articles Ratings /ratings/en/research/articles/240213-default-transition-and-recovery-highest-january-for-corporate-defaults-since-2010-13000742.xml content esgSubNav
In This List
COMMENTS

Default, Transition, and Recovery: Highest January For Corporate Defaults Since 2010

COMMENTS

Default, Transition, and Recovery: Spotlight On U.S. Defaults In October

COMMENTS

Default, Transition, and Recovery: European Speculative-Grade Default Rate Should Fall To 4.25% By September 2025

COMMENTS

Default, Transition, and Recovery: U.S. Speculative-Grade Corporate Default Rate To Fall Further To 3.25% By September 2025

COMMENTS

Credit Trends: U.S. Public Finance Credit Quality: Obligors' Finances Drove Rating Actions In The Third Quarter


Default, Transition, and Recovery: Highest January For Corporate Defaults Since 2010

image

S&P Global Ratings' 2024 global corporate default tally has reached 14 after the following defaults in January:

  • U.S. based financial institution Resolute Investment Managers Inc.
  • U.K. based travel retail platforms provider Toro Private Holdings I Ltd.
  • U.S. based wound care provider AMT TopCo LLC
  • Netherland based ultraviolet (UV) curable material provider Ignition Topco B.V.
  • U.K. based wine producer and distributor Amphora Intermediate II Ltd.
  • Switzerland based health care company Covis Finco S.a.r.l.
  • U.S. based foodservice equipment and supplies provider TMK Hawk Parent Corp.
  • U.S. based consumer products company KNS Holdco LLC
  • U.S. based online digital marketing services provider System1 Inc.
  • U.S. based medical scrubs provider New Trojan Parent Inc.
  • Brazil-based airline Gol Linhas Aereas Inteligentes S.A.
  • U.S. based theatrical exhibition company AMC Entertainment Holdings Inc.
  • Chile based hotel and gaming operator Enjoy S.A.
  • And one confidential issuer

The recent trend of elevated corporate defaults has continued into 2024. There have been 14 defaults in January, up from 12 in December 2023, its highest January tally since 2010. Both the U.S. and Europe continue to drive defaults with seven and five, respectively, largely coming from the consumer and media and entertainment sectors. These sectors have a high volume of speculative-grade debt maturing over the next 36-months (see "Maturity Wall Looms Higher For Speculative-Grade Debt," Feb 5, 2024).

We are expecting defaults to remain high as the number of rating transitions in the 'CCC+' and below rating category continues to be elevated, particularly in North America (see chart 1). Risky credits (Issuers rated 'CCC+' and below) in both the U.S. and Europe are still above their five-year averages (see "Debt Levels Rose 33% In North America In 2023 As Maturities Loom" and "Europe Continues To Walk A Fine Line" and "Silver Lining For Emerging Market", Feb. 7, 2024).

S&P Global Ratings expects the U.S. speculative-grade corporate default rate could reach 5% by September 2024, while the European corporate speculative-grade default rate could reach 3.75% by September 2024, according to our November forecast (see " Higher Rates For Even Longer Could Push The U.S. Speculative-Grade Corporate Default Rate To 5% By September 2024" and "Elevated Interest Rates Could Push The European Speculative-Grade Corporate Default Rate To 3.75% By Sept. 2024", Nov. 17, 2023).

Chart 1

image

Chart 2

image

Distressed Exchange Was The Leading Reason For Defaults

Distressed exchange continued to be the primary reason for defaults in January--with seven defaults--the highest January number of distressed exchanges since 2008. Distressed exchanges have become popular among issuers and lenders looking to avoid a more costly bankruptcy proceeding. We expect this trend to continue as struggling issuers seek options to manage looming debt maturities.

Chart 3

image

Chart 4

image

Table 1

Global Corporate Default Summary--We expect U.S. and Europe default rate to increase in coming months
Region 12-month trailing speculative-grade default rate (%) Weakest links
U.S. *4.72 228
Emerging market 1.8 25
Europe *3.90 48
Other developed 4.3 8
Global 3.7 309
Note:* Trailing-12-month speculative grade default rates for from Jan. 31, 2024- Jan.31, 2024 are preliminary and subject to change.Trailing-12-month speculative grade default rates for from Dec. 31, 2023- Dec.31, 2023. Year-to-date data as of Jan. 31, 2024. Weakest link data is as of Dec. 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

Global Corporate Defaults in 2024
Date Parent company Country/Market Subsector To From Reason
1/2/2024

Resolute Investment Managers Inc.

U.S. Financial institutions D CC Distressed exchange
1/4/2024

Toro Private Holdings I Ltd.

U.K. Transportation D CC Distressed exchange
1/5/2024

AMT TopCo LLC

U.S. Health care D CCC Missed Payments
1/10/2024

Ignition Topco B.V.

Netherlands Chemicals, packaging, and environmental services D CCC Missed Payments
1/11/2024

Amphora Intermediate II Ltd.

U.K. Consumer products SD CCC+ Missed Payments
1/11/2024 Confidential Confidential Metals, mining, & steel SD CC Confidential
1/16/2024

Covis Finco S.a.r.l.

Switzerland Health care SD CCC- Distressed exchange
1/17/2024

TMK Hawk Parent Corp.

U.S. Consumer products SD CC Distressed exchange
1/18/2024

KNS Holdco LLC

U.S. Consumer products SD B- Distressed exchange
1/19/2024

System1 Inc.

U.S. Media & entertainment SD CCC Distressed exchange
1/24/2024

New Trojan Parent Inc.

U.S. Consumer products D CCC- Bankruptcy
1/26/2024

Gol Linhas Aereas Inteligentes S.A.

Brazil Transportation D CCC- Bankruptcy
1/31/2024

AMC Entertainment Holdings Inc.

U.S. Media & entertainment SD CCC+ Distressed exchange
1/31/2024

Enjoy S.A.

Chile Media & entertainment D CCC- Bankruptcy

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

No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.

 

Create a free account to unlock the article.

Gain access to exclusive research, events and more.

Already have an account?    Sign in