Key Takeaways
- With 13 defaults in April, the global default tally increased to 50 as of April 30, more than 75% higher than the same period in 2022 and 25% higher than the 10-year average.
- Eight different sectors contributed to the default tally in April, signaling broadening credit pressures.
- Latin America saw four defaults in April alone, and is responsible for all emerging market defaults so far this year.
- While the pace of monthly corporate defaults declined for the second month in a row, weakest links continue to rise, pointing to a potential future increase in global defaults.
S&P Global Ratings' 2023 global corporate default tally has reached 50 following 13 defaults in April:
- U.S.-based skin care company Rodan & Fields LLC
- Chilean-based coal-fired power generator Guacolda Energia S.A.
- U.S.-based quick service restaurants operator Burger BossCo Intermediate Inc.
- U.S.-based specialty retailer Bed Bath & Beyond Inc.
- U.S-based mobile gaming platform operator Skillz Inc.
- Luxembourg-incorporated residential real estate holding company Adler Group S.A.
- U.S.-based communication infrastructure and renewable energy services provider QualTek LLC
- Swiss-based pharmaceutical company Covis Finco S.a.r.l.
- U.S.-based manufacturer of generic pharmaceutics Lannett Co. Inc.
- Mexico-based petrochemicals producer Grupo Idesa S.A. de C.V.
- And three confidential issuers.
With 13 defaults in April, the year-to-date global default tally stands at 50, more than 75% above last year's tally and 25% higher than the 10-year average. (see chart 1). Despite the sharp rise so far this year, the number of defaults in April was lower than that of March by one, the second month-on-month decline in a row. However, the number of weakest links as of March 31 was up by 18 from the end of February, indicating increased future default pressure (see table 1).
Latin America Pushes Up Defaults In Emerging Markets
All eight emerging market defaults so far this year--four of which were in April alone--were in Latin America, versus only two Latin American defaults for the same period in 2022. The region's extremely tight financing conditions are exacerbating companies' funding costs and heightening credit stress for entities that already had precarious liquidity positions. (see "Risky Credits: Emerging Market Default Risk Centers On Latin America", April 28, 2023). We think the default risk in emerging markets remains high because weakest links (defined as issuers rated 'B-' and below with either negative outlooks or on CreditWatch with negative implications) increased to 38 from 28 during March. In addition, the negative bias among risky credits (defined as issuers in the 'CCC' rating category) surged to 80%.
Greater Number Of Sectors Contributed To Defaults In April
Defaults during April came from a wide number of sectors. Eight sectors contributed to the tally, with two each from health care, capital goods, media and entertainment, utilities, and retail/restaurants.
Distressed Exchanges Remain The Leading Reason For Default This Year
Five out of 13 defaults in April were due to distressed exchanges. This led to a total of 21 so far this year--42% of all defaults, and 2.6x higher than the same period in 2022 (eight defaults). The number of distressed exchanges has risen as distressed issuers view out-of-court restructuring more favorably than other options, such as a traditional bankruptcy.
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Table 1
Increase in weakest links indicates rising default pressure | ||||||
---|---|---|---|---|---|---|
Region | 12-month trailing speculative-grade default rate (%) | Weakest links | ||||
U.S. | *2.42 | 203 | ||||
Emerging markets | 1.9 | 38 | ||||
Europe | *2.70 | 47 | ||||
Other developed regions | 2.2 | 11 | ||||
Global | 2.4 | 299 | ||||
*Trailing 12-month speculative-grade default rates from April 30, 2023 are preliminary and subject to change. Year-to-date data as of April 30, 2023. Weakest link data is as of March 31, 2023. Other developed regions includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially-rated issuers. Sources: S&P Global Ratings Credit Research and S&P Global Market Intelligence's CreditPro®. |
Table 2
Global default tally through April 30 stands at 50 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Date | Parent company | Country/Market | Subsector | To | From | Reason | ||||||||
1/3/2023 |
Moran Foods LLC (SAL Acquisition Corp.) |
U.S. | Retail/restaurants | SD | CCC+ | Distressed exchange | ||||||||
1/16/2023 |
Americanas S.A. (Lojas Americanas S.A.) |
Brazil | Retail/restaurants | D | B | Missed principal and interest payments | ||||||||
1/19/2023 |
Party City Holdings Inc. (PC Nextco Holdings LLC) |
U.S. | Retail/restaurants | D | CCC | Bankruptcy | ||||||||
1/20/2023 |
Mexarrend S.A.P.I. de C.V. |
Mexico | Financial institutions | D | CC | Missed principal and interest payments | ||||||||
1/24/2023 |
Serta Simmons Bedding LLC |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
1/27/2023 |
Bed Bath & Beyond Inc.(A) |
U.S. | Retail/restaurants | D | CC | Missed principal and interest payments | ||||||||
1/30/2023 |
Cooper-Standard Holdings Inc. |
U.S. | Automotive | SD | CC | Distressed exchange | ||||||||
1/31/2023 |
Missouri TopCo Ltd. |
U.K. | Consumer products | SD | CCC- | Distressed exchange | ||||||||
2/3/2023 |
Oi S.A. |
Brazil | Telecommunications | D | CCC- | Missed principal and interest payments | ||||||||
2/9/2023 |
KNB Holdings Corp. |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
2/10/2023 |
Yak Access LLC |
U.S. | Capital goods | D | CCC | Distressed exchange | ||||||||
2/14/2023 |
K&N Parent Inc. |
U.S. | Automotive | D | CCC- | Distressed exchange | ||||||||
2/15/2023 |
99 cents only stores LLC |
U.S. | Retail/restaurants | SD | CCC+ | Missed payments | ||||||||
2/15/2023 |
Avaya Holdings Corp. |
U.S. | High technology | D | CC | Bankruptcy | ||||||||
2/15/2023 |
Diamond Sports Group LLC |
U.S. | Media and entertainment | D | CCC- | Missed interest payments | ||||||||
2/16/2023 | Confidential | Confidential | Media and entertainment | D | CC | Confidential | ||||||||
2/17/2023 |
AMC Entertainment Holdings Inc. |
U.S. | Media and entertainment | SD | CC | Distressed exchange | ||||||||
2/17/2023 |
Premier Brands Group Holdings LLC |
U.S. | Consumer products | SD | CCC | Distressed exchange | ||||||||
2/22/2023 |
Altisource Portfolio Solutions S.A. |
Luxembourg | Financial Institutions | SD | CC | Distressed exchange | ||||||||
2/22/2023 |
Foodco Bondco SAU |
Spain | Retail/restaurants | SD | CCC- | Missed interest payments | ||||||||
2/24/2023 |
Bausch Health Cos. Inc. |
Canada | Health care | SD | CCC+ | Distressed exchange | ||||||||
2/28/2023 |
Equinox Holdings Inc. |
U.S. | Media and entertainment | SD | CCC- | Distressed exchange | ||||||||
2/28/2023 |
Rising Tide Holdings Inc. |
U.S. | Retail/restaurants | SD | CC | Distressed exchange | ||||||||
3/1/2023 |
Akorn Operating Co. LLC |
U.S. | Health care | D | CCC+ | Bankruptcy | ||||||||
3/2/2023 |
Community Health Systems Inc. |
U.S. | Health care | SD | B- | Distressed exchange | ||||||||
3/6/2023 |
LendingTree Inc. |
U.S. | Media and entertainment | SD | B- | Distressed exchange | ||||||||
3/10/2023 |
Loyalty Ventures Inc. |
U.S. | Media and entertainment | D | CCC+ | Bankruptcy | ||||||||
3/10/2023 |
Silicon Valley Bank |
U.S. | Financial institutions | D | BBB | Regulatory | ||||||||
3/14/2023 |
Bioplan USA Inc. |
U.S. | Media and entertainment | D | CCC | Out-Of-Court Restructuring | ||||||||
3/14/2023 |
Gol Linhas Aereas Inteligentes S.A. |
Brazil | Transportation | SD | CC | Distressed exchange | ||||||||
3/14/2023 |
Technicolor Creative Studios |
France | Media and entertainment | D | CCC- | Missed interest payments | ||||||||
3/16/2023 |
Mallinckrodt PLC |
Ireland | Health care | SD | B- | Distressed exchange | ||||||||
3/17/2023 |
National CineMedia Inc. |
U.S. | Media and entertainment | D | CCC- | Missed interest payments | ||||||||
3/17/2023 |
SVB Financial Group |
U.S. | Financial institutions | D | NR | Regulatory | ||||||||
3/23/2023 |
Flint HoldCo S.a.r.l. |
Luxembourg | Chemicals, packaging, and environmental services | SD | CCC | Missed principal payments | ||||||||
3/31/2023 |
Toro Private Holdings I Ltd. |
U.K. | Transportation | SD | CCC+ | Distressed exchange | ||||||||
3/31/2023 |
Wahoo Fitness Acquisition LLC |
U.S. | Consumer products | D | CCC- | Missed principal and interest payments | ||||||||
4/6/2023 |
Lannett Co. Inc. |
U.S. | Health care | SD | CCC+ | Missed interest payments | ||||||||
4/6/2023 |
Rodan & Fields LLC |
U.S. | Consumer products | D | CCC- | Out-Of-Court Restructuring | ||||||||
4/6/2023 |
Covis Finco S.a.r.l. |
Switzerland | Health care | SD | CCC+ | Distressed exchange | ||||||||
4/6/2023 | Confidential | Confidential | Capital goods | D | CCC- | Confidential | ||||||||
4/10/2023 |
QualTek LLC |
U.S. | Capital goods | SD | CCC+ | Missed interest payments | ||||||||
4/10/2023 | Confidential | Confidential | Media and entertainment | D | CC | Confidential | ||||||||
4/12/2023 | Confidential | Confidential | Utilities | D | CCC- | Confidential | ||||||||
4/12/2023 |
Guacolda Energia S.A. |
Chile | Utilities | D | CC | Distressed exchange | ||||||||
4/17/2023 |
Adler Group S.A. (ADO Group Ltd.) |
Luxembourg | Homebuilders/real estate companies | SD | CC | Distressed exchange | ||||||||
4/19/2023 |
Skillz Inc. |
U.S. | Media and entertainment | SD | CCC+ | Distressed exchange | ||||||||
4/24/2023 |
Bed Bath & Beyond Inc.(B) |
U.S. | Retail/restaurants | D | CCC- | Bankruptcy | ||||||||
4/27/2023 |
Burger BossCo Intermediate Inc. |
U.S. | Retail/restaurants | D | CCC- | Missed principal and interest payments | ||||||||
4/27/2023 |
Grupo Idesa S.A. de C.V. |
Mexico | Chemicals, packaging, and environmental services | SD | CC | Distressed exchange | ||||||||
Data as of April 30, 2023. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®. |
Related Research
- Grupo Idesa Credit Rating Lowered To ‘SD’ And Debt Rating To ‘D’ From ‘CC’ On Distressed Exchange Completion, April 28, 2023
- Burger BossCo Downgraded To ’D’ From ‘CCC-‘ On Maturity And Expected Recapitalization; Debt Ratings Lowered To ’D’, April 27, 2023
- Bed Bath & Beyond Inc. Downgraded To ’D’ From ‘CCC-‘ On Chapter 11 Bankruptcy Filing, April 25, 2023
- Skillz Inc. Downgraded To ‘SD’ From ‘CCC+’ Following Distressed Exchange, April 20, 2023
- Adler Group And Adler RE Downgraded To 'SD' On Approved Debt Restructuring, April 17, 2023
- Guacolda Energia S.A. Downgraded To ’D’ From ‘CC’ Following Tender Offer Completion, April 12, 2023
- QualTek LLC Downgraded To ‘SD’ Following Missed Interest Payment; Term Loan Rating Lowered To ‘D’, April 10, 2023
- Covis Finco S.a.r.l. Downgraded To ‘SD’ On Distressed Debt Restructuring, April 6, 2023
- Lannett Co. Inc. Downgraded To 'SD' From 'CCC+' On Failure To Make Interest Payment, Senior Secured Debt Rating Lowered, April 6, 2023
- Rodan & Fields LLC Ratings Lowered To ‘D’ From ‘CCC-‘ On Recapitalization Agreements, April 6, 2023
Default Studies
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (financial and nonfinancial)
- 2021 Annual Global Financial Services Default And Rating Transition Study
- 2022 Annual Global Corporate Default And Rating Transition Study
- 2021 Annual U.S. Corporate Default And Rating Transition Study
- 2021 Annual European Corporate Default And Rating Transition Study
- 2022 Annual Japanese Corporate Default And Rating Transition Study
- 2021 Annual Asia Corporate Default And Rating Transition Study
- 2022 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2021 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study
- 2021 Annual Greater China Corporate Default And Rating Transition Study
Structured finance
- 2022 Annual Global Structured Finance Default And Rating Transition Study
- 2022 Annual Japanese Structured Finance Default And Rating Transition Study
- 2021 Annual European Structured Finance Default And Rating Transition Study
- 2022 Annual Taiwan Ratings Corp. Structured Finance Default And Rating Transition Study
- 2021 Annual Mexican Structured Finance Default And Rating Transition Study
- 2021 Annual Global Leveraged Loan CLO Default And Rating Transition Study
Public finance
- 2022 Annual U.S. Public Finance Default And Rating Transition Study
- 2021 Annual International Public Finance Default And Rating Transition Study
- 2021 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
Sovereign and international public finance
This report does not constitute a rating action.
Credit Research & Insights: | Sarah Limbach, Paris + 33 14 420 6708; Sarah.Limbach@spglobal.com |
Nicole Serino, New York + 1 (212) 438 1396; nicole.serino@spglobal.com | |
Patrick Drury Byrne, Dublin (00353) 1 568 0605; patrick.drurybyrne@spglobal.com | |
Research Contributor: | Vaishali Singh, Pune; vaishali.singh2@spglobal.com |
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