U.S. Defaults Remained Extremely Low In 2022 Amid A Robust Economy

Defaults increased in 2022 to 32, from 29 in the previous year, but are still exceptionally low as the U.S. economy remained strong despite 40-year high inflation and a rising interest rate. By sector, consumer services led defaults with 10. Consumers' budget-conscious behavior, price inflation, and supply chain constraints are affecting some lower-rated issuers in the sector.

Downgrades increased in 2022 from the previous year, but overall upgrades outpaced downgrades for the year. While credit quality continued to improve, our rated corporate issuers overall remain weaker than prior to the 2020 recession, with 21% rated 'B-' and lower as of December 2022. A high proportion of weaker-rated speculative-grade issuers could contribute to more defaults in an economic downturn. However, this may depend on prevailing financial conditions.

The U.S. speculative-grade default rate rose slightly to 1.65% from 1.54% in the previous year. This is the fifth-lowest speculative-grade default rate in the 42 years covered in this study (see chart 1 and table 1).

Table 1

U.S. corporate default summary
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)	Total debt defaulting (bil. $)
2001	172	6	133	4.55	0.34	10.55	100.91
2002	134	10	82	3.18	0.57	7.25	188.14
2003	89	0	65	2.32	0.00	5.60	42.68
2004	45	1	29	1.08	0.06	2.44	18.68
2005	33	1	26	0.95	0.06	2.02	42.04
2006	22	0	19	0.65	0.00	1.37	6.97
2007	18	0	15	0.50	0.00	1.02	7.02
2008	95	11	66	2.56	0.75	4.30	334.34
2009	195	5	166	6.01	0.35	11.81	516.08
2010	58	0	45	1.69	0.00	3.47	79.45
2011	39	1	30	1.12	0.07	2.16	74.30
2012	46	0	39	1.37	0.00	2.66	39.00
2013	45	0	34	1.16	0.00	2.19	64.85
2014	33	0	27	0.87	0.00	1.61	81.98
2015	66	0	52	1.58	0.00	2.86	85.90
2016	106	0	92	2.84	0.00	5.20	166.77
2017	64	0	54	1.69	0.00	3.08	70.70
2018	47	0	43	1.34	0.00	2.41	101.55
2019	78	2	59	1.83	0.14	3.10	147.88
2020	146	0	124	3.79	0.00	6.64	222.84
2021	40	0	29	0.89	0.00	1.54	52.68
2022	36	0	32	0.96	0.00	1.65	56.91
*Total defaults column includes companies that were no longer rated at the time of default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

For the purposes of this study, we consider issuers that reemerge from default--including after a distressed exchange, according to our criteria--to be new entities and consider the ratings on these entities to be initial ratings. We make our best effort to capture these defaults in the database, and we include them in the annual default rate calculations if the entity was rated by Jan. 1 of the year it defaulted. However, if S&P Global Ratings withdrew the rating before Jan. 1 of the year the issuer defaulted, we do not include the issuer in the default rate calculation for that year.

Of the 36 total U.S. corporate defaulters in 2022, 32 had active ratings at the start of the year and four were not rated when the year began. Two of these four issuers followed prior defaults earlier in 2022, after these issuers received new initial ratings following an earlier default (see table 2).

Our study of corporate defaults in the U.S. region (which includes the tax havens Bermuda and the Cayman Islands) identified a clear correlation between low ratings and the probability of default. The one-year Gini ratio held largely stable, even as it increased slightly to 84.7% in 2022 from 83.3% in 2021. It remained higher than the 80.3% long-term weighted average one-year Gini ratio for U.S. corporate ratings going back to 1981.

The Gini ratio is a measure of the rank-ordering power of ratings over a given time horizon. High Gini scores reflect a high proportion of the lowest-rated issuers among defaulters in a given period. Around 69% of rated defaulters in the U.S. were rated 'CCC+' or lower at the beginning of the year.

This study includes industrials, utilities, financial institutions (including banks, brokerages, asset managers, and other financial entities), and insurance companies from the U.S. region. We calculated default and transition rates based on the number of issuers in the sample period. The weighted average default rates in this study use the number of issuers at the beginning of each year as the basis for each year's weight (see Appendix 1 for terms and definitions). The data we present in this study, unless labeled otherwise, refers to only public and confidential issuer credit ratings on nonfinancial and financial issuers and excludes credit estimates.

Table 2

2022 U.S. region publicly rated corporate defaults
Company name	Reason for default	Industry	Debt amount (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	Energy and natural resources	116.19	1/4/2022	-	-	CCC	6/2/2021
Fusion Connect Inc.	Distressed exchange	Telecommunications	340.00	1/24/2022	CCC+		CCC+	2/12/2020
TPC Group Inc. (TPC Group LLC)	Missed interest	Health care/chemicals	1,083.00	2/1/2022	CCC	B-	B+	4/20/2006
U.S. TelePacific Holdings Corp.	Distressed exchange	Telecommunications	680.00	2/17/2022	B-	B	B-	7/14/2006
Diamond Sports Group LLC (Sinclair Broadcast Group Inc.)	Distressed exchange	Leisure time/media	1,825.00	3/15/2022	CCC+	-	BB-	7/9/2019
Ruby Pipeline LLC	Missed principal	Energy and natural resources	825.00	4/1/2022	B-	BBB-	BBB-	2/10/2012
PSS Industrial Group Corp.	Missed principal/interest	Consumer/service sector	350.00	4/7/2022	CCC+	B-	B	1/9/2014
Dunn Paper Holdings Inc.	Missed interest	Aerospace/automotive/capital goods/metal	380.00	4/12/2022	B-	B	B	9/1/2016
Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) (A)	Distressed exchange	Health care/chemicals	7,369.81	5/3/2022	CCC	-	CCC	5/4/2020
Talen Energy Supply LLC (Talen Energy Corp.)	Chapter 11	Utility	9,026.77	5/10/2022	B	B+	BBB	10/15/2001
Revlon Inc.	Chapter 11	Consumer/service sector	2,750.00	6/16/2022	CCC-	-	CCC-	12/8/2020
Rite Aid Corp.(A)	Distressed exchange	Consumer/service sector	3,244.00	6/30/2022	CCC+	-	CCC+	10/22/2019
SK HoldCo LLC	Distressed exchange	Aerospace/automotive/capital goods/metal	1,241.00	7/14/2022	CCC+	B-	B	9/9/2014
Output Services Group Inc.	Chapter 11	Consumer/service sector	-	8/9/2022	CCC	B-	B	3/2/2018
Dawn Acquisitions LLC (Infra Colodata Holdings LLC)	Distressed exchange	Telecommunications	600.00	8/11/2022	CCC	B	B	10/11/2018
GEO Group (The) Inc.	Chapter 11	Consumer/service sector	4,485.60	8/19/2022	CCC+	BB-	BB-	11/18/2002
Carestream Health Inc.	Chapter 11	Health care/chemicals	1,066.04	8/23/2022	B-	B	B+	3/7/2007
Envision Healthcare Corp. (Envision Healthcare Holdings Inc.) (B)	Distressed exchange	Health care/chemicals	7,369.81	8/30/2022	-	-	CCC	5/16/2022
Phoenix Services International LLC	Chapter 11	Energy and natural resources	530.00	9/28/2022	B	B	B+	2/10/2012
Isagenix Worldwide Inc.	Missed principal/interest	Consumer/service sector	405.00	9/30/2022	B-	-	B-	4/30/2021
K&N Parent Inc.	Distressed exchange	Aerospace/automotive/capital goods/metal	-	10/13/2022	CCC	B-	B	10/4/2016
Fly Leasing Ltd§	Distressed exchange	Transportation	-	10/19/2022	BB-	BB	BB	7/19/2012
Vericast Corp.	Distressed exchange	Leisure time/media	2,781.47	11/7/2022	CCC+	CCC+	B+	11/15/2005
Bed Bath & Beyond Inc.	Distressed exchange	Consumer/service sector	1,500.00	11/14/2022	B+	BB	BBB-	4/13/1999
Neovia Logistics L.P.	Distressed exchange	Transportation	325.00	11/18/2022	CCC+	CCC+	CCC+	4/24/2017
Rite Aid Corp.(B)	Distressed exchange	Consumer/service sector	3,019.00	12/6/2022	-	-	CCC+	7/1/2022
Mongolian Mining Corp.†	Distressed exchange	Energy and natural resources	-	12/12/2022	B-	B-	B-	12/12/2017
BW Homecare Holdings LLC	Distressed exchange	Health care/chemicals	-	12/22/2022	CCC	-	CCC	4/9/2020
Diebold Nixdorf Inc.	Distressed exchange	High tech/computers/office equipment	2,920.35	12/30/2022	B-	B-	A	12/31/1980
*This total does not match table 1 because it excludes confidentially rated defaults. §Bermuda-based issuer. †Cayman Islands-based issuer. (B) & (C) Initial ratings for these companies are those immediately following a prior default in 2022. Initial ratings, or those as of Dec. 31, 1980. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Distressed Exchanges Led Defaults

Distressed exchanges, as defined under our criteria, were the most common reason for default in 2022, with 22, and accounted for the highest share of affected debt, at 63%. By sector, consumer services (four), aerospace/automotive/capital goods/metal, telecommunications (three), and health care/chemicals (three) had the most distressed exchanges. For more information on how we treat distressed exchanges, please see our default definitions in Appendix 1.

Globally, selective defaults accounted for nearly two-thirds of defaults last year. Since 2013, selective defaults have accounted for about one-third or more of annual defaults as distressed exchanges have become more common.

Missed principal and interest payments and Chapter 11 bankruptcy were the second most-common cause of default in 2022, with seven defaulters each. The consumer services sector had the most defaults due to missed principal and interest payments and Chapter 11, with three each.

The largest default of the year in the U.S. was Talen Energy Supply LLC, an independent power producer that defaulted on May 10, 2022, after filing for Chapter 11 Bankruptcy. Therefore, S&P Global Ratings lowered its long-term issuer credit rating on the company, as well as its issue-level ratings on the debt, to 'D' from 'CCC'. Talen has secured $1.76 billion of debtor-in-possession financing, consisting of a $1.0 billion term loan, a $300 million revolving credit facility, and a $458 million letter of credit facility.

The U.S. Accounts For Most Of The World's Speculative-Grade Issuers

Speculative-grade issuers have grown as a share of rated U.S. corporate issuers in recent years as investors have shown willingness to accept higher credit risk for additional yield. The proportion ended the year at 56%, below the all-time high (59% in September 2021) and up nearly 11 percentage points since 2004.

Newly assigned ratings have contributed to most of this growth. Since 1980, 67% of new ratings annually have been speculative grade, on average, and this proportion has been rising. Since 2009, speculative-grade ratings have accounted for 86% of new ratings annually on average. In 2022, 154 corporate issuers were assigned new ratings in the U.S., and 84% of these were speculative grade.

The U.S. accounts for nearly half of all global corporate issuer ratings. It also accounts for most global speculative-grade corporate issuers (see chart 2). Globally, there were 3,512 speculative-grade issuers at the end of 2022, with 52% of these based in the U.S. Furthermore, the U.S. accounts for 64% of issuers rated 'B- 'or lower globally.

As a result, the U.S. typically experiences a higher number of rated corporate defaults annually than other regions. In 2022, 43% of global defaults were from issuers based in the U.S, slightly down from 56% in 2021.

In 2022, for the second time in the 42-year history of this study, there were more annual speculative-grade defaults globally outside of the U.S. than there were in the U.S. This led to a lower speculative-grade default rate in the U.S. than globally, which last occurred in 2013. Since 1992, the global speculative-grade default rate has been greater than the U.S. speculative-grade default rate in only seven calendar years (see chart 3).

No investment-grade issuers defaulted in the U.S. in 2022, and most defaults came from issuers rated in the lowest rating categories. The preponderance of defaults from the lowest rating categories supports the view that ratings are effective indicators of relative credit risk. All speculative-grade rating categories' default rates were well below long-term averages (see table 3).

Table 3

One-year U.S. 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	0.71	0.00	0.00	2.86	7.14	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	1.39	2.27	0.00	1.64	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	1.46	0.00	0.00	1.72	1.56	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	1.72	1.56	1.43	2.65	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	1.85	1.23	1.18	4.79	12.16	17.50	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	0.85	1.35	6.02	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	2.05	4.55	10.00	20.37
1989	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.91	0.83	0.00	0.00	0.00	2.04	0.44	7.86	5.00	31.37
1990	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.77	0.00	1.11	1.45	3.06	4.50	4.95	12.38	22.58	31.82
1991	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.84	0.77	0.00	3.85	1.12	1.05	8.72	16.88	31.43	32.76
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	0.73	15.87	21.74	31.37
1993	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.98	0.00	1.31	4.26	4.55	14.29
1994	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.90	0.00	1.87	6.94	3.33	17.39
1995	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.74	0.00	1.69	1.25	2.90	7.29	7.89	30.43
1996	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.63	2.51	3.88	4.17	8.70
1997	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.48	0.00	0.00	0.00	0.00	0.47	0.80	5.74	15.91	8.33
1998	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.36	0.00	0.00	0.71	0.46	1.67	6.72	8.20	42.86
1999	0.00	0.00	0.00	0.65	0.00	0.38	0.43	0.00	0.38	0.46	0.85	1.31	0.81	4.04	9.09	15.38	37.50
2000	0.00	0.00	0.00	0.00	0.00	0.38	0.93	0.00	0.38	0.92	0.00	1.26	2.92	6.61	10.31	14.67	42.19
2001	0.00	0.00	0.00	0.00	0.93	0.00	0.00	0.40	0.72	0.45	0.81	1.32	4.24	4.88	18.03	27.55	50.62
2002	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.20	1.03	1.75	1.75	1.17	4.06	2.30	6.96	19.28	34.62
2003	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.91	1.63	0.40	1.03	5.41	13.89	36.11
2004	0.00	0.00	0.00	0.00	0.00	0.44	0.00	0.00	0.00	0.00	0.00	1.18	0.40	0.00	3.45	3.80	20.48
2005	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.31	0.00	0.80	0.00	0.40	1.09	3.35	4.85	11.11
2006	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.86	0.00	0.41	0.52	0.74	0.93	16.22
2007	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.53	0.39	0.00	0.00	0.69	16.90
2008	0.00	0.00	1.16	0.99	0.82	0.48	1.02	0.46	0.78	0.95	2.59	0.62	0.80	3.19	3.25	8.02	31.43
2009	0.00	0.00	0.00	0.00	0.00	0.49	0.00	0.50	0.38	0.88	0.00	1.41	0.92	5.40	10.33	20.81	50.35
2010	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	1.03	3.30	23.23
2011	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.41	0.00	0.00	0.00	0.70	0.77	6.06	17.05
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	0.00	0.33	1.42	1.90	30.85
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	0.00	0.62	0.61	2.23	29.41
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	0.00	0.00	2.87	26.25
2015	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.43	0.70	1.95	5.88	30.99
2016	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.43	1.09	2.34	10.37	41.96
2017	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.62	0.00	0.42	0.52	3.40	27.89
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	0.36	1.37	29.37
2019	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.97	0.00	0.00	0.00	0.39	0.68	3.13	32.09
2020	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.68	0.00	2.96	2.13	1.93	6.57	48.70
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	0.90	0.47	0.21	8.76
2022	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.51	0.41	0.21	1.38	12.79
Average	0.00	0.00	0.03	0.04	0.04	0.06	0.08	0.13	0.21	0.24	0.49	0.66	1.13	1.88	5.38	8.76	25.72
Median	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.49	1.17	3.73	6.31	27.07
Standard deviation	0.00	0.00	0.18	0.18	0.19	0.15	0.25	0.30	0.37	0.45	0.89	0.84	1.54	1.99	4.95	7.78	12.44
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	1.16	0.99	0.93	0.49	1.02	1.20	1.46	1.75	3.85	3.06	7.14	8.72	18.03	31.43	50.62
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Corporate Ratings Follow A Gradual Path To Default

As an issuer's credit quality weakens and it moves toward default, the ratings reflect that. When we look at the path to default for U.S. corporate issuers since 1981, we see that the median rating for an issuer five years prior to default was 'B+' (for all defaulters since 1981). The median U.S. corporate rating falls to:

• 'B' 28 months prior to default,
• 'B-' eight months prior to default, and
• 'CCC+' three months prior to default (see chart 4).

U.S. corporate issuers that have defaulted within the past 12 quarters have shown lower median ratings along the path to default. These issuers had a median rating of 'B' five years prior to default. This median rating drops to:

• 'B-' 24 months prior to default,
• 'CCC+' 10 months prior to default, and
• 'CCC' three months prior to default.

The number of issuer defaults over the trailing 12 quarters is considerably smaller (222) than the full pool from 1981 to 2022 (2,350).

The median path to default for nonfinancial issuers is similar to the total sample, given most defaults in this study are from nonfinancial issuers (see chart 5). Nonfinancial issuers have historically had a smoother, more gradual path to default than financial issuers, albeit with a much larger sample. There were 2,178 nonfinancial issuer defaults from 1981 to 2022, while the total from the most recent 12-quarter period is 220.

By comparison, financial services defaults are less frequent, yet some of these issuers have historically experienced relatively swift transitions to default. Financial services companies are typically more confidence-sensitive than nonfinancial companies, and the loss of confidence from stakeholders (such as counterparties or funding sources) can contribute to a rapid decline in liquidity and credit quality. This was evident during the global financial crisis, when many highly rated financial services issuers defaulted within a short time.

Since 1981, the median rating for financial services issuers was 'BBB-' five years prior to default, notably higher than the 'B+' median rating for a nonfinancial corporate issuer five years prior to default. Financial entities that defaulted over the past 12 quarters (from 2020 to 2022) experienced a much more gradual path to default from a lower rating level. These issuers displayed a median rating of 'B+'/'B' five years prior to default, which is in line with the median rating for a nonfinancial corporate issuer that defaulted over the same period. Notably, for financial services entities, these median ratings are based on a much smaller sample of just 172 issuer defaults (for the period from 1981 to 2022).

Defaults By Industry

For the sixth consecutive year, the consumer/service industries led the default tally. Issuers in consumer services (10), health care/chemicals (five), aerospace/automotive/capital goods/metal (four), energy and natural resources (four), and telecommunications (three) accounted for 72% of defaults during the year. The industries with the highest default rates were telecommunications (4.00%), transportation (2.67%), consumer services (1.79%), and energy and natural resources (1.69%).

Seven nonfinancial industries had higher default rates in 2022 than in 2021, and two--telecommunications and transportation--had default rates above their long-term averages (see table 4).

Both financial institutions and insurance had no defaults last year.

Table 4

Annual U.S corporate default rates by industry (%)
Year	Aerospace / automotive / capital goods / metal	Consumer / service sector	Energy and natural resources	Financial Institutions	Forest and building products / homebuilders	Health care / chemicals	High technology / computers / office equipment
1981	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1982	1.32	1.69	0.85	1.16	2.86	0.00	1.52
1983	0.93	1.28	2.68	0.00	0.00	0.00	0.00
1984	0.00	0.43	5.79	0.00	1.49	0.00	3.17
1985	1.27	1.61	5.17	0.00	0.00	2.47	0.00
1986	4.28	0.36	10.53	0.00	1.35	2.17	3.85
1987	1.87	1.36	4.72	0.00	1.16	0.93	0.00
1988	1.20	1.96	2.04	2.03	1.09	3.54	0.00
1989	2.51	1.28	0.00	2.76	0.00	0.96	1.08
1990	2.14	4.98	0.00	1.53	8.60	0.00	4.88
1991	2.40	6.74	3.53	2.70	8.75	1.98	1.52
1992	1.98	3.08	1.18	2.81	1.47	0.00	4.76
1993	1.95	1.09	2.08	0.40	0.00	0.00	1.59
1994	0.47	1.34	0.96	0.00	1.12	0.67	1.47
1995	0.00	4.14	0.88	0.62	3.13	1.23	1.33
1996	1.23	1.90	0.83	0.00	0.00	0.00	0.00
1997	1.15	2.99	0.00	0.29	0.00	0.56	1.25
1998	0.71	3.58	1.32	0.85	0.89	2.06	0.00
1999	2.61	3.27	6.94	0.32	1.63	3.43	1.60
2000	4.76	6.45	0.64	0.32	4.84	4.93	5.56
2001	10.69	7.24	2.52	1.90	4.46	4.98	5.47
2002	6.45	3.75	2.00	0.32	7.00	0.97	3.33
2003	5.17	4.05	1.38	0.64	1.10	3.32	2.59
2004	2.45	2.29	0.67	0.00	2.20	0.47	0.00
2005	2.89	1.36	0.00	0.36	0.96	1.28	0.00
2006	1.59	1.06	0.00	0.00	2.70	0.42	0.81
2007	1.32	0.54	0.00	0.64	2.65	0.79	0.00
2008	2.33	2.43	1.55	4.02	3.81	2.96	0.00
2009	10.21	5.04	5.18	2.97	23.76	4.88	2.17
2010	1.92	2.38	1.04	1.09	4.82	1.75	0.00
2011	0.73	2.38	0.95	0.36	3.37	0.42	0.00
2012	0.70	1.42	2.65	0.72	2.30	0.83	0.63
2013	0.68	1.05	1.57	0.35	3.45	1.61	0.00
2014	0.33	0.73	2.08	0.00	0.00	1.15	1.61
2015	0.30	2.08	9.18	0.00	1.90	0.72	0.50
2016	0.92	1.45	19.30	2.32	0.93	1.18	0.51
2017	1.54	3.07	6.97	0.90	0.90	1.25	1.45
2018	0.60	2.81	4.82	0.31	1.72	1.61	0.93
2019	0.85	3.33	6.74	1.18	0.81	1.49	1.72
2020	2.52	8.95	14.29	0.30	1.77	3.40	0.89
2021	0.56	1.53	2.69	0.00	0.83	0.70	0.43
2022	1.11	1.79	1.69	0.00	0.81	1.39	0.82
Weighted average	2.20	2.73	3.99	0.85	2.68	1.62	1.25
Median	1.32	2.02	1.85	0.35	1.48	1.17	0.91
Standard deviation	2.35	1.98	4.05	1.03	3.98	1.40	1.59
Minimum	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	10.69	8.95	19.30	4.02	23.76	4.98	5.56
Year	Insurance	Leisure time / media	Real estate	Telecommunications	Transportation	Utility
1981	0.00	0.00	0.00	0.00	2.15	0.00
1982	3.03	2.22	0.00	0.00	2.13	0.42
1983	4.88	0.00	0.00	0.00	1.04	0.00
1984	0.00	0.00	0.00	0.00	3.03	0.00
1985	1.67	2.53	0.00	0.00	0.00	0.00
1986	0.00	0.97	0.00	0.00	0.89	0.00
1987	0.00	0.72	0.00	1.41	0.00	0.39
1988	0.00	3.21	0.00	1.32	0.00	0.75
1989	0.75	6.67	6.90	0.00	1.74	0.00
1990	0.00	9.09	9.09	2.67	3.77	0.00
1991	1.79	6.96	6.67	0.00	6.38	1.11
1992	0.90	1.89	6.25	0.00	0.00	1.08
1993	0.39	0.84	0.00	0.00	0.00	0.00
1994	0.00	3.08	0.00	0.00	1.92	0.00
1995	0.33	1.90	0.00	0.00	2.88	0.00
1996	0.00	2.22	0.00	1.08	0.00	0.00
1997	0.28	0.00	0.00	1.98	0.96	0.00
1998	0.00	2.61	0.00	1.57	1.89	0.00
1999	0.89	5.22	0.00	2.70	1.92	0.29
2000	1.74	5.20	0.00	3.38	5.05	0.58
2001	0.00	5.69	0.00	14.18	5.49	0.84
2002	0.45	3.45	0.00	15.45	10.71	1.67
2003	0.47	0.88	0.00	11.83	1.32	1.45
2004	0.71	1.33	0.00	3.61	2.33	0.00
2005	0.00	0.90	0.00	0.00	4.94	0.61
2006	0.22	0.85	0.00	1.09	1.22	0.00
2007	0.00	0.81	0.00	0.00	0.00	0.00
2008	0.86	7.36	4.46	2.20	3.66	0.00
2009	0.90	20.08	7.22	2.47	5.48	0.34
2010	0.48	5.74	1.14	1.30	2.74	0.35
2011	0.48	1.76	0.00	0.00	9.09	0.35
2012	0.25	4.15	0.00	1.25	5.26	1.05
2013	0.00	4.86	0.00	1.30	2.63	0.35
2014	0.00	2.78	0.00	1.27	1.20	0.70
2015	0.24	2.33	0.58	0.00	0.00	0.00
2016	0.00	2.66	0.00	1.23	5.19	0.97
2017	0.24	2.28	0.00	0.00	1.43	0.32
2018	0.00	1.96	0.00	2.47	0.00	0.33
2019	0.24	1.57	0.00	5.06	0.00	0.67
2020	0.00	5.60	1.27	3.80	2.50	1.02
2021	0.00	0.78	3.33	2.44	1.32	0.00
2022	0.00	0.74	0.00	4.00	2.67	0.35
Weighted average	0.37	3.44	0.73	2.56	2.40	0.40
Median	0.24	2.25	0.00	1.26	1.92	0.32
Standard deviation	0.94	3.50	2.46	3.56	2.49	0.45
Minimum	0.00	0.00	0.00	0.00	0.00	0.00
Maximum	4.88	20.08	9.09	15.45	10.71	1.67
Note: Includes investment-grade- and speculative-grade-rated entities. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

In most periods, nonfinancial issuers have higher cumulative default rates than financial issuers, which reflects the higher proportion of speculative-grade issuers within U.S. nonfinancial sectors (table 5).

Table 5

Cumulative U.S. corporate default rates by sector (%)
	All financials			All nonfinancials
Year	One-year	Three-year	10-year	One-year	Three-year	10-year
1981	0.00	N/A	N/A	0.17	N/A	N/A
1982	1.68	N/A	N/A	1.21	N/A	N/A
1983	1.39	2.56	N/A	0.73	2.16	N/A
1984	0.00	2.52	N/A	1.10	2.89	N/A
1985	0.52	2.08	N/A	1.28	2.60	N/A
1986	0.00	1.20	N/A	2.19	4.38	N/A
1987	0.00	1.05	N/A	1.22	4.22	N/A
1988	1.41	2.10	N/A	1.50	4.18	N/A
1989	2.07	3.99	N/A	1.66	4.11	N/A
1990	0.97	4.80	6.84	3.45	5.70	8.33
1991	2.34	5.68	9.24	3.92	8.92	9.89
1992	1.91	5.33	9.03	1.70	8.83	10.25
1993	0.39	4.92	8.38	0.76	6.17	10.95
1994	0.00	2.33	9.95	0.96	2.81	10.84
1995	0.48	0.98	7.69	1.56	2.63	10.41
1996	0.00	0.54	9.82	0.86	3.22	11.80
1997	0.29	0.81	10.17	0.96	3.06	12.41
1998	0.38	0.30	8.79	1.53	3.00	12.87
1999	0.65	0.86	6.54	2.81	4.33	12.48
2000	1.16	2.17	6.32	3.95	7.39	9.80
2001	0.79	2.62	4.03	5.80	11.44	7.56
2002	0.40	2.71	2.94	4.15	12.86	9.01
2003	0.55	1.98	3.27	2.96	12.69	11.25
2004	0.41	1.47	3.54	1.32	8.63	12.04
2005	0.14	0.95	3.02	1.22	5.33	12.28
2006	0.14	0.55	3.31	0.83	3.24	14.18
2007	0.25	0.42	4.60	0.59	2.68	17.21
2008	2.16	2.73	5.76	2.70	3.91	19.91
2009	1.74	3.95	6.19	7.52	9.16	21.43
2010	0.72	4.32	5.15	2.03	11.17	19.62
2011	0.43	2.82	4.67	1.35	10.42	15.26
2012	0.44	1.44	4.50	1.66	4.78	12.36
2013	0.15	1.01	4.39	1.46	3.95	10.89
2014	0.00	0.58	4.67	1.13	3.70	11.56
2015	0.13	0.44	4.78	2.00	4.08	12.97
2016	1.05	1.28	5.48	3.39	5.52	14.78
2017	0.53	1.61	5.46	2.05	6.63	16.08
2018	0.14	1.44	3.49	1.70	6.45	15.37
2019	0.66	1.20	1.87	2.18	5.05	10.11
2020	0.13	0.82	1.88	4.86	7.41	10.56
2021	0.00	0.80	1.75	1.14	7.46	10.54
2022	0.00	0.13	1.46	1.23	6.72	10.96
Average	0.63	1.99	5.42	2.07	5.85	12.60
Median	0.42	1.45	4.78	1.54	4.91	11.80
Standard deviation	0.68	1.49	2.55	1.50	2.97	3.30
Minimum	0.00	0.13	1.46	0.17	2.16	7.56
Maximum	2.34	5.68	10.17	7.52	12.86	21.43
N/A--Not applicable. Note: All financials refers to financial institutions and insurance combined. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

The energy and natural resources (50), insurance (20), and leisure time/media (17) industries had the highest net positive rating actions in 2022 (more issuer upgrades than downgrades or defaults).

Seven industries had negative net rating actions in 2022 (more issuer downgrades or defaults than upgrades) (see table 6). These were forest and building products/homebuilders, high tech/computers/office equipment, aerospace/automotive/capital goods/metal, telecommunications, health care/chemicals, consumer services, and real estate.

Table 6

Rating action comparison
	2022			2021			Net positive rating actions
Industry	Upgrades	Downgrades	Defaults	Upgrades	Downgrades	Defaults	2022	2021	Difference
Aerospace/automotive/capital goods/metal	24	28	4	43	25	2	-8	16	-24
Consumer/service sector	38	60	9	80	19	7	-31	54	-85
Energy and natural resources	63	9	4	37	18	6	50	13	37
Financial institutions	19	17	0	23	11	0	2	12	-10
Forest and building products/homebuilders	9	9	1	12	12	1	-1	-1	0
Health care/chemicals	18	32	4	52	5	2	-18	45	-63
High tech/computers/office equipment	19	18	2	35	9	1	-1	25	-26
Insurance	24	4	0	10	7	0	20	3	17
Leisure time/media	53	34	2	48	18	2	17	28	-11
Real estate	8	9	0	9	11	5	-1	-7	6
Telecommunications	6	13	3	13	4	2	-10	7	-17
Transportation	7	2	2	10	2	1	3	7	-4
Utility	11	7	1	20	46	0	3	-26	29
Source: S&P Global Credit Research & Insights.

To measure upgrades and downgrades, we compared the rating on an issuer as of Jan. 1 with that as of Dec. 31 of the same year. Using this approach, issuers downgraded (or upgraded) multiple times during the year are counted as one downgrade (or upgrade).

While the U.S. default rate rose, credit quality continued to improve, with more upgrades than downgrades in 2022. Even so, the upgrade rate fell to 8.97% while the downgrade rate rose to 7.26% from the prior year (see table 7). The downgrade-to-upgrade ratio also, although still favorable, increased in 2022 to 0.81. Even as credit quality improved, the proportion of speculative-grade-rated corporate issuers remains historically high, particularly the proportion of 'B-' rated issuers.

Table 7

Summary of U.S. net annual corporate rating changes (%)
Year	Issuers as of Jan. 1	Upgrades	Downgrades§	Defaults	Withdrawn ratings	Changed ratings	Unchanged ratings	Downgrade/upgrade ratio
1981	1,318	9.94	13.35	0.15	2.12	25.57	74.43	1.34
1982	1,363	5.80	12.62	1.25	5.50	25.17	74.83	2.18
1983	1,373	7.36	12.02	0.80	5.32	25.49	74.51	1.63
1984	1,445	11.28	10.10	0.97	2.91	25.26	74.74	0.90
1985	1,519	8.03	14.22	1.18	4.02	27.45	72.55	1.77
1986	1,746	7.33	15.81	1.83	7.04	32.02	67.98	2.16
1987	1,885	7.37	12.31	1.01	9.39	30.08	69.92	1.67
1988	1,950	8.87	12.26	1.49	8.31	30.92	69.08	1.38
1989	1,957	9.91	11.34	1.74	8.12	31.12	68.88	1.14
1990	1,919	6.62	16.05	2.92	7.09	32.67	67.33	2.43
1991	1,804	6.54	13.30	3.55	4.05	27.44	72.56	2.03
1992	1,822	10.65	10.04	1.76	4.28	26.73	73.27	0.94
1993	1,953	9.68	8.45	0.67	8.86	27.65	72.35	0.87
1994	2,106	7.88	8.50	0.71	4.99	22.08	77.92	1.08
1995	2,290	9.43	8.78	1.27	5.33	24.80	75.20	0.93
1996	2,397	10.22	7.59	0.63	7.84	26.28	73.72	0.74
1997	2,564	10.22	7.37	0.78	8.23	26.60	73.40	0.72
1998	2,881	8.71	9.06	1.21	8.02	27.00	73.00	1.04
1999	3,115	6.58	10.79	2.28	8.64	28.28	71.72	1.64
2000	3,133	6.00	13.34	3.26	7.21	29.81	70.19	2.22
2001	3,052	5.54	16.94	4.55	7.18	34.21	65.79	3.06
2002	2,893	5.12	19.98	3.18	7.02	35.29	64.71	3.91
2003	2,796	5.90	15.70	2.32	7.12	31.04	68.96	2.66
2004	2,768	7.30	9.86	1.08	7.77	26.01	73.99	1.35
2005	2,835	9.70	11.43	0.95	7.72	29.81	70.19	1.18
2006	2,907	10.97	10.46	0.65	8.05	30.13	69.87	0.95
2007	2,991	10.43	11.94	0.50	9.39	32.26	67.74	1.14
2008	3,007	7.25	18.69	2.56	7.65	36.15	63.85	2.58
2009	2,847	5.44	19.21	6.01	7.06	37.72	62.28	3.53
2010	2,664	13.25	9.46	1.69	5.78	30.18	69.82	0.71
2011	2,764	12.41	10.56	1.12	7.27	31.37	68.63	0.85
2012	2,850	9.02	8.84	1.37	6.21	25.44	74.56	0.98
2013	2,937	12.33	7.66	1.16	6.98	28.12	71.88	0.62
2014	3,097	10.07	7.10	0.87	6.55	24.60	75.40	0.71
2015	3,294	7.29	10.41	1.58	8.11	27.38	72.62	1.43
2016	3,242	7.99	11.63	2.84	8.17	30.63	69.37	1.46
2017	3,186	8.47	8.63	1.69	8.44	27.24	72.76	1.02
2018	3,207	9.29	8.54	1.34	7.89	27.07	72.93	0.92
2019	3,326	5.71	11.00	1.83	7.43	25.98	74.02	1.93
2020	3,276	3.48	19.38	3.79	6.04	32.69	67.31	5.57
2021	3,274	11.97	5.71	0.89	10.11	28.68	71.32	0.48
2022	3,334	8.97	7.26	0.96	7.83	25.01	74.99	0.81
Weighted average		8.44	11.53	1.80	7.23	29.00	71.00	1.61
Median		8.59	10.90	1.30	7.24	27.89	72.11	1.26
Standard deviation		2.25	3.63	1.20	1.73	3.45	3.45	1.02
Minimum		3.48	5.71	0.15	2.12	22.08	62.28	0.48
Maximum		13.25	19.98	6.01	10.11	37.72	77.92	5.57
*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®.

Transition Tables And Cumulative Default Rates Demonstrate Rating Performance

One-year rating transitions in the U.S. were generally consistent with rating transitions globally in 2022. U.S. investment-grade ratings tend to be more stable (as measured by transition rates) than speculative-grade ratings (see table 8). For example, 92.25% of U.S. issuers rated 'BBB' on Jan. 1 were still rated 'BBB' on Dec. 31, whereas 84.39% of 'BB' rated issuers maintained a 'BB' rating over the same period. As you move diagonally from 'BBB' across the table, the transition rate generally falls as the likelihood of ratings movement increases further down the ratings scale.

Table 8

2022 One-year corporate transition rates: U.S. versus global (%)
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
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
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

In any given year, this relationship may not hold true, but it is clear when multiple samples are averaged together (see table 9). Of the U.S. issuers rated 'AAA', 87.37% retained the rating after one year, whereas only 75.65% of issuers rated 'B' maintained the rating after one year, on average. The stability of higher-rated issuers in the U.S. is largely consistent with global corporate ratings performance (see tables 9-11).

The lowest transition rate (one minus the diagonal rate) is in the 'A' rating category (and not in 'AAA'), and this becomes more pronounced as the time horizon lengthens. The smaller sample sizes of issuers in the 'AAA' and 'AA' categories likely contribute to this.

Table 9

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)
Global
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)
Note: Numbers in parentheses are weighted standard deviations. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 10

Average three-year corporate transition rates (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	66.53	20.61	2.45	0.37	0.33	0.12	0.12	0.17	9.29
	(15.47)	(16.99)	(2.18)	(1.02)	(0.69)	(0.44)	(0.43)	(0.56)	(4.96)
AA	1.06	67.61	17.01	2.10	0.39	0.32	0.03	0.16	11.32
	(0.79)	(10.74)	(6.75)	(1.78)	(0.57)	(0.64)	(0.12)	(0.37)	(4.64)
A	0.08	3.76	70.75	11.35	1.35	0.49	0.10	0.32	11.80
	(0.11)	(2.56)	(7.84)	(3.11)	(1.18)	(0.72)	(0.18)	(0.38)	(3.81)
BBB	0.03	0.32	7.98	67.77	6.58	1.83	0.25	0.87	14.38
	(0.08)	(0.41)	(3.46)	(9.33)	(2.64)	(1.51)	(0.37)	(0.80)	(4.14)
BB	0.01	0.07	0.57	10.08	48.61	13.03	1.23	4.03	22.37
	(0.07)	(0.16)	(0.79)	(4.19)	(8.58)	(3.68)	(0.87)	(3.40)	(4.07)
B	0.00	0.03	0.22	0.65	8.56	43.27	5.47	12.12	29.68
	(0.05)	(0.12)	(0.44)	(0.82)	(3.37)	(5.76)	(2.31)	(7.02)	(4.87)
CCC/C	0.00	0.00	0.15	0.63	1.44	13.58	10.31	47.04	26.87
	(0.00)	(0.00)	(0.56)	(1.31)	(1.90)	(7.01)	(6.43)	(12.04)	(7.64)
Global
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)
Note: 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 11

Average 10-year corporate transition rates (1981-2022) (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
U.S.
AAA	26.08	34.60	8.32	2.30	0.21	0.29	0.08	0.84	27.29
	(12.70)	(19.94)	(3.94)	(3.22)	(0.44)	(0.72)	(0.35)	(0.89)	(7.45)
AA	1.33	28.82	28.52	6.62	1.06	0.50	0.04	1.03	32.09
	(0.96)	(8.28)	(4.18)	(2.57)	(0.89)	(0.52)	(0.12)	(1.01)	(4.78)
A	0.12	4.83	38.99	17.42	2.80	1.04	0.17	1.80	32.84
	(0.18)	(1.93)	(8.33)	(2.36)	(1.12)	(0.78)	(0.25)	(0.95)	(4.91)
BBB	0.02	0.70	11.19	37.19	6.82	2.48	0.18	4.34	37.09
	(0.09)	(0.61)	(3.89)	(8.91)	(1.37)	(1.34)	(0.19)	(2.18)	(6.56)
BB	0.02	0.10	1.66	11.65	16.69	8.99	0.76	14.83	45.30
	(0.08)	(0.16)	(1.21)	(3.25)	(5.40)	(3.21)	(0.48)	(5.85)	(3.87)
B	0.00	0.03	0.35	2.20	6.85	9.99	1.07	27.39	52.13
	(0.00)	(0.08)	(0.61)	(1.71)	(1.68)	(3.20)	(0.61)	(8.43)	(5.77)
CCC/C	0.00	0.00	0.16	0.69	3.06	2.69	0.32	55.84	37.24
	(0.00)	(0.00)	(0.60)	(0.98)	(2.71)	(2.24)	(0.65)	(10.17)	(8.48)
Global
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)
Note: 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®.

When we look at rating transitions including the rating modifier (the plus [+] or minus [-] following the rating), the same relationship generally holds true. However, differences in stability rates frequently exist among rating modifiers within the same rating category. For example, within the 'AA' category, the 'AA+' rating has a stability rate of 81.9%, which is lower than the stability rate of 82.2% for debt rated 'AA' (see table 12). Differences in the sample size of issuers for each rating contribute to this.

Table 12

Average one-year transition rates for U.S. 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	87.37	5.26	2.69	0.70	0.21	0.21	0.17	0.00	0.04	0.00	0.04	0.08	0.04	0.00	0.04	0.00	0.04	0.00	3.11
	(10.16)	(9.64)	(4.30)	(1.18)	(0.60)	(0.70)	(0.51)	(0.00)	(0.21)	(0.00)	(0.24)	(0.29)	(0.21)	(0.00)	(0.27)	(0.00)	(0.27)	(0.00)	(2.48)
AA+	2.03	81.88	8.12	3.76	0.60	0.23	0.15	0.00	0.15	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.08
	(3.32)	(15.33)	(8.31)	(5.29)	(3.14)	(0.93)	(0.70)	(0.00)	(0.95)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.61)
AA	0.44	1.23	82.23	7.01	2.50	1.32	0.34	0.49	0.17	0.10	0.05	0.05	0.02	0.00	0.00	0.02	0.07	0.02	3.92
	(0.52)	(1.55)	(8.06)	(4.44)	(2.24)	(1.48)	(1.07)	(1.05)	(0.41)	(0.41)	(0.22)	(0.18)	(0.12)	(0.00)	(0.00)	(0.11)	(0.24)	(0.17)	(3.08)
AA-	0.03	0.15	3.51	78.63	9.43	2.53	0.55	0.30	0.08	0.08	0.05	0.00	0.00	0.05	0.15	0.00	0.00	0.05	4.42
	(0.18)	(0.42)	(3.32)	(8.93)	(5.75)	(2.93)	(0.98)	(0.66)	(0.29)	(0.29)	(0.28)	(0.00)	(0.00)	(0.23)	(0.53)	(0.00)	(0.00)	(0.20)	(2.74)
A+	0.00	0.14	0.55	3.82	80.18	7.71	2.21	0.70	0.37	0.09	0.06	0.14	0.02	0.06	0.05	0.00	0.00	0.05	3.85
	(0.00)	(0.46)	(0.85)	(2.61)	(7.20)	(3.61)	(1.85)	(0.89)	(0.49)	(0.24)	(0.20)	(0.34)	(0.08)	(0.19)	(0.17)	(0.00)	(0.00)	(0.20)	(2.19)
A	0.05	0.02	0.30	0.40	4.93	79.66	5.98	2.71	0.97	0.30	0.14	0.14	0.10	0.09	0.03	0.00	0.02	0.07	4.08
	(0.17)	(0.09)	(0.58)	(0.53)	(2.02)	(5.50)	(2.70)	(1.97)	(1.07)	(0.46)	(0.25)	(0.34)	(0.36)	(0.29)	(0.14)	(0.00)	(0.10)	(0.15)	(2.34)
A-	0.05	0.01	0.05	0.17	0.41	6.00	78.59	7.19	2.22	0.52	0.12	0.14	0.13	0.13	0.03	0.01	0.05	0.08	4.09
	(0.25)	(0.08)	(0.19)	(0.37)	(0.61)	(3.55)	(7.88)	(4.10)	(1.56)	(0.73)	(0.37)	(0.43)	(0.31)	(0.45)	(0.11)	(0.10)	(0.24)	(0.25)	(2.13)
BBB+	0.00	0.01	0.09	0.06	0.24	0.89	6.75	76.49	7.76	1.78	0.38	0.29	0.14	0.20	0.11	0.04	0.08	0.13	4.55
	(0.00)	(0.07)	(0.24)	(0.21)	(0.53)	(1.16)	(3.34)	(8.60)	(4.01)	(1.76)	(0.66)	(0.73)	(0.28)	(0.51)	(0.36)	(0.16)	(0.21)	(0.30)	(2.61)
BBB	0.01	0.00	0.04	0.03	0.12	0.38	1.13	6.78	77.60	5.64	1.31	0.70	0.33	0.28	0.12	0.02	0.06	0.19	5.25
	(0.09)	(0.00)	(0.13)	(0.15)	(0.28)	(0.81)	(1.20)	(3.31)	(6.53)	(2.66)	(1.15)	(0.93)	(0.57)	(0.53)	(0.45)	(0.09)	(0.17)	(0.34)	(2.49)
BBB-	0.01	0.01	0.01	0.07	0.07	0.15	0.32	1.25	8.93	73.74	4.70	2.30	1.01	0.48	0.20	0.18	0.15	0.25	6.14
	(0.10)	(0.08)	(0.07)	(0.26)	(0.22)	(0.47)	(0.61)	(1.42)	(3.07)	(6.20)	(2.35)	(1.79)	(1.00)	(0.91)	(0.53)	(0.54)	(0.31)	(0.46)	(2.40)
BB+	0.07	0.00	0.00	0.05	0.02	0.14	0.12	0.39	2.13	10.60	66.80	6.54	2.94	1.23	0.67	0.23	0.32	0.39	7.35
	(0.33)	(0.00)	(0.00)	(0.20)	(0.14)	(0.49)	(0.30)	(0.90)	(2.35)	(5.04)	(8.27)	(3.71)	(2.53)	(2.04)	(1.38)	(0.47)	(0.94)	(0.76)	(3.13)
BB	0.00	0.00	0.05	0.02	0.00	0.07	0.05	0.16	0.87	2.31	8.71	66.21	8.16	2.70	1.34	0.49	0.37	0.58	7.89
	(0.00)	(0.00)	(0.25)	(0.10)	(0.00)	(0.32)	(0.26)	(0.49)	(1.43)	(2.63)	(4.93)	(6.44)	(3.48)	(2.17)	(1.80)	(0.74)	(0.80)	(0.76)	(3.51)
BB-	0.00	0.00	0.00	0.01	0.01	0.01	0.07	0.13	0.21	0.38	1.85	9.18	63.91	8.44	3.31	1.02	0.84	0.98	9.64
	(0.00)	(0.00)	(0.00)	(0.11)	(0.09)	(0.09)	(0.32)	(0.30)	(0.51)	(0.72)	(1.72)	(4.46)	(6.43)	(4.79)	(2.07)	(0.97)	(0.90)	(1.36)	(2.81)
B+	0.00	0.01	0.00	0.04	0.00	0.03	0.08	0.04	0.06	0.11	0.25	1.25	7.56	64.52	9.04	2.50	1.80	1.95	10.76
	(0.00)	(0.06)	(0.00)	(0.16)	(0.00)	(0.10)	(0.23)	(0.14)	(0.18)	(0.24)	(0.37)	(1.08)	(3.54)	(5.86)	(4.35)	(1.54)	(1.58)	(2.04)	(2.73)
B	0.00	0.00	0.01	0.01	0.00	0.04	0.05	0.02	0.05	0.02	0.10	0.24	0.96	7.09	62.31	9.89	4.17	3.11	11.94
	(0.00)	(0.00)	(0.09)	(0.07)	(0.00)	(0.21)	(0.39)	(0.09)	(0.29)	(0.10)	(0.33)	(0.60)	(1.14)	(2.99)	(7.14)	(4.97)	(3.45)	(4.08)	(2.87)
B-	0.00	0.00	0.00	0.00	0.02	0.04	0.00	0.07	0.05	0.09	0.09	0.13	0.33	1.91	8.87	56.89	12.43	6.09	12.99
	(0.00)	(0.00)	(0.00)	(0.00)	(0.31)	(0.32)	(0.00)	(0.35)	(0.19)	(0.43)	(0.51)	(0.89)	(1.04)	(2.17)	(5.25)	(8.77)	(5.78)	(6.55)	(4.73)
CCC/C	0.00	0.00	0.00	0.00	0.03	0.00	0.09	0.06	0.06	0.06	0.03	0.16	0.35	0.95	2.85	9.14	44.70	27.41	14.10
	(0.00)	(0.00)	(0.00)	(0.00)	(0.25)	(0.00)	(0.42)	(0.49)	(0.33)	(0.43)	(0.24)	(0.56)	(0.82)	(1.49)	(3.28)	(6.42)	(8.34)	(12.81)	(4.91)
Note: 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®.

In addition to greater ratings stability, higher-rated issuers also have lower default rates over time. In the U.S., defaults are less frequent among higher-rated entities than they are for lower-rated entities. This relationship remains true over time, as the cumulative average default rates illustrate (see tables 13 and 14 and chart 7, which illustrates the data in the top half of table 13).

Table 13

Comparison of 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
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
Global
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 14

U.S. 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	0.04	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+	0.00	0.08	0.08	0.16	0.24	0.32	0.41	0.50	0.59	0.69	0.79	0.89	1.00	1.10	1.21
AA	0.02	0.05	0.12	0.30	0.48	0.63	0.78	0.91	1.02	1.15	1.26	1.34	1.47	1.56	1.64
AA-	0.05	0.10	0.23	0.31	0.39	0.53	0.64	0.73	0.79	0.85	0.91	0.97	0.97	1.01	1.07
A+	0.05	0.11	0.26	0.46	0.61	0.75	0.91	1.05	1.24	1.43	1.60	1.78	1.99	2.22	2.42
A	0.07	0.18	0.29	0.45	0.61	0.80	1.00	1.20	1.44	1.71	1.93	2.08	2.22	2.32	2.49
A-	0.08	0.25	0.40	0.53	0.69	0.92	1.21	1.46	1.63	1.77	1.94	2.13	2.32	2.44	2.55
BBB+	0.13	0.35	0.61	0.88	1.22	1.57	1.81	2.08	2.43	2.75	3.03	3.21	3.37	3.62	3.91
BBB	0.19	0.50	0.75	1.16	1.56	1.95	2.38	2.78	3.20	3.62	4.05	4.37	4.68	4.83	5.10
BBB-	0.25	0.63	1.22	1.93	2.70	3.43	4.06	4.67	5.15	5.62	6.05	6.42	6.77	7.32	7.73
BB+	0.39	1.14	2.01	3.02	4.00	5.01	5.93	6.58	7.38	8.14	8.72	9.41	10.10	10.56	11.27
BB	0.58	1.68	3.42	4.91	6.43	7.79	9.01	10.14	11.14	12.09	13.06	13.76	14.27	14.66	15.06
BB-	0.98	3.19	5.50	7.78	9.73	11.62	13.19	14.77	16.05	17.19	18.04	18.94	19.79	20.53	21.20
B+	1.95	5.54	9.10	12.23	14.74	16.71	18.52	20.06	21.46	22.76	23.84	24.59	25.39	26.16	26.89
B	3.11	7.30	11.13	14.12	16.60	18.85	20.38	21.46	22.52	23.49	24.23	25.02	25.63	26.12	26.63
B-	6.09	12.83	18.37	22.39	25.23	27.30	28.80	30.00	30.71	31.40	32.25	32.76	33.27	33.84	34.19
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
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Just four of the 36 U.S. corporate defaulters in 2022--Ruby Pipeline LLC, Talen Energy Supply LLC, Bed Bath & Beyond Inc., and Diebold Nixdorf Inc.--were initially rated investment grade. All 32 rated defaulters were rated speculative grade when the year began, with two of these issuers defaulting twice: Envision Healthcare Corp. and Rite Aid Corp.

The average number of years between the initial rating and default for the 36 U.S. corporate defaulters in 2022 was 7.6, higher than the average 3.8 years in 2021. The defaulter with the longest time to default in 2022 was Diebold Nixdorf Inc. at 42.0 years. The company was initially rated 'A 'in 1980. Two confidential issuers had the shortest time to default in 2022, at 40 days.

Historically, issuers rated in higher rating categories exhibit longer times to default, on average, than issuers rated in lower rating categories (see chart 8 and tables 15-16). For example, from 1981 to 2022, the average time to default from the initial rating for U.S. issuers rated 'B' averaged 5.5 years, while issuers rated 'BB' had an average time to default of 7.8 years. This relationship is true for every sequential rating category from 'AAA' to 'CCC'/'C'. The relationship also holds when the time to default is measured using post-original issuer credit ratings.

In the 42 years covered in this study, from 1981 to 2022, seven U.S. issuers initially rated 'AAA' defaulted: Macy's Inc., Ally Financial Inc. (formerly known as GMAC Financial--a subsidiary of General Motors Corp.), Ambac Assurance Corp., Mutual Benefit Life Insurance Co., Executive Life Insurance Co. CA, Motors Liquidation Co. (formerly known as General Motors Corp.), and Eastman Kodak Co. The average time between initial rating and default for these issuers was 19.4 years.

Table 15

Time to default from original rating among corporate defaulters (U.S. versus global) (1981-2022)
Original rating	Defaults	Average years from original rating*	Median years from original rating	Standard deviation of years from original rating
U.S.
AAA	7	19.4	28.0	11.5
AA	29	18.4	20.0	10.6
A	87	15.5	12.5	9.7
BBB	159	10.7	9.4	7.1
BB	456	7.8	5.7	6.3
B	1,353	5.5	4.0	4.6
CCC/C	259	2.2	1.3	2.6
Total	2,350	6.5	4.5	6.2
Global
AAA	8	18.0	18.5	11.4
AA	32	17.4	19.6	10.6
A	102	14.4	11.2	9.5
BBB	228	9.4	7.6	6.8
BB	673	7.1	5.4	5.8
B	1,809	5.1	3.8	4.4
CCC/C	401	2.1	1.2	2.6
Total	3,253	5.9	4.0	5.8
*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®.

Table 16

Time to default from post-original ratings among corporate defaulters (U.S. versus global) (1981-2022)
Rating path to default	Average years from rating category	Median years from rating category	Standard deviation of years from rating category
U.S.
AAA	27.39	27.7	10.0
AA	16.12	17.3	9.0
A	12.19	10.6	8.3
BBB	8.88	7.2	7.1
BB	6.93	5.1	6.1
B	3.56	2.2	4.1
CCC/C	0.97	0.4	1.8
NR	5.59	3.3	6.2
Total	3.82	1.6	5.4
Global
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
NR--Not rated. 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 issuer credit ratings shows they continue to correlate with default risk across time horizons. To measure ratings performance, the cumulative share of defaulters is plotted against the cumulative share of issuers by rating in a Lorenz curve to visually render the accuracy of the rank ordering (see charts 9-11 and Appendix 3). Over the long term, the U.S. weighted average one-year transition to default has a one-year Gini coefficient of 80.29%, a three-year Gini coefficient of 72.79%, a five-year Gini coefficient of 68.93%, and a seven-year Gini coefficient of 66.41% (see table 17). These weighted average Gini ratios are weighted by yearly issuer counts since 1981 (see Appendix 2).

Table 17

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)
Note: Numbers in parentheses are standard deviations. Average and standard deviation for Europe calculated for the period 1996-2022. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

As expected, Gini coefficients decline as the time horizon lengthens because longer time horizons increase the likelihood of credit degradation among higher-rated entities. In the one-year U.S. Lorenz curve, for example, speculative-grade issuers accounted for 96.7% of total corporate defaults from 1981 to 2022 but only 44.2% of total issuers during that time (see chart 9). The five-year Lorenz curve shows that over a longer period, speculative-grade issuers accounted for 91.7% of defaulters but just 42.3% of total issuers (see chart 11).

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 level would be nearly the same, producing a Gini ratio of zero.

Trends in the one-year Gini ratio emerge during periods of extreme highs and lows in the default cycle. When defaults are high, there tends to be greater variation in the distribution of defaults across the ratings spectrum, which reduces the Gini ratio. In other words, when default pressure is high, economic conditions are such that issuers across the rating spectrum are more likely to suffer a rapid deterioration of credit quality.

The one-year Gini ratio for U.S. corporate ratings increased to 84.7% in 2022 from 83.3% in 2021 (the lowest recorded was 57.6% in 2008).

Appendix 1: 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 the CreditPro corporate dataset accurately represents the complete universe of ratings. The local currency senior unsecured rating is the preferred debt rating 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

For the purposes of this study, the U.S. region includes the tax havens Bermuda and the Cayman Islands.

This study analyzes the rating histories of 12,455 corporate issuers in the U.S. 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 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 also 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 issuers 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 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. For the purposes of this study, a corporate rating may also be withdrawn as a result of mergers and acquisitions. Others are withdrawn because of a lack of cooperation, particularly when an issuer is experiencing financial difficulties and refuses to provide all the information needed to continue surveillance on the ratings, or at the entity's request.

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.

S&P Global Ratings will typically lower the issuer credit rating to 'SD' (selective default) if the issuer conducts a distressed exchange. An 'SD' rating is assigned if the issuer 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.

These distressed exchanges typically involve entities in distress that restructure their obligations in a way that offers less than the original promise. A distressed exchange is an alternative to a conventional default, in which the investor or counterparty stands to fare even worse, and this motivates (at least partially) the acceptance of such an offer. S&P Global Ratings treats such offers and buybacks analytically as de facto restructuring--and, accordingly, as equivalent to a default on the part of the issuer. Given this analytical treatment, distressed exchanges are included in default rates and other relevant statistics.

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 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, 2019, we removed 'R' from all rating scales.

We deem 'D', 'SD', and 'R' issuer credit 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.

Calculations

Static pool methodology.  We conduct our 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 issuers 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.

S&P Global Ratings uses the static pool methodology to avoid certain pitfalls in estimating default rates. For example, this methodology ensures that default rates account for rating migration and allows them 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 issuers 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 to the same starting date of Dec. 31, 1980, 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 only include entities with active ratings as of the beginning date of a given pool, we exclude issuers 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 issuer subsequently defaults, we will include it in that static pool as a default 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 issuers rated as of 12:00 a.m. on Jan. 1, 1981. Adding those issuers first rated in 1981 to the surviving members 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 a.m. on Jan. 1, 1982. We used the same method to form static pools for 1983 through 2022. From Jan. 1, 1981, to Dec. 31, 2022, a total of 11,659 first-time-rated organizations were added to form new static pools, while we excluded 2,350 defaulting issuers and 6,884 issuers with last ratings of 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 issuer in the 1987 and 1988 pools with the 'BB' rating, which was the rating 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 issuer 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.

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 5, 13-14, and 20-22). 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 22, the weighted average first-year default rate for all speculative-grade-rated issuers in the U.S. for all 42 pools was 3.93%, meaning an average of 96.07% survived one year. Similarly, the second- and third-year conditional marginal averages--shown in the summary statistics at the bottom of the table--were 3.91% for the first 41 pools (96.09% of issuers that did not default in the first year survived the second year) and 3.54% for the first 40 pools (96.46% of issuers that did not default by the second year survived the third year), respectively. Multiplying 96.07% by 96.09% results in a 92.31% survival rate to the end of the second year, which is a two-year average cumulative default rate of 7.7%. Multiplying 92.31% by 96.46% results in an 89.04% survival rate to the end of the third year, which is a three-year average cumulative default rate of 10.96%.

Transition analysis

Transition rates compare issuer credit ratings at the beginning of a period with the 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 to 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 issuers first rated on Jan. 1, 2022, had only one. 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 25).

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 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' and ended the year as 'A'. This also applies to transition matrices that span longer time horizons. If an issuer defaults or the rating is withdrawn in the middle of the year, then we would consider it to be rated 'D' or not rated as of Dec. 31 of that particular year.

Multiyear transitions

To calculate multiyear transition matrices, we compared the ratings at the beginning of the multiyear period with the ratings 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 25-28). 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 the 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 to, for example, 'AA' from 'AA-' or to 'BBB+' from 'BBB-' are not considered to be rating changes 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 13 is equivalent to column 'D' of the average one-year transition matrix in table 9 and the cumulative average in the summary statistics of the year one column in table 20.

However, the three-year default rate column in table 13 is not the same as column 'D' of the average three-year transition matrix in table 10. This difference results from the different methods of calculating default rates. The default rates in table 10 are calculated as not conditional on survival, while those in table 13 are average default rates, conditional on survival. The three-year default rates in table 13 are calculated in the same way as those in the cumulative average section for the year three column in table 20, while those in the 'D' column of table 10 are equivalent to adding up all the defaults behind the year three column's annual default rates in table 20, divided by the sum of all the issuers in table 20 for the years 1981-2020.

The links between transition matrices and average cumulative default rates are best illustrated through tables 20-22. 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 20-22 are broken out by the broadest rating classifications (all rated, investment-grade, and speculative-grade, respectively). These tables can also be constructed for each rating category.

As an example, the year two column in table 20 shows the two-year default rates (conditional on survival) for each static pool. These are calculated in the same way as the default column in table 7, though table 7 shows the one-year default rates exclusively. In the summary section at the bottom of tables 20-22, 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 13 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 in 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 9-12 and 25-28, 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 example, in the average one-year global transition matrix in table 9, each cell's weighted standard deviation is calculated from the series of that particular cell in each of the 42 cohorts beginning with the 1981 cohort and ending with the 2022 cohort. The squared difference between each cohort's transition rate and the weighted average--which is the data point in each cell--is multiplied by each cohort's weight. These weights are based on each cohort's rating level's contribution to the 42-year total issuer base for each rating level. We then divide this by the ratio of the total number of nonzero weights minus one to the total number of nonzero weights.

For the Gini ratios in table 17, 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 U.S. Gini ratio in table 17 (6.06) 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.

Appendix 2: Additional Tables

Table 18

U.S. corporate 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	0.22	0.35	4.29	3.18	21.43
1983	0.00	0.00	0.00	0.34	1.20	4.70	6.67
1984	0.00	0.00	0.00	0.69	1.19	3.49	25.00
1985	0.00	0.00	0.00	0.00	1.56	6.57	15.38
1986	0.00	0.00	0.18	0.34	1.36	8.54	23.08
1987	0.00	0.00	0.00	0.00	0.39	3.16	12.28
1988	0.00	0.00	0.00	0.00	1.07	3.71	20.37
1989	0.00	0.00	0.00	0.63	0.73	3.42	31.37
1990	0.00	0.00	0.00	0.59	3.24	8.66	31.82
1991	0.00	0.00	0.00	0.56	1.69	13.73	32.76
1992	0.00	0.00	0.00	0.00	0.00	7.17	31.37
1993	0.00	0.00	0.00	0.00	0.72	2.25	14.29
1994	0.00	0.00	0.00	0.00	0.29	3.16	17.39
1995	0.00	0.00	0.00	0.20	1.09	4.53	30.43
1996	0.00	0.00	0.00	0.00	0.25	3.08	8.70
1997	0.00	0.00	0.00	0.16	0.23	3.86	8.33
1998	0.00	0.00	0.00	0.14	0.43	3.60	42.86
1999	0.00	0.32	0.27	0.28	0.97	6.57	37.50
2000	0.00	0.00	0.42	0.42	1.70	8.47	42.19
2001	0.00	0.00	0.30	0.53	2.55	11.79	50.62
2002	0.00	0.00	0.00	1.30	2.49	6.24	34.62
2003	0.00	0.00	0.00	0.00	0.92	4.11	36.11
2004	0.00	0.00	0.17	0.00	0.55	1.60	20.48
2005	0.00	0.00	0.00	0.13	0.37	2.36	11.11
2006	0.00	0.00	0.00	0.00	0.37	0.66	16.22
2007	0.00	0.00	0.00	0.00	0.36	0.12	16.90
2008	0.00	0.96	0.76	0.73	1.14	4.06	31.43
2009	0.00	0.00	0.19	0.58	0.87	11.19	50.35
2010	0.00	0.00	0.00	0.00	0.00	1.25	23.23
2011	0.00	0.00	0.00	0.14	0.00	1.78	17.05
2012	0.00	0.00	0.00	0.00	0.00	1.14	30.85
2013	0.00	0.00	0.00	0.00	0.00	0.91	29.41
2014	0.00	0.00	0.00	0.00	0.00	0.55	26.25
2015	0.00	0.00	0.00	0.00	0.18	2.44	30.99
2016	0.00	0.00	0.00	0.00	0.55	3.77	41.96
2017	0.00	0.00	0.00	0.00	0.18	1.14	27.89
2018	0.00	0.00	0.00	0.00	0.00	0.54	29.37
2019	0.00	0.00	0.00	0.27	0.00	1.34	32.09
2020	0.00	0.00	0.00	0.00	1.27	3.61	48.70
2021	0.00	0.00	0.00	0.00	0.00	0.45	8.76
2022	0.00	0.00	0.00	0.00	0.19	0.73	12.79
Average	0.00	0.03	0.06	0.20	0.82	3.95	25.72
Median	0.00	0.00	0.00	0.00	0.49	3.30	27.07
Std. dev.	0.00	0.15	0.15	0.29	0.95	3.27	12.44
Min	0.00	0.00	0.00	0.00	0.00	0.12	0.00
Max	0.00	0.96	0.76	1.30	4.29	13.73	50.62
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 19

Summary of one-year U.S. 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	1,002	97.31	1.40	0.00	1.30	316	4.75	89.87	0.63	4.75
1982	1,029	93.68	2.92	0.19	3.21	334	2.69	80.24	4.49	12.57
1983	1,042	94.05	2.21	0.10	3.65	331	3.32	83.08	3.02	10.57
1984	1,089	95.22	2.30	0.18	2.30	356	4.78	87.08	3.37	4.78
1985	1,116	92.83	3.76	0.00	3.41	403	3.97	85.86	4.47	5.71
1986	1,232	89.94	3.73	0.16	6.17	514	3.11	81.91	5.84	9.14
1987	1,224	89.87	3.35	0.00	6.78	661	3.63	79.27	2.87	14.22
1988	1,212	91.34	3.05	0.00	5.61	738	3.25	80.08	3.93	12.74
1989	1,223	92.89	3.03	0.16	3.92	734	5.31	75.20	4.36	15.12
1990	1,239	93.95	2.42	0.16	3.47	680	3.24	75.15	7.94	13.68
1991	1,226	95.68	2.04	0.16	2.12	578	3.11	78.03	10.73	8.13
1992	1,312	96.27	1.30	0.00	2.44	510	6.47	78.24	6.27	9.02
1993	1,412	91.78	1.84	0.00	6.37	541	4.81	77.45	2.40	15.34
1994	1,428	95.66	0.84	0.00	3.50	678	4.13	85.55	2.21	8.11
1995	1,525	94.56	1.38	0.07	4.00	765	3.53	84.84	3.66	7.97
1996	1,589	93.90	0.82	0.00	5.29	808	4.95	80.32	1.86	12.87
1997	1,693	92.79	0.95	0.06	6.20	871	4.36	81.29	2.18	12.17
1998	1,837	91.07	1.47	0.05	7.40	1,044	3.54	84.10	3.26	9.10
1999	1,858	90.85	1.94	0.27	6.94	1,257	1.43	82.18	5.25	11.14
2000	1,833	90.29	2.35	0.33	7.04	1,300	1.92	83.23	7.38	7.46
2001	1,791	91.12	2.57	0.34	5.97	1,261	1.59	78.98	10.55	8.88
2002	1,762	88.48	4.48	0.57	6.47	1,131	1.33	83.55	7.25	7.87
2003	1,636	91.81	2.75	0.00	5.44	1,160	1.38	83.53	5.60	9.48
2004	1,579	93.10	1.65	0.06	5.19	1,189	2.02	84.36	2.44	11.19
2005	1,548	93.93	2.26	0.06	3.75	1,287	1.94	83.53	2.02	12.51
2006	1,525	93.38	1.90	0.00	4.72	1,382	1.74	85.17	1.37	11.72
2007	1,522	91.66	2.89	0.00	5.45	1,469	1.57	83.93	1.02	13.48
2008	1,473	91.24	2.38	0.75	5.63	1,534	1.96	84.16	4.30	9.58
2009	1,441	90.63	3.68	0.35	5.34	1,406	0.92	78.45	11.81	8.82
2010	1,367	95.98	0.80	0.00	3.22	1,297	1.62	86.43	3.47	8.48
2011	1,373	94.90	1.31	0.07	3.71	1,391	1.22	85.84	2.16	10.78
2012	1,382	96.02	0.80	0.00	3.18	1,468	1.50	86.78	2.66	9.06
2013	1,386	96.75	0.72	0.00	2.53	1,551	2.06	84.78	2.19	10.96
2014	1,421	97.40	0.91	0.00	1.69	1,676	0.95	86.75	1.61	10.68
2015	1,475	94.98	1.02	0.00	4.00	1,819	1.10	84.61	2.86	11.43
2016	1,474	92.81	1.83	0.00	5.36	1,768	1.53	82.75	5.20	10.52
2017	1,435	95.26	0.98	0.00	3.76	1,751	0.91	83.72	3.08	12.28
2018	1,425	95.93	0.84	0.00	3.23	1,782	0.90	85.07	2.41	11.62
2019	1,423	95.57	0.91	0.14	3.37	1,903	0.53	85.92	3.10	10.46
2020	1,408	94.60	2.56	0.00	2.84	1,868	0.32	84.58	6.64	8.46
2021	1,387	95.60	0.79	0.00	3.60	1,887	1.43	82.14	1.54	14.89
2022	1,397	96.13	0.72	0.00	3.15	1,937	1.29	85.85	1.65	11.20
Weighted average	59,751	93.46	1.93	0.11	4.50	47,336	1.96	83.43	3.93	10.68
Median		93.91	1.87	0.00	3.84		1.95	83.64	3.18	10.63
Standard deviation		2.28	1.01	0.16	1.59		1.52	3.32	2.66	2.58
Minimum		88.48	0.72	0.00	1.30		0.32	75.15	0.63	4.75
Maximum		97.40	4.48	0.75	7.40		6.47	89.87	11.81	15.34
*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®.

Table 20

Static pool cumulative corporate default rates among all U.S. rated issuers (1981-2022) (%)
		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1981	1,318	0.15	1.44	2.20	3.03	3.72	5.16	5.61	6.45	7.06	8.19	9.94	10.39	10.93	11.00	11.23
1982	1,363	1.25	1.98	2.86	3.60	5.06	5.43	6.24	6.75	7.92	9.83	10.34	10.93	11.01	11.23	11.23
1983	1,373	0.80	1.68	2.55	4.22	4.66	5.75	6.26	7.43	9.54	10.12	10.71	10.78	11.00	11.00	11.07
1984	1,445	0.97	2.08	4.01	4.50	5.61	6.37	7.61	9.41	10.03	10.66	10.73	10.93	10.93	11.07	11.07
1985	1,519	1.18	3.23	3.82	5.27	6.19	7.57	9.55	10.14	10.66	10.73	11.06	11.06	11.19	11.19	11.52
1986	1,746	1.83	2.46	3.84	4.75	6.24	8.25	8.93	9.51	9.68	9.97	10.08	10.31	10.42	10.65	11.05
1987	1,885	1.01	2.55	4.08	6.05	8.75	9.92	10.72	10.93	11.30	11.46	11.67	11.78	12.04	12.52	13.63
1988	1,950	1.49	3.23	5.54	8.82	10.00	10.82	11.03	11.54	11.69	12.00	12.21	12.51	13.23	14.21	15.28
1989	1,957	1.74	4.55	8.28	9.56	10.42	10.73	11.19	11.34	11.65	12.06	12.37	13.03	14.05	15.07	15.59
1990	1,919	2.92	6.51	8.08	8.96	9.28	9.80	9.90	10.32	10.84	11.20	12.04	13.08	14.23	14.80	14.96
1991	1,804	3.55	5.27	5.88	6.21	6.82	6.93	7.32	7.82	8.20	8.98	10.14	11.42	11.97	12.20	12.36
1992	1,822	1.76	2.36	2.69	3.35	3.51	3.90	4.39	4.72	5.54	6.64	7.90	8.40	8.62	8.78	8.95
1993	1,953	0.67	1.18	2.20	2.46	2.92	3.43	3.89	4.81	6.09	7.42	7.94	8.14	8.35	8.60	8.76
1994	2,106	0.71	2.04	2.52	3.09	3.61	4.51	5.75	7.26	8.59	9.16	9.45	9.64	9.92	10.07	10.78
1995	2,290	1.27	1.83	2.45	3.10	4.06	5.33	7.34	8.78	9.43	9.74	10.00	10.26	10.39	11.05	12.14
1996	2,397	0.63	1.34	2.25	3.50	4.84	6.80	8.39	9.14	9.47	9.72	9.97	10.14	10.85	11.93	12.10
1997	2,564	0.78	1.95	3.39	5.23	7.53	9.32	10.26	10.61	10.88	11.23	11.43	12.25	13.38	13.49	13.65
1998	2,881	1.21	3.30	5.97	8.92	10.90	12.15	12.74	13.16	13.57	13.78	14.61	15.86	16.00	16.17	16.35
1999	3,115	2.28	5.49	9.28	11.97	13.52	14.22	14.70	15.15	15.38	16.44	17.95	18.20	18.39	18.62	18.75
2000	3,133	3.26	7.53	10.34	12.22	13.18	13.82	14.30	14.55	15.77	17.65	17.91	18.16	18.38	18.61	18.67
2001	3,052	4.55	7.73	10.03	11.04	11.76	12.25	12.52	13.73	15.76	16.02	16.28	16.55	16.84	16.91	17.14
2002	2,893	3.18	5.63	6.77	7.43	7.92	8.19	9.61	11.96	12.24	12.51	12.79	13.10	13.17	13.38	13.76
2003	2,796	2.32	3.47	4.18	4.76	5.04	6.55	9.26	9.62	9.91	10.30	10.66	10.77	10.98	11.37	11.73
2004	2,768	1.08	1.91	2.53	2.89	4.55	7.59	8.06	8.45	8.85	9.18	9.32	9.54	9.97	10.33	10.51
2005	2,835	0.95	1.62	2.12	4.13	7.69	8.36	8.85	9.28	9.63	9.84	10.19	10.65	11.01	11.18	11.53
2006	2,907	0.65	1.20	3.61	7.67	8.57	9.25	9.84	10.25	10.46	10.90	11.46	11.80	12.01	12.35	12.90
2007	2,991	0.50	3.11	7.79	8.99	9.66	10.40	10.90	11.20	11.74	12.34	12.70	12.87	13.24	13.87	13.87
2008	3,007	2.56	7.88	9.38	10.04	10.87	11.34	11.71	12.30	12.90	13.30	13.60	13.93	14.70	14.73	14.97
2009	2,847	6.01	7.69	8.43	9.34	9.80	10.19	10.82	11.52	11.94	12.26	12.57	13.38	13.42	13.66
2010	2,664	1.69	2.78	3.90	4.43	4.95	5.59	6.61	7.17	7.51	7.96	8.97	9.01	9.23
2011	2,764	1.12	2.50	3.22	3.80	4.63	5.90	6.55	6.91	7.34	8.39	8.50	8.72
2012	2,850	1.37	2.39	2.95	3.89	5.37	6.14	6.67	7.16	8.32	8.42	8.63
2013	2,937	1.16	1.87	3.23	5.04	5.96	6.54	7.05	8.34	8.44	8.75
2014	3,097	0.87	2.32	4.55	5.81	6.62	7.30	8.81	8.91	9.20
2015	3,294	1.58	4.16	5.49	6.34	7.23	9.14	9.35	9.68
2016	3,242	2.84	4.26	5.27	6.14	8.36	8.67	9.04
2017	3,186	1.69	2.92	4.14	6.84	7.31	7.78
2018	3,207	1.34	2.81	5.89	6.49	7.05
2019	3,326	1.83	5.32	5.95	6.55
2020	3,276	3.79	4.52	5.22
2021	3,274	0.89	1.74
2022	3,334	0.96
Summary statistics
Marginal average		1.80	1.78	1.59	1.36	1.15	0.99	0.84	0.72	0.66	0.61	0.53	0.44	0.41	0.38	0.37
Cumulative average		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
Standard deviation		1.20	1.95	2.41	2.68	2.76	2.67	2.57	2.52	2.53	2.54	2.53	2.59	2.61	2.60	2.63
Median		1.30	2.78	4.11	5.81	6.93	7.78	8.99	9.51	9.79	10.30	10.72	11.06	11.58	12.20	12.25
Minimum		0.15	1.18	2.12	2.46	2.92	3.43	3.89	4.72	5.54	6.64	7.90	8.14	8.35	8.60	8.76
Maximum		6.01	7.88	10.34	12.22	13.52	14.22	14.70	15.15	15.77	17.65	17.95	18.20	18.39	18.62	18.75
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 21

Static pool cumulative corporate default rates among U.S. investment-grade-rated issuers (1981-2022) (%)
		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1981	1,002	0.00	0.40	0.40	0.50	0.70	1.10	1.40	2.20	2.40	3.19	4.29	4.49	4.69	4.69	4.89
1982	1,029	0.19	0.29	0.39	0.58	1.07	1.36	2.14	2.33	3.21	4.37	4.66	4.96	4.96	5.15	5.15
1983	1,042	0.10	0.38	0.48	0.96	1.15	1.73	1.82	2.69	3.84	4.22	4.51	4.51	4.70	4.70	4.70
1984	1,089	0.18	0.28	0.64	0.83	1.29	1.47	2.20	3.21	3.58	3.86	3.86	4.04	4.04	4.13	4.13
1985	1,116	0.00	0.18	0.27	0.90	1.08	1.88	2.96	3.32	3.58	3.58	3.85	3.85	4.03	4.03	4.21
1986	1,232	0.16	0.16	0.57	0.73	1.30	2.27	2.68	2.84	2.84	3.08	3.08	3.25	3.33	3.41	3.73
1987	1,224	0.00	0.16	0.41	0.90	1.88	2.45	2.61	2.61	2.78	2.78	2.94	3.02	3.10	3.27	4.17
1988	1,212	0.00	0.25	0.41	1.07	1.65	1.82	1.82	1.98	1.98	2.15	2.15	2.23	2.39	3.14	4.04
1989	1,223	0.16	0.33	0.65	1.31	1.47	1.47	1.64	1.64	1.64	1.64	1.80	1.96	2.86	3.60	4.01
1990	1,239	0.16	0.40	0.89	1.13	1.13	1.29	1.29	1.29	1.37	1.61	2.02	2.82	3.47	3.87	3.95
1991	1,226	0.16	0.33	0.49	0.49	0.65	0.65	0.65	0.73	1.06	1.47	2.37	3.02	3.34	3.43	3.51
1992	1,312	0.00	0.08	0.08	0.23	0.23	0.23	0.30	0.53	0.84	1.52	2.06	2.36	2.44	2.59	2.82
1993	1,412	0.00	0.00	0.14	0.14	0.21	0.42	0.78	1.20	1.98	2.69	2.97	2.97	3.12	3.26	3.33
1994	1,428	0.00	0.14	0.14	0.28	0.35	0.84	1.19	1.96	2.59	2.94	3.01	3.08	3.22	3.29	3.78
1995	1,525	0.07	0.07	0.13	0.20	0.79	1.11	1.97	2.56	2.89	2.95	3.02	3.15	3.21	3.74	4.20
1996	1,589	0.00	0.06	0.06	0.57	1.01	1.89	2.39	2.71	2.77	2.83	2.96	2.96	3.52	4.09	4.15
1997	1,693	0.06	0.12	0.53	1.00	1.71	2.30	2.66	2.72	2.78	2.95	2.95	3.54	4.08	4.13	4.31
1998	1,837	0.05	0.49	1.03	1.69	2.40	2.83	2.99	3.16	3.27	3.27	3.92	4.63	4.74	4.95	5.17
1999	1,858	0.27	0.75	1.29	1.88	2.37	2.48	2.64	2.80	2.80	3.55	4.47	4.57	4.79	5.06	5.11
2000	1,833	0.33	0.82	1.25	1.80	1.85	2.07	2.24	2.24	3.11	4.09	4.20	4.47	4.69	4.75	4.80
2001	1,791	0.34	0.89	1.34	1.51	1.73	1.90	1.90	2.68	3.80	3.85	4.13	4.41	4.52	4.52	4.63
2002	1,762	0.57	0.96	1.14	1.31	1.36	1.36	2.16	3.18	3.23	3.46	3.75	3.86	3.86	3.97	4.09
2003	1,636	0.00	0.18	0.37	0.43	0.43	1.22	2.32	2.38	2.57	2.69	2.81	2.81	2.93	3.06	3.18
2004	1,579	0.06	0.19	0.25	0.25	1.08	2.09	2.22	2.41	2.53	2.66	2.66	2.79	2.91	2.98	3.04
2005	1,548	0.06	0.13	0.13	1.10	2.07	2.26	2.45	2.58	2.71	2.71	2.84	2.97	2.97	3.04	3.17
2006	1,525	0.00	0.00	0.98	1.64	1.84	2.03	2.10	2.23	2.23	2.30	2.43	2.43	2.43	2.49	2.62
2007	1,522	0.00	0.85	1.51	1.77	1.97	2.04	2.17	2.17	2.17	2.30	2.30	2.30	2.37	2.56	2.56
2008	1,473	0.75	1.22	1.43	1.70	1.77	1.83	1.83	1.83	1.97	1.97	2.04	2.10	2.24	2.24	2.38
2009	1,441	0.35	0.49	0.69	0.76	0.76	0.76	0.76	0.90	0.90	0.97	1.04	1.18	1.18	1.32
2010	1,367	0.00	0.07	0.15	0.15	0.15	0.15	0.29	0.29	0.44	0.59	0.66	0.66	0.80
2011	1,373	0.07	0.15	0.15	0.15	0.15	0.36	0.36	0.51	0.66	0.80	0.80	0.95
2012	1,382	0.00	0.00	0.00	0.00	0.22	0.22	0.36	0.51	0.65	0.65	0.80
2013	1,386	0.00	0.00	0.00	0.14	0.14	0.29	0.43	0.65	0.65	0.87
2014	1,421	0.00	0.00	0.14	0.14	0.28	0.42	0.70	0.70	0.91
2015	1,475	0.00	0.00	0.00	0.14	0.27	0.54	0.61	0.75
2016	1,474	0.00	0.00	0.14	0.27	0.61	0.68	0.81
2017	1,435	0.00	0.00	0.14	0.35	0.42	0.56
2018	1,425	0.00	0.14	0.21	0.28	0.42
2019	1,423	0.14	0.21	0.28	0.35
2020	1,408	0.00	0.00	0.07
2021	1,387	0.00	0.00
2022	1,397	0.00
Summary statistics
Marginal average		0.11	0.18	0.22	0.27	0.29	0.30	0.28	0.27	0.26	0.26	0.24	0.20	0.19	0.19	0.20
Cumulative average		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
Standard deviation		0.16	0.31	0.44	0.58	0.69	0.77	0.85	0.93	1.01	1.08	1.12	1.11	1.05	0.93	0.80
Median		0.00	0.16	0.38	0.58	1.07	1.36	1.87	2.23	2.55	2.71	2.95	3.02	3.27	3.60	4.06
Minimum		0.00	0.00	0.00	0.00	0.14	0.15	0.29	0.29	0.44	0.59	0.66	0.66	0.80	1.32	2.38
Maximum		0.75	1.22	1.51	1.88	2.40	2.83	2.99	3.32	3.84	4.37	4.66	4.96	4.96	5.15	5.17
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 22

Static pool cumulative corporate default rates among U.S. speculative-grade-rated issuers (1981-2022) (%)
		--Time horizon (years)--
Year	Issuers	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1981	316	0.63	4.75	7.91	11.08	13.29	18.04	18.99	19.94	21.84	24.05	27.85	29.11	30.70	31.01	31.33
1982	334	4.49	7.19	10.48	12.87	17.37	17.96	18.86	20.36	22.46	26.65	27.84	29.34	29.64	29.94	29.94
1983	331	3.02	5.74	9.06	14.50	15.71	18.43	20.24	22.36	27.49	28.70	30.21	30.51	30.82	30.82	31.12
1984	356	3.37	7.58	14.33	15.73	18.82	21.35	24.16	28.37	29.78	31.46	31.74	32.02	32.02	32.30	32.30
1985	403	4.47	11.66	13.65	17.37	20.35	23.33	27.79	29.03	30.27	30.52	31.02	31.02	31.02	31.02	31.76
1986	514	5.84	7.98	11.67	14.40	18.09	22.57	23.93	25.49	26.07	26.46	26.85	27.24	27.43	28.02	28.60
1987	661	2.87	6.96	10.89	15.58	21.48	23.75	25.72	26.32	27.08	27.53	27.84	27.99	28.59	29.65	31.16
1988	738	3.93	8.13	13.96	21.54	23.71	25.61	26.15	27.24	27.64	28.18	28.73	29.40	31.03	32.38	33.74
1989	734	4.36	11.58	20.98	23.30	25.34	26.16	27.11	27.52	28.34	29.43	29.97	31.47	32.70	34.20	34.88
1990	680	7.94	17.65	21.18	23.24	24.12	25.29	25.59	26.76	28.09	28.68	30.29	31.76	33.82	34.71	35.00
1991	578	10.73	15.74	17.30	18.34	19.90	20.24	21.45	22.84	23.36	24.91	26.64	29.24	30.28	30.80	31.14
1992	510	6.27	8.24	9.41	11.37	11.96	13.33	14.90	15.49	17.65	19.80	22.94	23.92	24.51	24.71	24.71
1993	541	2.40	4.25	7.58	8.50	9.98	11.28	12.01	14.23	16.82	19.78	20.89	21.63	22.00	22.55	22.92
1994	678	2.21	6.05	7.52	9.00	10.47	12.24	15.34	18.44	21.24	22.27	23.01	23.45	24.04	24.34	25.52
1995	765	3.66	5.36	7.06	8.89	10.59	13.73	18.04	21.18	22.48	23.27	23.92	24.44	24.71	25.62	27.97
1996	808	1.86	3.84	6.56	9.28	12.38	16.46	20.17	21.78	22.65	23.27	23.76	24.26	25.25	27.35	27.72
1997	871	2.18	5.51	8.96	13.43	18.83	22.96	25.03	25.95	26.64	27.32	27.90	29.16	31.46	31.69	31.80
1998	1,044	3.26	8.24	14.66	21.65	25.86	28.54	29.89	30.75	31.70	32.28	33.43	35.63	35.82	35.92	36.02
1999	1,257	5.25	12.49	21.08	26.89	29.99	31.58	32.54	33.41	33.97	35.48	37.87	38.35	38.50	38.66	38.90
2000	1,300	7.38	17.00	23.15	26.92	29.15	30.38	31.31	31.92	33.62	36.77	37.23	37.46	37.69	38.15	38.23
2001	1,261	10.55	17.45	22.36	24.58	26.01	26.96	27.60	29.42	32.75	33.31	33.54	33.78	34.34	34.50	34.89
2002	1,131	7.25	12.91	15.56	16.98	18.13	18.83	21.22	25.64	26.26	26.61	26.88	27.50	27.67	28.03	28.82
2003	1,160	5.60	8.10	9.57	10.86	11.55	14.05	19.05	19.83	20.26	21.03	21.72	21.98	22.33	23.10	23.79
2004	1,189	2.44	4.21	5.55	6.39	9.17	14.89	15.81	16.48	17.24	17.83	18.17	18.50	19.34	20.10	20.44
2005	1,287	2.02	3.42	4.51	7.77	14.45	15.70	16.55	17.33	17.95	18.41	19.04	19.89	20.67	20.98	21.60
2006	1,382	1.37	2.53	6.51	14.33	15.99	17.22	18.38	19.10	19.54	20.41	21.42	22.14	22.58	23.23	24.24
2007	1,469	1.02	5.45	14.30	16.47	17.63	19.06	19.95	20.56	21.65	22.74	23.49	23.83	24.51	25.60	25.60
2008	1,534	4.30	14.28	17.01	18.06	19.62	20.47	21.19	22.36	23.40	24.19	24.71	25.29	26.66	26.73	27.05
2009	1,406	11.81	15.08	16.36	18.14	19.06	19.84	21.12	22.40	23.26	23.83	24.40	25.89	25.96	26.32
2010	1,297	3.47	5.63	7.86	8.94	10.02	11.33	13.26	14.42	14.96	15.73	17.73	17.81	18.12
2011	1,391	2.16	4.82	6.25	7.40	9.06	11.36	12.65	13.23	13.95	15.89	16.10	16.39
2012	1,468	2.66	4.63	5.72	7.56	10.22	11.72	12.60	13.42	15.53	15.74	16.01
2013	1,551	2.19	3.55	6.13	9.41	11.15	12.12	12.96	15.22	15.41	15.80
2014	1,676	1.61	4.30	8.29	10.62	11.99	13.13	15.69	15.87	16.23
2015	1,819	2.86	7.53	9.95	11.38	12.86	16.11	16.44	16.93
2016	1,768	5.20	7.81	9.56	11.03	14.82	15.33	15.89
2017	1,751	3.08	5.31	7.42	12.16	12.96	13.71
2018	1,782	2.41	4.94	10.44	11.45	12.35
2019	1,903	3.10	9.14	10.19	11.19
2020	1,868	6.64	7.92	9.10
2021	1,887	1.54	3.02
2022	1,937	1.65
Summary statistics
Marginal average		3.93	3.91	3.54	2.98	2.51	2.14	1.81	1.53	1.38	1.28	1.11	0.95	0.90	0.79	0.75
Cumulative average		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
Standard deviation		2.66	4.26	5.15	5.66	5.86	5.74	5.63	5.69	5.77	5.77	5.66	5.57	5.32	4.98	4.93
Median		3.18	7.19	9.76	12.87	15.85	18.04	20.06	21.78	22.95	24.19	26.75	27.50	28.13	29.65	30.53
Minimum		0.63	2.53	4.51	6.39	9.06	11.28	12.01	13.23	13.95	15.73	16.01	16.39	18.12	20.10	20.44
Maximum		11.81	17.65	23.15	26.92	29.99	31.58	32.54	33.41	33.97	36.77	37.87	38.35	38.50	38.66	38.90
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 23

Initial-to-last transition rates by rating modifier for U.S. nonfinancials (1981-2022) (%)
From/to	Issuers	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	93	1.08	0.00	0.00	3.23	5.38	2.15	3.23	1.08	2.15	0.00	0.00	0.00	0.00	0.00	1.08	0.00	0.00	3.23	77.42
AA+	27	0.00	0.00	0.00	3.70	0.00	0.00	0.00	0.00	3.70	0.00	0.00	0.00	0.00	0.00	3.70	0.00	0.00	7.41	81.48
AA	197	0.51	0.51	0.00	2.03	3.05	3.55	10.15	4.57	2.54	1.52	0.51	0.51	0.00	0.00	0.00	0.00	0.00	4.57	65.99
AA-	94	0.00	0.00	0.00	3.19	3.19	4.26	2.13	9.57	7.45	2.13	2.13	0.00	0.00	1.06	0.00	0.00	0.00	2.13	62.77
A+	180	0.00	0.00	0.00	2.22	6.11	5.56	5.00	6.11	2.22	1.67	0.56	1.67	0.00	1.11	0.00	0.00	0.00	6.67	61.11
A	482	0.00	0.21	0.21	0.21	1.04	3.53	3.73	7.26	6.64	2.28	0.62	0.41	0.00	0.83	0.41	0.00	0.00	7.47	65.15
A-	218	0.00	0.00	0.00	0.00	0.46	3.21	9.63	9.17	6.42	1.83	1.83	2.29	0.46	0.00	0.00	0.00	0.46	7.80	56.42
BBB+	239	0.00	0.00	0.00	0.00	1.67	1.26	6.28	14.64	10.46	2.51	1.67	0.84	0.00	0.42	0.00	0.00	0.42	9.62	50.21
BBB	495	0.00	0.00	0.00	0.20	0.00	1.62	3.84	7.07	10.91	3.23	0.81	0.81	1.41	0.00	0.00	0.00	0.00	11.11	58.99
BBB-	435	0.00	0.00	0.00	0.00	0.23	1.15	2.99	4.14	8.05	9.66	2.30	1.15	0.92	1.38	0.23	0.69	0.00	10.34	56.78
BB+	283	0.00	0.00	0.00	0.35	0.00	0.71	0.71	2.47	3.18	5.65	11.31	3.53	1.41	1.06	1.77	0.71	0.00	11.31	55.83
BB	530	0.00	0.00	0.00	0.00	0.19	0.19	0.19	0.94	2.08	1.70	4.34	7.36	2.64	2.64	0.94	0.75	0.38	18.11	57.55
BB-	1,074	0.00	0.00	0.00	0.00	0.00	0.09	0.19	0.47	0.65	1.49	2.51	3.45	6.70	1.86	1.02	1.21	0.84	26.91	52.61
B+	1,959	0.00	0.00	0.00	0.00	0.00	0.05	0.26	0.15	0.41	0.41	0.82	1.07	1.63	4.85	1.63	1.53	0.66	29.15	57.38
B	2,382	0.00	0.00	0.04	0.00	0.00	0.00	0.08	0.04	0.08	0.08	0.38	0.50	0.84	2.02	10.92	6.42	3.19	20.65	54.74
B-	1,030	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.19	0.19	0.29	0.39	0.58	1.17	3.50	22.43	3.69	24.08	43.50
CCC/C	519	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.58	0.19	0.00	0.19	0.58	0.19	1.35	1.73	3.47	11.18	47.40	33.14
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 24

Initial-to-last transition rates by rating modifier for U.S. financials (1981-2022) (%)
From/to	Issuers	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C	D	NR
AAA	148	0.00	17.57	10.81	6.08	6.76	4.05	1.35	0.68	0.68	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.70	49.32
AA+	45	0.00	0.00	2.22	2.22	17.78	8.89	6.67	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.22	60.00
AA	160	0.00	1.25	2.50	5.00	5.63	4.38	3.13	3.75	0.63	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	6.88	66.88
AA-	124	0.00	0.81	0.00	8.87	6.45	8.06	3.23	2.42	1.61	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.23	65.32
A+	198	0.00	0.00	0.00	3.03	17.17	5.05	4.55	1.52	1.01	0.00	0.51	0.00	0.00	0.00	0.00	0.00	0.00	2.53	64.65
A	238	0.00	0.42	1.68	0.42	9.24	10.50	9.24	2.52	1.26	0.42	0.42	0.42	0.00	0.42	0.00	0.00	0.00	3.78	59.24
A-	201	0.00	0.00	0.50	0.00	3.98	8.46	16.42	5.47	2.99	1.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.98	57.21
BBB+	160	0.00	0.00	0.00	0.63	1.88	1.88	3.75	16.88	4.38	0.63	0.63	0.00	0.00	0.00	0.00	0.00	0.00	5.00	64.38
BBB	195	0.00	0.00	0.00	0.51	0.00	2.05	4.62	3.08	15.38	3.59	0.00	0.51	0.00	0.00	0.51	0.00	0.00	6.15	63.59
BBB-	192	0.00	0.00	0.00	0.52	0.00	0.00	1.04	5.73	6.25	16.67	2.60	1.04	0.52	0.52	0.00	0.00	0.00	8.33	56.77
BB+	68	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.94	4.41	1.47	10.29	1.47	1.47	1.47	0.00	0.00	0.00	16.18	60.29
BB	86	0.00	0.00	0.00	0.00	0.00	0.00	1.16	1.16	2.33	1.16	1.16	9.30	5.81	1.16	0.00	0.00	0.00	13.95	62.79
BB-	97	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.06	1.03	0.00	1.03	6.19	18.56	4.12	1.03	0.00	1.03	16.49	48.45
B+	111	0.00	0.00	0.00	0.90	0.00	0.00	0.90	0.90	2.70	0.90	0.00	0.00	5.41	6.31	4.50	4.50	0.00	13.51	59.46
B	123	0.00	0.00	0.00	0.81	0.00	0.00	0.81	0.81	0.00	0.00	1.63	0.00	0.81	2.44	18.70	4.07	0.81	18.70	50.41
B-	42	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.38	0.00	0.00	4.76	19.05	0.00	9.52	64.29
CCC/C	30	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	6.67	0.00	0.00	0.00	0.00	0.00	0.00	3.33	43.33	46.67
Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®.

Table 25

Average multiyear U.S. region corporate transition matrices (1981-2022)--all financials (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One year
AAA	88.17	8.88	0.33	0.07	0.13	0.07	0.07	0.00	2.30
	(13.41)	(12.99)	(1.38)	(0.37)	(0.61)	(0.37)	(0.37)	(0.00)	(2.49)
AA	0.52	87.95	7.15	0.36	0.04	0.04	0.06	0.06	3.82
	(0.72)	(7.70)	(6.26)	(0.81)	(0.15)	(0.14)	(0.25)	(0.23)	(2.29)
A	0.03	2.17	89.44	3.32	0.25	0.10	0.02	0.11	4.57
	(0.19)	(1.98)	(5.09)	(3.01)	(0.62)	(0.27)	(0.08)	(0.30)	(2.71)
BBB	0.00	0.27	3.86	85.44	2.55	0.54	0.20	0.32	6.81
	(0.00)	(0.67)	(2.41)	(6.03)	(2.75)	(1.14)	(0.38)	(0.78)	(2.73)
BB	0.00	0.23	0.34	7.10	74.11	5.74	1.19	0.91	10.39
	(0.00)	(0.72)	(0.99)	(6.26)	(10.25)	(4.57)	(2.38)	(1.64)	(5.81)
B	0.00	0.07	0.20	0.54	5.75	75.45	4.08	2.81	11.10
	(0.00)	(0.47)	(1.02)	(1.41)	(5.35)	(10.98)	(4.98)	(4.49)	(6.48)
CCC/C	0.00	0.00	0.00	0.00	2.46	12.32	39.41	28.57	17.24
	(0.00)	(0.00)	(0.00)	(0.00)	(6.07)	(14.79)	(23.04)	(25.70)	(16.45)
Three year
AAA	67.59	22.62	1.38	0.33	0.20	0.13	0.20	0.26	7.30
	(20.98)	(21.72)	(2.59)	(1.51)	(0.68)	(0.52)	(0.61)	(0.84)	(4.60)
AA	1.11	68.78	16.71	1.55	0.19	0.27	0.04	0.27	11.09
	(1.23)	(13.32)	(9.09)	(2.05)	(0.44)	(0.63)	(0.17)	(0.56)	(4.86)
A	0.08	5.08	72.77	6.69	0.96	0.26	0.16	0.56	13.45
	(0.25)	(3.74)	(9.50)	(3.26)	(1.46)	(0.64)	(0.33)	(0.74)	(5.67)
BBB	0.00	0.80	8.96	64.95	3.52	1.17	0.41	1.57	18.63
	(0.00)	(1.40)	(4.30)	(9.89)	(2.59)	(1.47)	(0.88)	(1.95)	(5.12)
BB	0.00	0.31	1.41	14.61	42.73	8.29	1.60	4.30	26.76
	(0.00)	(0.87)	(2.29)	(9.07)	(14.20)	(5.18)	(2.52)	(5.86)	(9.55)
B	0.00	0.00	0.67	2.55	10.94	45.43	2.92	9.97	27.51
	(0.00)	(0.00)	(1.63)	(3.92)	(7.50)	(13.26)	(3.60)	(10.58)	(9.86)
CCC/C	0.00	0.00	0.50	1.01	2.01	16.08	10.05	39.20	31.16
	(0.00)	(0.00)	(5.06)	(4.02)	(5.74)	(18.89)	(13.75)	(25.23)	(21.95)
10 year
AAA	25.38	39.71	7.56	1.58	0.13	0.46	0.13	1.12	23.93
	(18.42)	(24.04)	(6.54)	(3.53)	(0.43)	(0.95)	(0.47)	(1.39)	(6.86)
AA	1.23	32.68	28.34	3.88	0.49	0.49	0.05	1.58	31.25
	(1.41)	(11.92)	(8.08)	(1.98)	(0.65)	(0.76)	(0.15)	(1.83)	(5.87)
A	0.20	7.10	42.30	9.38	1.56	0.42	0.22	2.36	36.44
	(0.47)	(3.22)	(9.41)	(3.02)	(1.22)	(0.53)	(0.39)	(1.57)	(6.73)
BBB	0.00	1.97	10.97	31.49	2.19	1.19	0.27	5.70	46.22
	(0.00)	(3.02)	(2.29)	(9.93)	(1.18)	(0.80)	(0.50)	(2.95)	(7.07)
BB	0.00	0.17	3.47	15.91	8.97	4.65	0.17	13.71	52.96
	(0.00)	(0.66)	(4.12)	(5.48)	(4.65)	(3.72)	(0.72)	(10.99)	(8.98)
B	0.00	0.00	2.20	8.80	7.24	11.00	0.39	21.60	48.77
	(0.00)	(0.00)	(3.73)	(7.83)	(5.20)	(7.03)	(2.34)	(12.89)	(12.52)
CCC/C	0.00	0.00	0.61	1.21	6.06	1.21	0.00	43.64	47.27
	(0.00)	(0.00)	(5.56)	(4.05)	(12.65)	(3.76)	(0.00)	(22.93)	(24.37)
Note: 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 26

Average multiyear U.S. region corporate transition matrices (1981-2022) insurance (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One year
AAA	88.99	8.92	0.27	0.00	0.09	0.09	0.09	0.00	1.55
	(13.00)	(12.33)	(1.63)	(0.00)	(0.43)	(0.54)	(0.54)	(0.00)	(2.59)
AA	0.66	88.36	6.73	0.33	0.06	0.06	0.09	0.06	3.65
	(1.24)	(7.47)	(5.63)	(0.90)	(0.23)	(0.20)	(0.62)	(0.21)	(2.62)
A	0.02	2.31	90.33	2.68	0.23	0.09	0.02	0.13	4.19
	(0.10)	(2.67)	(5.51)	(2.71)	(0.62)	(0.35)	(0.10)	(0.31)	(2.49)
BBB	0.00	0.22	4.55	85.16	2.58	0.45	0.40	0.22	6.42
	(0.00)	(0.93)	(3.67)	(7.04)	(3.30)	(1.41)	(0.96)	(0.89)	(3.80)
BB	0.00	0.16	0.48	10.00	72.26	4.19	1.45	0.97	10.48
	(0.00)	(1.21)	(2.04)	(11.95)	(13.89)	(5.46)	(3.83)	(2.69)	(7.88)
B	0.00	0.16	0.31	0.47	5.32	79.03	2.03	1.56	11.11
	(0.00)	(1.14)	(2.57)	(2.48)	(8.64)	(12.02)	(4.29)	(4.52)	(7.90)
CCC/C	0.00	0.00	0.00	0.00	2.99	13.43	38.81	28.36	16.42
	(0.00)	(0.00)	(0.00)	(0.00)	(12.08)	(25.40)	(32.91)	(30.72)	(25.21)
Three year
AAA	68.79	23.02	1.46	0.00	0.18	0.18	0.27	0.36	5.73
	(19.43)	(19.16)	(2.41)	(0.00)	(0.69)	(0.76)	(0.85)	(1.12)	(6.38)
AA	1.49	70.14	15.69	1.53	0.25	0.31	0.06	0.28	10.24
	(2.44)	(12.42)	(7.69)	(2.01)	(0.65)	(0.85)	(0.25)	(0.61)	(4.97)
A	0.06	5.42	75.22	5.06	0.87	0.18	0.18	0.59	12.41
	(0.18)	(5.33)	(11.14)	(3.44)	(1.56)	(0.82)	(0.40)	(1.10)	(5.12)
BBB	0.00	0.63	10.54	65.67	3.47	1.06	0.58	1.35	16.71
	(0.00)	(1.96)	(5.09)	(11.51)	(3.86)	(1.30)	(1.57)	(2.39)	(5.42)
BB	0.00	0.17	2.33	18.67	42.00	5.67	1.50	3.33	26.33
	(0.00)	(1.24)	(4.94)	(14.03)	(17.04)	(5.60)	(4.23)	(5.36)	(12.13)
B	0.00	0.00	1.62	2.89	9.57	49.46	0.90	5.78	29.78
	(0.00)	(0.00)	(5.10)	(7.72)	(11.47)	(14.40)	(2.28)	(8.58)	(15.94)
CCC/C	0.00	0.00	1.49	2.99	1.49	20.90	13.43	37.31	22.39
	(0.00)	(0.00)	(12.37)	(12.08)	(8.68)	(28.52)	(21.67)	(32.90)	(28.89)
10 year
AAA	27.02	38.13	9.19	1.36	0.18	0.64	0.18	1.55	21.75
	(18.14)	(17.85)	(7.45)	(2.82)	(0.61)	(1.41)	(0.69)	(1.76)	(10.10)
AA	1.50	35.89	26.65	4.20	0.75	0.75	0.08	1.76	28.42
	(2.03)	(12.18)	(6.75)	(2.99)	(1.00)	(1.05)	(0.21)	(1.76)	(6.94)
A	0.25	7.89	46.28	6.80	1.56	0.42	0.39	2.43	33.98
	(1.37)	(5.73)	(12.63)	(2.90)	(2.04)	(0.56)	(0.63)	(1.93)	(7.79)
BBB	0.00	1.96	14.29	37.03	1.96	0.88	0.20	4.47	39.20
	(0.00)	(4.85)	(5.54)	(6.99)	(2.74)	(0.66)	(0.80)	(5.82)	(3.67)
BB	0.00	0.41	5.51	18.16	11.22	3.67	0.00	13.67	47.35
	(0.00)	(1.64)	(7.81)	(8.89)	(8.94)	(3.86)	(0.00)	(15.55)	(16.56)
B	0.00	0.00	5.02	14.34	7.17	11.83	0.72	13.26	47.67
	(0.00)	(0.00)	(10.07)	(16.83)	(12.23)	(9.99)	(5.21)	(11.79)	(18.83)
CCC/C	0.00	0.00	1.54	0.00	10.77	0.00	0.00	47.69	40.00
	(0.00)	(0.00)	(12.57)	(0.00)	(22.83)	(0.00)	(0.00)	(32.30)	(30.73)
Note: 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 27

Average multiyear U.S. region corporate transition matrices (1981-2022)--financial institutions (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One year
AAA	86.02	8.77	0.47	0.24	0.24	0.00	0.00	0.00	4.27
	(22.10)	(20.05)	(1.89)	(2.20)	(2.20)	(0.00)	(0.00)	(0.00)	(6.97)
AA	0.23	87.15	7.98	0.41	0.00	0.00	0.00	0.06	4.17
	(0.77)	(10.57)	(8.82)	(1.10)	(0.00)	(0.00)	(0.00)	(0.29)	(3.75)
A	0.05	1.98	88.24	4.18	0.28	0.10	0.03	0.08	5.08
	(0.32)	(2.54)	(7.19)	(5.19)	(0.98)	(0.28)	(0.15)	(0.49)	(4.23)
BBB	0.00	0.30	3.40	85.63	2.53	0.60	0.06	0.39	7.08
	(0.00)	(0.86)	(2.95)	(7.18)	(3.53)	(1.54)	(0.33)	(1.18)	(3.27)
BB	0.00	0.26	0.26	5.52	75.11	6.57	1.05	0.88	10.34
	(0.00)	(0.98)	(1.30)	(5.77)	(11.31)	(6.63)	(2.39)	(2.25)	(7.02)
B	0.00	0.00	0.12	0.58	6.07	72.78	5.61	3.74	11.10
	(0.00)	(0.00)	(0.99)	(1.78)	(6.56)	(13.53)	(6.69)	(6.43)	(8.77)
CCC/C	0.00	0.00	0.00	0.00	2.21	11.76	39.71	28.68	17.65
	(0.00)	(0.00)	(0.00)	(0.00)	(6.80)	(16.13)	(26.86)	(26.28)	(21.14)
Three year
AAA	64.45	21.56	1.18	1.18	0.24	0.00	0.00	0.00	11.37
	(32.64)	(30.69)	(4.15)	(4.17)	(1.47)	(0.00)	(0.00)	(0.00)	(8.71)
AA	0.37	66.12	18.71	1.58	0.06	0.18	0.00	0.24	12.74
	(0.84)	(18.14)	(12.95)	(2.86)	(0.41)	(0.65)	(0.00)	(0.63)	(8.35)
A	0.10	4.64	69.61	8.78	1.07	0.36	0.13	0.52	14.78
	(0.41)	(4.29)	(10.71)	(6.08)	(2.06)	(0.76)	(0.37)	(1.07)	(7.92)
BBB	0.00	0.91	7.88	64.46	3.55	1.24	0.29	1.73	19.93
	(0.00)	(1.69)	(5.22)	(11.08)	(3.46)	(2.30)	(1.05)	(2.99)	(6.51)
BB	0.00	0.39	0.87	12.24	43.15	9.82	1.65	4.86	27.02
	(0.00)	(1.30)	(2.12)	(9.06)	(16.01)	(7.69)	(3.24)	(7.94)	(12.05)
B	0.00	0.00	0.00	2.31	11.92	42.56	4.36	12.95	25.90
	(0.00)	(0.00)	(0.00)	(3.72)	(10.15)	(16.25)	(5.38)	(14.00)	(11.08)
CCC/C	0.00	0.00	0.00	0.00	2.27	13.64	8.33	40.15	35.61
	(0.00)	(0.00)	(0.00)	(0.00)	(6.89)	(17.92)	(18.54)	(24.95)	(24.27)
10 year
AAA	21.09	43.84	3.32	2.13	0.00	0.00	0.00	0.00	29.62
	(24.13)	(39.87)	(7.82)	(6.01)	(0.00)	(0.00)	(0.00)	(0.00)	(21.61)
AA	0.72	26.53	31.58	3.24	0.00	0.00	0.00	1.23	36.70
	(1.33)	(14.53)	(12.87)	(3.36)	(0.00)	(0.00)	(0.00)	(2.81)	(11.33)
A	0.15	6.24	37.94	12.21	1.56	0.43	0.03	2.29	39.14
	(0.35)	(4.10)	(6.96)	(8.09)	(2.10)	(0.77)	(0.16)	(2.17)	(7.99)
BBB	0.00	1.98	8.77	27.80	2.34	1.39	0.31	6.52	50.88
	(0.00)	(2.77)	(3.46)	(11.71)	(1.59)	(1.29)	(0.71)	(3.55)	(9.64)
BB	0.00	0.00	2.02	14.31	7.37	5.35	0.29	13.73	56.94
	(0.00)	(0.00)	(3.03)	(7.58)	(5.36)	(5.60)	(1.20)	(13.33)	(14.54)
B	0.00	0.00	0.61	5.67	7.29	10.53	0.20	26.32	49.39
	(0.00)	(0.00)	(2.17)	(6.27)	(7.06)	(8.68)	(1.06)	(17.34)	(14.06)
CCC/C	0.00	0.00	0.00	2.00	3.00	2.00	0.00	41.00	52.00
	(0.00)	(0.00)	(0.00)	(6.49)	(7.23)	(7.16)	(0.00)	(22.21)	(22.84)
Note: 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 28

Average multiyear U.S. region corporate transition matrices (1981-2022)--nonfinancials (%)
From/to	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
One year
AAA	86.02	8.28	1.01	0.00	0.22	0.00	0.00	0.00	4.47
	(9.64)	(9.13)	(2.05)	(0.00)	(0.66)	(0.00)	(0.00)	(0.00)	(5.83)
AA	0.46	86.89	7.38	0.76	0.11	0.16	0.00	0.00	4.23
	(0.66)	(6.91)	(4.65)	(1.17)	(0.32)	(0.42)	(0.00)	(0.00)	(3.25)
A	0.04	1.23	88.05	6.41	0.40	0.16	0.03	0.04	3.65
	(0.11)	(1.40)	(4.74)	(2.92)	(0.60)	(0.43)	(0.13)	(0.11)	(1.98)
BBB	0.01	0.06	3.15	87.43	3.78	0.53	0.06	0.15	4.84
	(0.06)	(0.14)	(2.10)	(5.13)	(1.92)	(0.82)	(0.14)	(0.31)	(2.10)
BB	0.02	0.02	0.13	4.36	78.34	7.66	0.49	0.68	8.29
	(0.08)	(0.10)	(0.27)	(2.26)	(5.44)	(4.24)	(0.50)	(0.89)	(2.74)
B	0.00	0.02	0.08	0.14	4.12	75.66	4.97	3.29	11.72
	(0.00)	(0.09)	(0.22)	(0.23)	(2.00)	(4.09)	(2.96)	(3.17)	(2.62)
CCC/C	0.00	0.00	0.14	0.20	0.41	12.97	45.07	27.33	13.89
	(0.00)	(0.00)	(0.53)	(0.77)	(0.91)	(8.40)	(8.41)	(13.00)	(5.00)
Three year
AAA	64.72	17.19	4.27	0.45	0.56	0.11	0.00	0.00	12.70
	(12.79)	(12.00)	(3.74)	(1.74)	(1.17)	(0.42)	(0.00)	(0.00)	(9.72)
AA	1.00	66.29	17.34	2.72	0.63	0.37	0.02	0.05	11.59
	(0.94)	(11.89)	(7.20)	(2.36)	(0.80)	(0.70)	(0.10)	(0.13)	(6.09)
A	0.07	2.91	69.44	14.37	1.60	0.64	0.07	0.17	10.73
	(0.13)	(2.90)	(7.72)	(4.04)	(1.30)	(0.94)	(0.15)	(0.28)	(3.53)
BBB	0.03	0.19	7.70	68.58	7.46	2.02	0.21	0.66	13.16
	(0.09)	(0.31)	(3.95)	(9.94)	(2.73)	(1.64)	(0.29)	(0.75)	(4.57)
BB	0.01	0.05	0.47	9.58	49.26	13.56	1.18	4.00	21.88
	(0.07)	(0.16)	(0.74)	(4.01)	(8.74)	(4.01)	(0.84)	(3.41)	(4.61)
B	0.00	0.03	0.19	0.54	8.43	43.15	5.62	12.24	29.80
	(0.06)	(0.12)	(0.45)	(0.77)	(3.30)	(5.64)	(2.50)	(6.96)	(5.18)
CCC/C	0.00	0.00	0.12	0.60	1.39	13.38	10.33	47.66	26.53
	(0.00)	(0.00)	(0.43)	(1.23)	(2.03)	(6.95)	(6.60)	(12.38)	(7.85)
10 year
AAA	27.29	25.69	9.63	3.56	0.34	0.00	0.00	0.34	33.14
	(8.06)	(9.70)	(3.84)	(3.96)	(0.91)	(0.00)	(0.00)	(0.69)	(14.62)
AA	1.42	24.98	28.70	9.34	1.62	0.51	0.02	0.49	32.92
	(0.97)	(9.88)	(4.47)	(4.20)	(1.32)	(0.64)	(0.12)	(0.60)	(6.40)
A	0.08	3.49	37.05	22.13	3.52	1.40	0.15	1.47	30.73
	(0.15)	(2.76)	(7.73)	(4.43)	(1.22)	(0.91)	(0.25)	(1.01)	(4.86)
BBB	0.02	0.36	11.25	38.68	8.03	2.81	0.16	3.98	34.70
	(0.11)	(0.31)	(4.79)	(9.30)	(1.54)	(1.62)	(0.23)	(2.27)	(7.33)
BB	0.02	0.09	1.48	11.21	17.50	9.44	0.82	14.95	44.51
	(0.09)	(0.17)	(1.00)	(3.39)	(5.59)	(3.32)	(0.49)	(5.82)	(4.12)
B	0.00	0.03	0.26	1.87	6.83	9.94	1.10	27.68	52.29
	(0.00)	(0.08)	(0.61)	(1.51)	(1.72)	(3.10)	(0.61)	(8.39)	(5.88)
CCC/C	0.00	0.00	0.12	0.64	2.78	2.84	0.35	57.00	36.28
	(0.00)	(0.00)	(0.41)	(1.07)	(2.52)	(2.30)	(0.72)	(10.70)	(8.96)
Note: 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 3: Gini Methodology

To measure relative ratings performance, we utilize the Lorenz curve as a graphical representation of the proportionality of a distribution, 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. On 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 13).

The procedure for calculating the Gini coefficients is illustrated in chart 13: 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.

Related Research

2022 Annual Global Corporate Default And Rating Transition Study, April 13, 2022

Credit Research & Insights:	Nicole Serino, New York + 1 (212) 438 1396; nicole.serino@spglobal.com
	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@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