Key Takeaways
- There were 14 global corporate defaults in January, well above the long term average of nine.
- Half of the defaults in January were from the consumer products (four) and media and entertainment (three) sectors as lower rated issuers continue to struggle with weak business risks profiles, highly leveraged capital structures, and looming debt maturities.
- We are expecting defaults to continue rising in 2024, as rating transitions in the 'CCC+' and below rating category continued to increase in 2023.
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
Chart 2
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
Chart 4
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)
- 2022 Annual Global Financial Services Default And Rating Transition Study
- 2022 Annual Global Corporate Default And Rating Transition Study
- 2022 Annual U.S. Corporate Default And Rating Transition Study
- 2022 Annual European Corporate Default And Rating Transition Study
- 2022 Annual Japanese Corporate And Public Finance Default And Rating Transition Study
- 2022 Annual Asia Corporate Default And Rating Transition Study
- 2022 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2022 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study
- 2022 Annual Greater China Corporate Default And Rating Transition Study
Structured finance
- 2022 Annual Global Structured Finance Default And Rating Transition Study
- 2022 Annual Japanese Structured Finance Default And Rating Transition Study
- 2022 Annual European Structured Finance Default And Rating Transition Study
- 2022 Annual Taiwan Ratings Corp. Structured Finance Default And Rating Transition Study
- 2021 Annual Mexican Structured Finance Default And Rating Transition Study
- 2022 Annual Global Leveraged Loan CLO Default And Rating Transition Study
Public finance
- 2022 Annual U.S. Public Finance Default And Rating Transition Study
- 2022 Annual International Public Finance Default And Rating Transition Study
- 2021 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
Sovereign and international public finance
This report does not constitute a rating action.
Credit Research & Insights: | 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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