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Default, Transition, and Recovery: Quarterly Defaults Reach Highest Level Since 2020

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S&P Global Ratings' 2023 global corporate default tally has reached to 84 after following 13 defaults in June:

  • Australia based health care sector Genesis Care Pty Limited
  • Atlanta-based coin-operated amusement machine operator Lucky Bucks LLC
  • Virginia-based third-party provider of visas, passports, and immigration-related travel documentation KCIBT Holdings L.P..
  • U.S.-based data center operator Cyxtera Technologies Inc..
  • U.S. based ATM and point-of-sale terminal manufacturer, seller, and servicer Diebold Nixdorf Inc.
  • U.S.-based competitive telecommunications and cloud provider U.S. TelePacific Holdings Corp.Canada based mining and processing iron ore mineral reserves Tacora Resources Inc.
  • Brazil based cement producer and seller InterCement Brasil S.A..
  • U.S. based home appliance Instant Brands Holdings Inc..
  • U.S. based transport service provider URS Holdco Inc.
  • U.S. based media and entertainment service provider Photo Holdings LLC
  • U.S. based provide credit report services PGX Holdings Inc..
  • And one confidential issuer.

With 44 defaults in the second quarter, the global default tally recorded its highest quarterly default tally since the fourth quarter of 2020, as defaults continue to rise. By region, nearly two-thirds of defaults in the second quarter were from the U.S., where credit conditions remain tight with benchmark rates unlikely to fall, continuing pricing pressures, and lenders becoming even more selective. In June alone, 77% of defaults were from U.S. based companies. Meanwhile in Europe, the number of defaults has been more stable in recent weeks with none in June and only six defaults this quarter, down from seven in the first quarter.

Moving forward, we expect there will be greater stress in the U.S., where 38% of speculative grade issuers have these low ratings, compared with 30% in Europe, and only 16% in the rest of the world. Considering current trends, we anticipate defaults will increase through early 2024--to 4.25% in the U.S. and 3.6% in Europe (see "Global Credit Conditions Q3 2023: Higher For Longer Will Fuel Ratings Divergence", June 27, 2023).

Chart 1

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Chart 2

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In the emerging markets region, defaults have been rising. All 11 emerging market defaults so far this year—six of which were in the second quarter--were in Latin America, versus only two Latin American defaults for the same period in 2022 (see chart 3). The region's extremely tight financing conditions are exacerbating companies' funding costs and heightening credit stress for entities that already had precarious liquidity positions. More defaults may come given persistently higher interest rates coupled with looming debt maturities in the region.

Chart 3

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The media and entertainment sector continued to lead defaults in June with three followed by consumer products and telecom with two each. For the media and entertainment sector, year-to-date totals are almost five times greater than at this point in 2022. The combination of now-elevated rates and worsening secular or cyclical media trends is hurting cash flow generation of lower-rated companies, especially in the U.S. where many of these defaults are from. We expect this trend to broadly continue as media and entertainment and consumer products lead our weakest link tally.

Chart 4

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Bankruptcies led defaults last month with five, compared with distressed exchanges with four. However, the number of distressed exchanges for the quarter remains elevated with 41% of total defaults--- slightly higher than the previous quarter.

Chart 5

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Chart 6

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Table 1

U.S. speculative-grade default rate is expected to climb to 3.2% in June
Region 12-month trailing speculative-grade default rate (%) Weakest links
U.S. *3.24 209
Emerging market 2.4 40
Europe *3.06 52
Other developed 2.9 10
Global 2.8 311
Note:* Trailing-12-month speculative grade default rates for from June 30, 2023- June 30, 2023 are preliminary and subject to change.Trailing-12-month speculative grade default rates for from May 31, 2023- May 31, 2023. Year-to-date data as of June 30, 2023. Weakest link data is as of May 31, 2023. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially-rated issuers. Sources: S&P Global Ratings Credit Research and S&P Global Market Intelligence’s CreditPro®.

Table 2

Year-to-date global corporate default tally elevated to 84
Date Parent company Country/Market Subsector To From Reason
1/3/2023

Moran Foods LLC (SAL Acquisition Corp.)

U.S. Retail/Restaurants SD CCC+ Distressed exchange
1/16/2023

Americanas S.A. (Lojas Americanas S.A.)

Brazil Retail/Restaurants D B Missed principal and interest payments
1/19/2023

Party City Holdings, Inc. (PC Nextco Holdings LLC)

U.S. Retail/Restaurants D CCC Bankruptcy
1/20/2023

Mexarrend, S.A.P.I. de C.V.

Mexico Financial Institutions D CC Missed principal and interest payments
1/24/2023

Serta Simmons Bedding LLC

U.S. Consumer Products D CCC- Bankruptcy
1/27/2023

Bed Bath & Beyond Inc.(A)

U.S. Retail/Restaurants D CC Missed principal and interest payments
1/30/2023

Cooper-Standard Holdings, Inc.

U.S. Automotive SD CC Distressed exchange
1/31/2023

Missouri TopCo Ltd.

U.K. Consumer Products SD CCC- Distressed exchange
1/31/2023

Invacare Corp.

U.S. Health care D NR Bankruptcy
2/3/2023

Oi S.A.

Brazil Telecommunications D CCC- Missed principal and interest payments
2/9/2023

KNB Holdings Corp.

U.S. Consumer Products D CCC- Bankruptcy
2/10/2023

Yak Access, LLC

U.S. Capital goods D CCC Distressed exchange
2/14/2023

K&N Parent Inc.

U.S. Automotive D CCC- Distressed exchange
2/15/2023

99 cents only stores LLC

U.S. Retail/Restaurants SD CCC+ Missed payments
2/15/2023

Avaya Holdings Corp.

U.S. High Technology D CC Bankruptcy
2/15/2023

Diamond Sports Group LLC

U.S. Media and entertainment D CCC- Missed interest payments
2/16/2023 Confidential Confidential Media and entertainment D CC Confidential
2/16/2023

Stanadyne Holdings, Inc.

U.S. Capital goods D NR Bankruptcy
2/17/2023

AMC Entertainment Holdings Inc.

U.S. Media and entertainment SD CC Distressed exchange
2/17/2023

Premier Brands Group Holdings LLC

U.S. Consumer Products SD CCC Distressed exchange
2/22/2023

Altisource Portfolio Solutions S.A.

Luxembourg Financial Institutions SD CC Distressed exchange
2/22/2023

Foodco Bondco SAU

Spain Retail/Restaurants SD CCC- Missed interest payments
2/24/2023

Bausch Health Cos. Inc.

Canada Health care SD CCC+ Distressed exchange
2/28/2023

Equinox Holdings Inc.

U.S. Media and entertainment SD CCC- Distressed exchange
2/28/2023

Rising Tide Holdings, Inc.

U.S. Retail/Restaurants SD CC Distressed exchange
3/1/2023

Akorn Operating Company LLC

U.S. Health Care D CCC+ Bankruptcy
3/2/2023

Community Health Systems Inc.

U.S. Health Care SD B- Distressed exchange
3/6/2023

LendingTree Inc.

U.S. Media and entertainment SD B- Distressed exchange
3/10/2023

Loyalty Ventures Inc.

U.S. Media and entertainment D CCC+ Bankruptcy
3/10/2023

Silicon Valley Bank

U.S. Financial institutions D BBB Regulatory
3/14/2023

Bioplan USA Inc.

U.S. Media and entertainment D CCC Out-Of-Court Restructuring
3/14/2023

Gol Linhas Aereas Inteligentes S.A.

Brazil Transportation SD CC Distressed exchange
3/14/2023

Technicolor Creative Studios

France Media and entertainment D CCC- Missed interest payments
3/16/2023

Mallinckrodt plc

Ireland Health Care SD B- Distressed exchange
3/17/2023

National CineMedia Inc.

U.S. Media and entertainment D CCC- Missed interest payments
3/17/2023

SVB Financial Group

U.S. Financial institutions D NR Regulatory
3/20/2023

TV Azteca, S.A.B de C.V.

Mexico Media and entertainment D NR Bankruptcy
3/23/2023

Flint HoldCo S.a r.l.

Luxembourg Chemicals, packaging, and environmental services SD CCC Missed principal payments
3/31/2023

Toro Private Holdings I, Ltd

U.K. Transportation SD CCC+ Distressed exchange
3/31/2023

Wahoo Fitness Acquisition LLC

U.S. Consumer products D CCC- Missed principal and interest payments
4/5/2023

FQM (Akubra) Inc.

Canada Metals, mining, and steel D NR Bankruptcy
4/6/2023 Lannett Company Inc. U.S. Health Care SD CCC+ Missed interest payments
4/6/2023 Rodan & Fields, LLC U.S. Consumer products D CCC- Out-Of-Court Restructuring
4/6/2023 Covis Finco S.a r.l Switzerland Health Care SD CCC+ Distressed exchange
4/6/2023 Confidential Confidential Capital goods D CCC- Confidential
4/10/2023

QualTek LLC

U.S. Capital goods SD CCC+ Missed interest payments
4/10/2023 Confidential Confidential Media and entertainment D CC Confidential
4/12/2023 Confidential Confidential Utlities D CCC- Confidential
4/12/2023 Guacolda Energia S.A Chile Utlities D CC Distressed exchange
4/17/2023 David's Bridal, LLC U.S. Consumer Products D NR Bankruptcy
4/17/2023 Adler Group S.A. (ADO Group Ltd.) Luxembourg Homebuilders/real estate companies SD CC Distressed exchange
4/19/2023

Skillz Inc.

U.S. Media and entertainment SD CCC+ Distressed exchange
4/24/2023

Bed Bath & Beyond Inc.(B)

U.S. Retail/Restaurants D CCC- Bankruptcy
4/27/2023

Burger BossCo Intermediate, Inc.

U.S. Retail/Restaurants D CCC- Missed principal and interest payments
4/27/2023

Grupo IDESA S.A. de C.V.

Mexico Chemicals, packaging, and environmental services SD CC Distressed exchange
5/1/2023

FXI Holdings, Inc.

U.S. Chemicals, packaging, and environmental services SD CC Distressed exchange
5/2/2023 Confidential Confidential Consumer products D CCC- Confidential
5/2/2023

WeWork Companies LLC

U.S. Media and entertainment SD CC Distressed exchange
5/5/2023

Frigoglass SAIC

Greece Consumer products SD CC Distressed exchange
5/8/2023

CatLuxe Sarl (CatLuxe Acquistion Sarl)

Luxembourg Consumer products D CC Out-Of-Court Restructuring
5/10/2023

Range Parent Inc.

U.S. Capital goods SD CCC Distressed exchange
5/15/2023

Telesat Canada (Telesat Holdings Inc.)

Canada Telecommunications SD CCC+ Distressed exchange
5/16/2023

Envision Healthcare Corp. (Envision Healthcare Holdings Inc.)

U.S. Health Care D CCC Bankruptcy
5/16/2023

Monitronics International Inc.

U.S. Media and entertainment D CCC Bankruptcy
5/17/2023

At Home Group Inc.

U.S. Retail/Restaurants SD CCC+ Distressed exchange
5/17/2023

CareerBuilder, LLC

U.S. Media and entertainment SD CCC Distressed exchange
5/18/2023

Curo Group Holdings Corp.

U.S. Financial institutions SD B- Distressed exchange
5/18/2023

Venator Materials PLC

U.K. Chemicals, packaging, and environmental services D CCC- Bankruptcy
5/22/2023

LifeScan Global Corp.

U.S. Health Care SD CC Distressed exchange
5/24/2023 Confidential Confidential Media and entertainment D CCC Confidential
5/29/2023 Confidential Confidential Forest products and building materials SD CCC- Confidential
6/1/2023

Genesis Care Pty Ltd.

Australia Health care D CCC- Bankruptcy
6/1/2023

Lucky Bucks, LLC

U.S. Media and entertainment D CCC- Missed principal and interest payments
6/2/2023

Diebold Nixdorf Inc.

U.S. High Technology D CC Bankruptcy
6/4/2023

PGX Holdings Inc.

U.S. Media and entertainment D NR Bankruptcy
6/5/2023

KCIBT Holdings LP

U.S. Consumer Products SD CCC Distressed exchange
6/6/2023

Cyxtera Technologies, Inc.

U.S. Telecommunications D CCC- Bankruptcy
6/7/2023

U.S. TelePacific Holdings Corp.

U.S. Telecommunications SD CCC- Distressed exchange
6/12/2023

Tacora Resources Inc.

Canada Metals, mining, and steel D CCC- Missed Interest Payments
6/12/2023

InterCement Brasil S.A. (InterCement Participacoes S.A.)

Brazil Forest products and building materials SD CC Missed principal and interest payments
6/13/2023

Instant Brands Holdings Inc.

U.S. Consumer Products D CCC- Bankruptcy
6/21/2023

Photo Holdings, LLC

U.S. Media and entertainment SD CC Distressed exchange
6/23/2023

URS Holdco, Inc.

U.S. Transportation SD CCC+ Distressed exchange
6/30/2023 Confidential Confidential Aerospace and defense D CCC- Confidential
Data as of June 30, 2023. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro® Copyright © 2018 by Standard & Poor’s Financial Services LLC. All rights reserved.

We would like to thank our colleague Vaishali Singh at S&P Global/CRISIL for his assistance with this report.

Related Research

Default Studies

More analysis and statistics are available in our annual default studies, published on RatingsDirect:

Corporate (financial and nonfinancial)
Structured finance
Public finance
Sovereign and international public finance

This report does not constitute a rating action.

Credit Research & Insights:Nicole Serino, New York + 1 (212) 438 1396;
nicole.serino@spglobal.com
Patrick Drury Byrne, Dublin (00353) 1 568 0605;
patrick.drurybyrne@spglobal.com
Research Contributor:Vaishali Singh, Pune;
vaishali.singh2@spglobal.com

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