11.83	13.64	13.89	14.29
2014	3,122	1.44	4.10	7.24	9.03	10.09	10.99	13.10	13.36	13.87
2015	3,386	2.78	6.65	8.62	9.89	11.25	13.91	14.26	14.88
2016	3,374	4.24	6.34	7.85	9.25	12.24	12.77	13.43
2017	3,363	2.47	4.31	6.10	9.78	10.47	11.27
2018	3,428	2.07	4.26	8.58	9.51	10.68
2019	3,623	2.54	7.48	8.61	9.83
2020	3,592	5.51	6.90	8.30
2021	3,580	1.68	3.35
2022	3,704	1.92
Summary statistics
Marginal average		3.52	3.40	3.02	2.54	2.15	1.79	1.51	1.27	1.16	1.06	0.91	0.78	0.73	0.66	0.63
Cumulative average		3.52	6.79	9.61	11.91	13.80	15.34	16.62	17.68	18.63	19.50	20.23	20.85	21.43	21.95	22.44
Standard deviation		2.61	4.27	5.28	5.89	6.19	6.21	6.16	6.26	6.37	6.36	6.32	6.31	6.19	5.91	5.89
Median		3.00	6.65	8.78	11.28	13.84	17.13	18.67	20.24	22.76	24.02	25.86	26.82	27.59	29.21	30.21
Minimum		0.63	2.19	3.40	5.01	6.93	10.11	11.81	12.41	13.05	13.64	13.85	14.22	14.81	15.50	15.82
Maximum		11.05	18.12	22.48	26.53	29.86	31.13	31.92	32.65	33.07	34.34	36.34	36.71	36.83	36.95	37.13
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 33

Average multiyear global corporate transition matrix (1981-2022) (%)
	--One-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	87.09	9.05	0.52	0.05	0.10	0.03	0.05	0.00	3.10
	(7.19)	(7.21)	(0.82)	(0.24)	(0.27)	(0.17)	(0.34)	(0.00)	(2.43)
AA	0.47	87.42	7.64	0.46	0.05	0.06	0.02	0.02	3.87
	(0.53)	(5.20)	(4.19)	(0.67)	(0.19)	(0.20)	(0.06)	(0.07)	(1.76)
A	0.02	1.54	88.96	4.86	0.25	0.10	0.01	0.05	4.21
	(0.08)	(1.05)	(3.88)	(2.16)	(0.37)	(0.23)	(0.06)	(0.10)	(1.68)
BBB	0.00	0.08	3.13	86.95	3.38	0.40	0.09	0.14	5.83
	(0.03)	(0.14)	(1.60)	(4.00)	(1.62)	(0.63)	(0.20)	(0.24)	(1.50)
BB	0.01	0.02	0.10	4.49	78.30	6.50	0.53	0.59	9.47
	(0.05)	(0.08)	(0.23)	(1.95)	(4.51)	(3.13)	(0.68)	(0.79)	(2.12)
B	0.00	0.02	0.06	0.15	4.50	74.82	4.81	3.07	12.58
	(0.00)	(0.07)	(0.18)	(0.20)	(2.09)	(3.81)	(2.68)	(2.97)	(2.21)
CCC/C	0.00	0.00	0.08	0.15	0.46	13.72	44.74	25.70	15.16
	(0.00)	(0.00)	(0.37)	(0.57)	(0.83)	(7.44)	(8.71)	(11.97)	(4.67)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 34

Average multiyear global corporate transition matrix (1981-2022) (%)
	--Two-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	75.78	16.15	1.42	0.11	0.24	0.05	0.11	0.03	6.13
	(10.20)	(10.60)	(1.47)	(0.30)	(0.46)	(0.23)	(0.40)	(0.17)	(4.25)
AA	0.82	76.55	13.59	1.17	0.17	0.13	0.02	0.05	7.50
	(0.71)	(8.16)	(5.91)	(1.10)	(0.33)	(0.28)	(0.06)	(0.11)	(2.83)
A	0.03	2.74	79.28	8.53	0.64	0.23	0.04	0.12	8.38
	(0.07)	(1.74)	(6.13)	(2.86)	(0.76)	(0.39)	(0.10)	(0.19)	(2.72)
BBB	0.01	0.15	5.76	76.09	5.46	0.91	0.18	0.40	11.04
	(0.07)	(0.22)	(2.51)	(6.42)	(2.00)	(1.04)	(0.29)	(0.60)	(2.48)
BB	0.01	0.03	0.24	7.89	61.80	9.78	0.96	1.86	17.43
	(0.05)	(0.09)	(0.46)	(3.06)	(6.64)	(2.83)	(0.85)	(2.06)	(2.92)
B	0.00	0.02	0.11	0.34	7.45	56.14	5.76	7.28	22.90
	(0.00)	(0.10)	(0.27)	(0.41)	(3.26)	(4.71)	(2.40)	(5.40)	(3.62)
CCC/C	0.00	0.00	0.11	0.38	0.85	17.09	21.43	36.10	24.03
	(0.00)	(0.00)	(0.42)	(1.04)	(1.08)	(7.38)	(7.78)	(13.30)	(6.37)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 35

Average multiyear global corporate transition matrix (1981-2022) (%)
	--Three-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	65.59	22.13	2.32	0.32	0.26	0.08	0.11	0.13	9.06
	(11.65)	(12.28)	(1.74)	(0.76)	(0.53)	(0.29)	(0.41)	(0.37)	(5.27)
AA	1.09	67.39	18.00	1.89	0.32	0.20	0.02	0.11	10.98
	(0.86)	(9.59)	(6.15)	(1.42)	(0.49)	(0.43)	(0.07)	(0.18)	(3.91)
A	0.05	3.58	71.17	11.04	1.06	0.37	0.08	0.21	12.45
	(0.09)	(2.20)	(7.44)	(2.90)	(1.01)	(0.56)	(0.13)	(0.27)	(3.51)
BBB	0.01	0.23	7.70	67.33	6.64	1.37	0.24	0.71	15.76
	(0.06)	(0.36)	(2.98)	(7.73)	(1.96)	(1.25)	(0.34)	(0.89)	(3.26)
BB	0.01	0.04	0.41	10.09	49.58	11.19	1.13	3.34	24.20
	(0.05)	(0.12)	(0.64)	(3.61)	(7.74)	(2.55)	(0.84)	(3.27)	(3.48)
B	0.00	0.02	0.15	0.60	8.80	42.62	5.41	11.25	31.15
	(0.04)	(0.10)	(0.38)	(0.72)	(3.63)	(5.05)	(2.08)	(6.66)	(4.53)
CCC/C	0.00	0.00	0.10	0.47	1.42	16.03	9.77	43.12	29.09
	(0.00)	(0.00)	(0.45)	(1.08)	(1.52)	(6.88)	(5.42)	(11.74)	(7.70)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 36

Average multiyear global corporate transition matrix (1981-2022) (%)
	--Five-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	49.59	28.82	4.74	0.79	0.34	0.16	0.08	0.34	15.14
	(11.86)	(13.42)	(2.74)	(1.53)	(0.54)	(0.40)	(0.27)	(0.59)	(6.63)
AA	1.35	52.81	23.94	3.34	0.52	0.34	0.04	0.30	17.37
	(0.99)	(9.75)	(5.20)	(1.87)	(0.63)	(0.58)	(0.10)	(0.38)	(4.63)
A	0.06	4.60	58.37	14.28	1.73	0.58	0.12	0.45	19.80
	(0.10)	(2.43)	(8.50)	(2.59)	(1.23)	(0.80)	(0.17)	(0.44)	(4.12)
BBB	0.02	0.36	10.00	54.54	7.38	1.87	0.32	1.51	23.99
	(0.06)	(0.50)	(2.88)	(8.35)	(1.57)	(1.41)	(0.37)	(1.42)	(4.34)
BB	0.01	0.06	0.82	12.05	34.13	11.05	1.13	6.28	34.47
	(0.05)	(0.16)	(0.93)	(3.16)	(7.77)	(1.94)	(0.86)	(4.82)	(3.78)
B	0.01	0.02	0.19	1.21	9.34	25.96	3.37	17.04	42.86
	(0.09)	(0.08)	(0.49)	(1.14)	(2.91)	(4.63)	(1.24)	(7.79)	(5.62)
CCC/C	0.00	0.00	0.08	0.64	2.46	12.10	2.63	46.81	35.27
	(0.00)	(0.00)	(0.42)	(1.55)	(1.92)	(4.58)	(3.23)	(11.06)	(8.24)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 37

Average multiyear global corporate transition matrix (1981-2022) (%)
	--Seven-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	38.02	32.75	6.76	1.46	0.35	0.19	0.11	0.51	19.86
	(10.96)	(13.95)	(3.06)	(1.91)	(0.55)	(0.42)	(0.31)	(0.74)	(6.97)
AA	1.40	41.91	27.23	4.47	0.68	0.34	0.03	0.49	23.44
	(0.98)	(8.28)	(4.30)	(1.91)	(0.62)	(0.50)	(0.08)	(0.53)	(4.60)
A	0.06	5.00	49.14	16.02	2.20	0.70	0.12	0.77	26.00
	(0.11)	(1.99)	(8.21)	(1.97)	(1.33)	(0.86)	(0.17)	(0.60)	(4.11)
BBB	0.02	0.48	10.88	45.79	7.27	2.05	0.32	2.33	30.86
	(0.10)	(0.55)	(2.59)	(7.78)	(0.87)	(1.18)	(0.31)	(1.76)	(4.52)
BB	0.00	0.07	1.15	12.42	25.18	9.90	0.93	9.09	41.25
	(0.00)	(0.16)	(1.02)	(3.04)	(6.95)	(1.96)	(0.63)	(5.59)	(3.44)
B	0.00	0.01	0.24	1.66	8.36	17.26	1.89	21.11	49.46
	(0.07)	(0.07)	(0.52)	(1.38)	(2.18)	(4.07)	(0.62)	(7.76)	(5.56)
CCC/C	0.00	0.00	0.19	0.89	3.16	7.34	2.17	48.18	38.07
	(0.00)	(0.00)	(0.53)	(1.83)	(2.05)	(3.63)	(2.50)	(10.69)	(8.63)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 38

Average multiyear global corporate transition matrix (1981-2022) (%)
	--10-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	24.95	34.97	9.24	2.75	0.16	0.19	0.05	0.70	26.98
	(9.10)	(14.35)	(3.26)	(2.28)	(0.33)	(0.46)	(0.22)	(0.76)	(7.05)
AA	1.14	29.83	29.18	6.40	0.87	0.38	0.02	0.73	31.45
	(0.83)	(6.15)	(3.54)	(2.01)	(0.73)	(0.35)	(0.08)	(0.61)	(3.88)
A	0.09	5.07	38.82	17.12	2.48	0.83	0.11	1.28	34.20
	(0.15)	(1.52)	(7.02)	(2.09)	(0.97)	(0.65)	(0.16)	(0.88)	(4.36)
BBB	0.01	0.58	11.30	36.59	6.61	2.06	0.25	3.53	39.07
	(0.08)	(0.61)	(2.78)	(7.15)	(1.08)	(1.07)	(0.21)	(2.30)	(4.37)
BB	0.01	0.07	1.57	11.64	17.33	8.05	0.64	12.76	47.92
	(0.06)	(0.12)	(0.99)	(2.63)	(5.27)	(2.03)	(0.35)	(6.46)	(2.66)
B	0.00	0.02	0.29	2.22	7.14	10.09	1.06	25.53	53.65
	(0.00)	(0.06)	(0.55)	(1.55)	(1.71)	(2.98)	(0.58)	(8.49)	(5.35)
CCC/C	0.00	0.00	0.12	0.73	3.78	3.86	0.46	50.83	40.22
	(0.00)	(0.00)	(0.49)	(0.86)	(2.30)	(2.88)	(0.66)	(10.97)	(8.80)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 39

Average multiyear global corporate transition matrix (1981-2022) (%)
	--15-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	12.12	33.33	14.03	2.74	0.55	0.38	0.03	0.95	35.87
	(6.65)	(11.59)	(3.44)	(1.04)	(0.44)	(0.57)	(0.16)	(0.78)	(4.54)
AA	0.77	17.60	28.40	8.75	1.03	0.54	0.03	1.14	41.74
	(0.78)	(3.32)	(3.58)	(2.10)	(0.80)	(0.46)	(0.09)	(0.52)	(3.05)
A	0.11	4.09	27.30	17.60	2.74	0.96	0.11	2.21	44.88
	(0.18)	(1.34)	(4.54)	(1.59)	(0.99)	(0.53)	(0.10)	(0.99)	(3.91)
BBB	0.00	0.64	10.12	26.51	5.37	1.93	0.20	5.72	49.52
	(0.00)	(0.45)	(2.94)	(4.35)	(0.69)	(1.05)	(0.19)	(2.59)	(2.90)
BB	0.00	0.13	1.88	9.50	10.42	5.39	0.45	17.92	54.31
	(0.00)	(0.17)	(0.98)	(2.25)	(3.16)	(1.55)	(0.30)	(5.96)	(2.83)
B	0.00	0.06	0.48	2.52	4.11	4.73	0.52	31.77	55.80
	(0.00)	(0.08)	(0.41)	(1.39)	(1.07)	(1.44)	(0.33)	(8.17)	(6.33)
CCC/C	0.00	0.00	0.51	0.97	2.56	1.60	0.17	53.16	41.03
	(0.00)	(0.00)	(1.25)	(1.18)	(2.21)	(1.23)	(0.69)	(11.52)	(10.65)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 40

Average multiyear global corporate transition matrix (1981-2022) (%)
	--20-year transition rates--
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	4.95	28.42	17.43	3.63	0.79	0.69	0.03	1.22	42.84
	(3.41)	(8.53)	(4.53)	(1.44)	(0.49)	(0.70)	(0.15)	(0.89)	(5.06)
AA	0.54	10.43	24.74	10.72	1.23	0.66	0.05	1.56	50.07
	(0.63)	(2.57)	(4.07)	(2.37)	(0.63)	(0.52)	(0.13)	(0.92)	(2.24)
A	0.10	2.58	20.32	16.30	2.77	1.16	0.17	3.46	53.13
	(0.17)	(0.92)	(3.41)	(1.66)	(0.82)	(0.72)	(0.14)	(1.36)	(3.16)
BBB	0.00	0.65	7.74	20.01	4.43	1.61	0.13	8.51	56.92
	(0.00)	(0.28)	(1.45)	(2.54)	(0.76)	(0.71)	(0.18)	(2.20)	(2.36)
BB	0.00	0.17	1.66	7.33	6.16	3.87	0.38	23.44	56.98
	(0.00)	(0.21)	(0.46)	(1.47)	(2.18)	(1.00)	(0.37)	(4.75)	(3.47)
B	0.00	0.12	0.46	2.28	2.55	2.62	0.23	37.72	54.02
	(0.00)	(0.15)	(0.25)	(1.09)	(0.80)	(0.96)	(0.23)	(6.69)	(5.58)
CCC/C	0.00	0.00	0.25	1.18	1.93	0.50	0.08	58.45	37.59
	(0.00)	(0.00)	(0.71)	(1.09)	(2.50)	(0.69)	(0.21)	(7.86)	(8.59)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 41

Average multiyear global corporate transition matrices--all financials (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	87.10	9.49	0.34	0.08	0.08	0.04	0.08	0.00	2.78
	(10.09)	(9.83)	(0.98)	(0.37)	(0.38)	(0.24)	(0.48)	(0.00)	(2.62)
AA	0.43	87.72	7.60	0.32	0.02	0.02	0.03	0.03	3.83
	(0.56)	(6.30)	(5.55)	(0.62)	(0.08)	(0.07)	(0.15)	(0.11)	(1.85)
A	0.02	1.96	89.64	3.38	0.17	0.05	0.01	0.07	4.70
	(0.12)	(1.69)	(4.31)	(2.54)	(0.44)	(0.14)	(0.04)	(0.17)	(2.00)
BBB	0.00	0.18	4.09	85.16	2.98	0.34	0.10	0.21	6.94
	(0.00)	(0.49)	(2.87)	(4.96)	(2.38)	(0.75)	(0.25)	(0.49)	(1.94)
BB	0.00	0.07	0.15	5.50	77.62	4.67	0.59	0.59	10.81
	(0.00)	(0.25)	(0.64)	(4.04)	(7.30)	(3.12)	(1.51)	(1.16)	(4.71)
B	0.00	0.02	0.07	0.39	6.06	76.41	3.08	2.37	11.59
	(0.00)	(0.19)	(0.56)	(0.77)	(4.20)	(7.10)	(3.28)	(3.28)	(3.81)
CCC/C	0.00	0.00	0.00	0.00	1.15	16.35	46.54	17.12	18.85
	(0.00)	(0.00)	(0.00)	(0.00)	(3.83)	(11.95)	(19.35)	(16.28)	(11.51)
Three-year
AAA	65.00	23.96	1.61	0.34	0.21	0.08	0.17	0.21	8.41
	(16.47)	(16.61)	(2.21)	(1.13)	(0.57)	(0.34)	(0.59)	(0.55)	(5.96)
AA	1.02	68.18	17.76	1.53	0.16	0.14	0.03	0.17	11.01
	(1.01)	(11.38)	(8.41)	(1.61)	(0.32)	(0.34)	(0.09)	(0.28)	(4.12)
A	0.05	4.60	72.93	7.09	0.86	0.19	0.09	0.32	13.88
	(0.16)	(3.47)	(8.49)	(2.98)	(1.21)	(0.43)	(0.20)	(0.50)	(4.66)
BBB	0.00	0.48	10.03	63.81	4.90	0.85	0.26	0.95	18.72
	(0.00)	(1.06)	(5.84)	(8.78)	(2.71)	(0.97)	(0.60)	(1.33)	(4.45)
BB	0.00	0.10	0.63	12.37	48.32	7.61	0.78	2.35	27.84
	(0.00)	(0.35)	(1.42)	(6.57)	(10.97)	(3.67)	(1.42)	(3.60)	(6.72)
B	0.00	0.00	0.25	1.38	12.04	48.11	3.69	7.11	27.42
	(0.00)	(0.00)	(0.86)	(2.28)	(6.51)	(9.68)	(2.92)	(6.57)	(6.14)
CCC/C	0.00	0.00	0.21	0.42	1.47	25.58	9.85	25.79	36.69
	(0.00)	(0.00)	(3.28)	(2.65)	(3.62)	(14.98)	(9.90)	(16.94)	(15.38)
10-year
AAA	22.17	38.38	8.77	2.10	0.13	0.30	0.09	0.98	27.09
	(12.20)	(17.01)	(5.14)	(2.68)	(0.38)	(0.67)	(0.32)	(1.22)	(8.89)
AA	0.95	32.74	28.45	4.40	0.35	0.33	0.03	1.06	31.69
	(0.94)	(8.21)	(6.23)	(2.42)	(0.38)	(0.41)	(0.08)	(1.16)	(5.13)
A	0.11	6.96	41.68	9.05	1.66	0.45	0.11	1.48	38.49
	(0.34)	(3.08)	(7.60)	(2.61)	(1.24)	(0.43)	(0.22)	(1.20)	(5.61)
BBB	0.00	1.37	13.30	29.62	3.77	1.10	0.38	3.79	46.67
	(0.00)	(2.66)	(3.23)	(6.93)	(1.68)	(0.49)	(0.58)	(2.44)	(5.10)
BB	0.00	0.10	2.96	14.15	12.67	6.18	0.13	7.97	55.83
	(0.00)	(0.33)	(3.23)	(4.43)	(6.79)	(3.05)	(0.28)	(8.22)	(6.87)
B	0.00	0.00	1.02	5.07	9.06	14.95	1.13	14.80	53.97
	(0.00)	(0.00)	(2.31)	(5.06)	(4.09)	(6.98)	(2.12)	(9.55)	(9.60)
CCC/C	0.00	0.00	0.29	0.88	5.57	7.62	0.59	31.67	53.37
	(0.00)	(0.00)	(3.88)	(2.17)	(6.44)	(8.50)	(1.74)	(17.94)	(15.83)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 42

Average multiyear global corporate transition matrices--insurance (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	87.68	10.13	0.28	0.00	0.07	0.07	0.14	0.00	1.63
	(12.08)	(11.60)	(1.32)	(0.00)	(0.32)	(0.43)	(0.87)	(0.00)	(2.21)
AA	0.52	88.01	7.01	0.32	0.04	0.04	0.06	0.04	3.96
	(0.98)	(6.47)	(5.57)	(0.90)	(0.15)	(0.13)	(0.46)	(0.14)	(2.22)
A	0.01	2.14	90.72	2.61	0.16	0.06	0.01	0.09	4.20
	(0.06)	(2.25)	(4.60)	(2.49)	(0.48)	(0.23)	(0.06)	(0.24)	(1.83)
BBB	0.00	0.15	5.27	83.85	2.45	0.30	0.25	0.18	7.54
	(0.00)	(0.68)	(3.36)	(5.05)	(2.54)	(0.96)	(0.72)	(0.65)	(2.93)
BB	0.00	0.09	0.45	7.80	74.53	3.59	0.99	0.54	12.02
	(0.00)	(0.80)	(1.97)	(8.58)	(12.19)	(4.26)	(2.93)	(2.02)	(7.02)
B	0.00	0.12	0.25	0.62	5.80	76.20	1.85	1.73	13.44
	(0.00)	(0.98)	(2.26)	(2.52)	(7.41)	(11.60)	(3.75)	(4.37)	(6.31)
CCC/C	0.00	0.00	0.00	0.00	3.45	12.64	40.23	22.99	20.69
	(0.00)	(0.00)	(0.00)	(0.00)	(11.41)	(21.78)	(32.08)	(27.62)	(29.12)
Three-year
AAA	65.65	26.13	1.84	0.00	0.14	0.14	0.28	0.35	5.45
	(18.41)	(17.54)	(2.76)	(0.00)	(0.55)	(0.62)	(1.03)	(0.89)	(5.81)
AA	1.20	69.36	16.04	1.52	0.17	0.21	0.06	0.25	11.20
	(1.98)	(11.23)	(7.26)	(2.09)	(0.48)	(0.56)	(0.19)	(0.42)	(4.06)
A	0.05	4.84	75.95	5.01	0.57	0.11	0.10	0.39	12.97
	(0.15)	(4.61)	(9.26)	(3.19)	(1.19)	(0.60)	(0.23)	(0.89)	(4.11)
BBB	0.00	0.44	12.77	61.87	3.68	0.76	0.35	0.90	19.21
	(0.00)	(1.45)	(5.74)	(8.61)	(2.93)	(0.94)	(1.08)	(1.71)	(4.65)
BB	0.00	0.10	1.75	15.89	43.57	5.07	1.17	2.05	30.41
	(0.00)	(0.84)	(3.94)	(11.23)	(14.59)	(4.27)	(3.82)	(4.64)	(10.28)
B	0.00	0.00	1.28	2.57	11.13	46.22	1.28	5.71	31.81
	(0.00)	(0.00)	(4.49)	(6.84)	(10.34)	(12.19)	(2.22)	(7.82)	(11.13)
CCC/C	0.00	0.00	1.18	2.35	4.71	17.65	14.12	30.59	29.41
	(0.00)	(0.00)	(10.97)	(10.78)	(10.35)	(22.59)	(18.53)	(29.70)	(30.13)
10-year
AAA	22.66	41.36	9.56	1.63	0.14	0.50	0.14	1.63	22.38
	(14.45)	(16.27)	(6.81)	(2.67)	(0.48)	(1.17)	(0.54)	(1.81)	(10.69)
AA	1.17	35.24	26.90	3.38	0.52	0.52	0.05	1.61	30.62
	(1.70)	(8.43)	(6.34)	(2.50)	(0.71)	(0.73)	(0.15)	(1.23)	(5.05)
A	0.16	7.09	48.03	5.88	1.14	0.30	0.25	1.69	35.46
	(1.09)	(4.59)	(10.67)	(2.89)	(1.68)	(0.38)	(0.46)	(1.80)	(6.15)
BBB	0.00	1.45	18.26	30.69	1.85	0.56	0.16	2.98	44.05
	(0.00)	(3.80)	(5.76)	(4.41)	(2.16)	(0.38)	(0.61)	(4.13)	(3.96)
BB	0.00	0.43	4.86	15.88	10.73	3.72	0.00	9.73	54.65
	(0.00)	(1.38)	(6.69)	(7.25)	(6.43)	(3.38)	(0.00)	(14.45)	(17.01)
B	0.00	0.00	4.07	11.92	8.72	11.05	0.58	13.66	50.00
	(0.00)	(0.00)	(9.04)	(15.40)	(10.37)	(8.50)	(4.70)	(11.86)	(18.27)
CCC/C	0.00	0.00	1.27	0.00	8.86	0.00	0.00	40.51	49.37
	(0.00)	(0.00)	(11.42)	(0.00)	(15.66)	(0.00)	(0.00)	(31.37)	(27.74)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 43

Average multiyear global corporate transition matrices--financial institutions (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	86.25	8.54	0.42	0.21	0.10	0.00	0.00	0.00	4.48
	(13.37)	(12.85)	(1.29)	(0.93)	(0.79)	(0.00)	(0.00)	(0.00)	(4.46)
AA	0.34	87.41	8.22	0.32	0.00	0.00	0.00	0.02	3.70
	(0.62)	(7.58)	(7.02)	(0.70)	(0.00)	(0.00)	(0.00)	(0.10)	(2.30)
A	0.03	1.80	88.67	4.07	0.18	0.05	0.01	0.06	5.14
	(0.19)	(1.95)	(5.54)	(3.58)	(0.63)	(0.14)	(0.06)	(0.22)	(2.88)
BBB	0.00	0.20	3.55	85.76	3.22	0.36	0.03	0.22	6.67
	(0.00)	(0.62)	(3.22)	(5.92)	(3.05)	(0.96)	(0.19)	(0.65)	(2.25)
BB	0.00	0.07	0.07	4.90	78.42	4.95	0.49	0.60	10.50
	(0.00)	(0.27)	(0.60)	(3.96)	(7.38)	(3.84)	(1.41)	(1.27)	(5.37)
B	0.00	0.00	0.03	0.34	6.13	76.46	3.38	2.53	11.13
	(0.00)	(0.00)	(0.47)	(0.83)	(4.43)	(7.45)	(3.96)	(3.96)	(4.05)
CCC/C	0.00	0.00	0.00	0.00	0.69	17.09	47.81	15.94	18.48
	(0.00)	(0.00)	(0.00)	(0.00)	(3.49)	(12.38)	(19.83)	(15.21)	(11.42)
Three-year
AAA	64.05	20.75	1.26	0.84	0.31	0.00	0.00	0.00	12.79
	(19.04)	(19.26)	(2.99)	(2.12)	(1.03)	(0.00)	(0.00)	(0.00)	(7.64)
AA	0.83	66.94	19.55	1.55	0.15	0.07	0.00	0.09	10.81
	(0.93)	(13.29)	(10.38)	(1.95)	(0.51)	(0.36)	(0.00)	(0.24)	(5.05)
A	0.05	4.38	70.29	8.91	1.10	0.25	0.07	0.26	14.68
	(0.25)	(3.85)	(9.39)	(3.95)	(1.88)	(0.49)	(0.24)	(0.56)	(5.98)
BBB	0.00	0.50	8.73	64.73	5.47	0.89	0.22	0.98	18.48
	(0.00)	(1.13)	(6.41)	(9.90)	(3.95)	(1.30)	(0.72)	(1.76)	(5.39)
BB	0.00	0.10	0.34	11.44	49.57	8.29	0.67	2.43	27.16
	(0.00)	(0.44)	(1.12)	(6.39)	(11.13)	(4.21)	(1.56)	(3.92)	(7.80)
B	0.00	0.00	0.00	1.09	12.26	48.57	4.27	7.45	26.37
	(0.00)	(0.00)	(0.00)	(1.85)	(7.28)	(10.36)	(3.82)	(7.80)	(6.94)
CCC/C	0.00	0.00	0.00	0.00	0.77	27.30	8.93	24.74	38.27
	(0.00)	(0.00)	(0.00)	(0.00)	(3.66)	(15.79)	(11.97)	(16.35)	(16.64)
10-year
AAA	21.41	33.84	7.57	2.81	0.11	0.00	0.00	0.00	34.27
	(13.79)	(20.39)	(5.47)	(4.67)	(0.57)	(0.00)	(0.00)	(0.00)	(12.46)
AA	0.74	30.21	30.02	5.43	0.18	0.13	0.00	0.50	32.79
	(0.92)	(10.32)	(7.72)	(3.57)	(0.48)	(0.29)	(0.00)	(1.70)	(7.08)
A	0.07	6.87	36.91	11.44	2.05	0.56	0.01	1.32	40.77
	(0.22)	(3.66)	(6.88)	(5.16)	(2.12)	(0.62)	(0.07)	(1.33)	(6.52)
BBB	0.00	1.33	10.82	29.09	4.73	1.37	0.48	4.19	47.99
	(0.00)	(2.56)	(4.23)	(9.34)	(2.92)	(0.76)	(0.85)	(2.67)	(7.28)
BB	0.00	0.00	2.37	13.62	13.27	6.94	0.18	7.43	56.20
	(0.00)	(0.00)	(2.75)	(4.77)	(8.64)	(3.77)	(0.35)	(7.23)	(9.15)
B	0.00	0.00	0.37	3.60	9.14	15.79	1.24	15.04	54.82
	(0.00)	(0.00)	(1.35)	(3.58)	(4.52)	(7.66)	(1.99)	(11.90)	(9.79)
CCC/C	0.00	0.00	0.00	1.15	4.58	9.92	0.76	29.01	54.58
	(0.00)	(0.00)	(0.00)	(2.86)	(6.86)	(10.37)	(2.38)	(18.20)	(15.18)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Table 44

Average multiyear global corporate transition matrices (1981-2022 – Nonfinancials (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One-year
AAA	87.07	8.34	0.83	0.00	0.14	0.00	0.00	0.00	3.61
	(8.62)	(7.82)	(1.67)	(0.00)	(0.47)	(0.00)	(0.00)	(0.00)	(4.12)
AA	0.52	87.01	7.69	0.65	0.09	0.12	0.00	0.00	3.93
	(0.75)	(5.70)	(3.91)	(1.00)	(0.30)	(0.35)	(0.00)	(0.00)	(2.48)
A	0.03	1.15	88.34	6.20	0.32	0.15	0.02	0.03	3.77
	(0.09)	(1.21)	(4.26)	(2.47)	(0.48)	(0.35)	(0.08)	(0.08)	(2.17)
BBB	0.01	0.04	2.75	87.65	3.53	0.42	0.08	0.12	5.40
	(0.04)	(0.11)	(1.67)	(4.45)	(1.82)	(0.68)	(0.22)	(0.25)	(1.76)
BB	0.01	0.01	0.09	4.27	78.44	6.90	0.52	0.59	9.17
	(0.06)	(0.08)	(0.23)	(1.91)	(4.65)	(3.43)	(0.60)	(0.83)	(2.10)
B	0.00	0.02	0.06	0.12	4.31	74.64	5.01	3.15	12.69
	(0.00)	(0.08)	(0.19)	(0.20)	(2.07)	(3.75)	(2.88)	(3.08)	(2.38)
CCC/C	0.00	0.00	0.09	0.16	0.38	13.39	44.52	26.74	14.71
	(0.00)	(0.00)	(0.42)	(0.63)	(0.75)	(7.91)	(8.79)	(12.43)	(4.71)
Three-year
AAA	66.55	19.10	3.50	0.28	0.35	0.07	0.00	0.00	10.15
	(11.71)	(11.03)	(3.22)	(1.30)	(0.86)	(0.32)	(0.00)	(0.00)	(7.28)
AA	1.18	66.31	18.34	2.38	0.53	0.28	0.01	0.03	10.93
	(1.08)	(9.87)	(5.71)	(2.00)	(0.78)	(0.58)	(0.08)	(0.11)	(4.85)
A	0.05	2.68	69.60	14.53	1.24	0.53	0.07	0.11	11.18
	(0.10)	(2.43)	(7.17)	(3.58)	(1.14)	(0.76)	(0.15)	(0.19)	(3.99)
BBB	0.02	0.13	6.80	68.68	7.31	1.57	0.24	0.62	14.63
	(0.07)	(0.26)	(3.19)	(8.39)	(2.13)	(1.45)	(0.33)	(0.98)	(3.73)
BB	0.01	0.03	0.36	9.61	49.86	11.96	1.20	3.55	23.42
	(0.06)	(0.13)	(0.63)	(3.55)	(7.85)	(3.01)	(0.84)	(3.41)	(3.72)
B	0.00	0.02	0.14	0.51	8.43	41.98	5.61	11.73	31.58
	(0.05)	(0.11)	(0.39)	(0.68)	(3.57)	(4.78)	(2.25)	(6.85)	(4.89)
CCC/C	0.00	0.00	0.08	0.48	1.41	14.74	9.76	45.46	28.06
	(0.00)	(0.00)	(0.35)	(1.06)	(1.64)	(6.67)	(5.80)	(11.94)	(7.69)
10-year
AAA	29.72	29.14	10.03	3.88	0.22	0.00	0.00	0.22	26.79
	(9.41)	(11.02)	(4.59)	(3.60)	(0.60)	(0.00)	(0.00)	(0.54)	(9.47)
AA	1.38	26.18	30.09	8.91	1.52	0.44	0.02	0.33	31.14
	(1.06)	(8.19)	(4.00)	(3.88)	(1.17)	(0.52)	(0.10)	(0.52)	(5.55)
A	0.07	3.62	36.64	23.29	3.10	1.12	0.11	1.13	30.92
	(0.15)	(2.27)	(6.43)	(3.90)	(1.19)	(0.84)	(0.17)	(0.93)	(4.81)
BBB	0.02	0.30	10.58	39.06	7.62	2.40	0.21	3.44	36.37
	(0.10)	(0.30)	(3.69)	(8.25)	(1.34)	(1.41)	(0.21)	(2.50)	(5.26)
BB	0.01	0.06	1.31	11.18	18.21	8.40	0.74	13.66	46.44
	(0.07)	(0.14)	(0.94)	(3.22)	(5.49)	(2.35)	(0.39)	(6.52)	(3.13)
B	0.00	0.03	0.22	1.93	6.94	9.61	1.05	26.60	53.61
	(0.00)	(0.07)	(0.55)	(1.44)	(1.72)	(2.67)	(0.57)	(8.56)	(5.61)
CCC/C	0.00	0.00	0.09	0.71	3.51	3.29	0.44	53.73	38.23
	(0.00)	(0.00)	(0.34)	(0.94)	(2.41)	(2.55)	(0.67)	(11.03)	(9.04)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

Appendix II: Gini Methodology

We utilize the Lorenz curve, a graphical representation of the proportionality of a distribution, as one measure of ratings performance, and we summarize this via the Gini coefficient. For this study, the Lorenz curve is plotted with the x-axis showing the cumulative share of issuers, arranged by rating, while the y-axis represents the cumulative share of defaulters, also arranged by rating. For both axes of the Lorenz curve, the observations are ordered from the low end of the ratings scale ('CCC'/'C') to the high end ('AAA').

As an example, if 'CCC'/'C' rated entities made up 10% of the total population of issuers at the start of the time frame examined (x-axis) and 50% of the defaulters (y-axis), then the coordinate (10, 50) would be the first point on the curve. If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal. Its Gini coefficient--which is a summary statistic of the Lorenz curve--would thus be zero. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated entities, the curve would capture all of the area above the diagonal on the graph (the ideal curve), and its Gini coefficient would be 1 (see chart 31).

The procedure for calculating the Gini coefficients is illustrated in chart 31: Area B is bounded by the random curve and the Lorenz curve, while area A is bounded by the Lorenz curve and the ideal curve. The Gini coefficient is defined as area B divided by the total of area A plus area B. In other words, the Gini coefficient captures the extent to which actual ratings accuracy diverges from the random scenario and aspires to the ideal scenario.

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Credit Research & Insights:	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
	Jon Palmer, CFA, Austin 212 438 1989; jon.palmer@spglobal.com
Research Contributors:	Nivritti Mishra Richhariya, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai
	Nivedita Daiya, CRISIL Global Analytical Center, an S&P affiliate, Mumbai
	Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai