Key Takeaways
- With 15 defaults in February, the 2024 global corporate default tally rose to 29, the highest year-to-date default count since 2009.
- Defaults in Europe are well above previous year-to-date totals, at eight--more than double the total of three at this point in 2023.
- By sector, 40% of defaults in February came from either heath care or media and entertainment, with three each.
An elevated number of defaults in Europe has helped boost S&P Global Ratings' 2024 global corporate default tally to 29, its highest year-to-date total since 2009. The following 15 companies defaulted in February:
- U.S.-based radiology operator Radiology Partners Holdings LLC
- U.S.-based tool manufacturer Apex Tool Group LLC
- Canada-based commercial real estate solutions and services Avison Young (Canada) Inc.
- U.S.-based staffing firm Tribe Buyer LLC
- U.S.-based ferry and cruise operator Hornblower HoldCo LLC
- U.K.-based multiplex cinemas operator Vue Entertainment International Ltd.
- U.S.-based components and control systems manufacturer Range Parent Inc.
- U.S.-based wood pellet producer Enviva Inc.
- U.K.-based financial service provider AFE S.A. SICAV-RAIF
- U.S.-based software company GoTo Group Inc.
- Argentina-based infrastructure service provider CLISA - Compania Latinoamericana de Infraestructura & Servicios S.A.
- U.S.-based health care provider Pluto Acquisition I Inc.
- U.S.-based retailer Astro Intermediate Holding II Corp.
- U.S.-based primary care medical services provider Cano Health Inc.
- One confidential issuer
The climbing defaults in February add to January's already substantial tally of 14 defaults. The year-to-date corporate default tally is now at its highest since 2009.
European Defaults Are Elevated
Although the U.S. leads with 17 defaults, the elevated defaults in Europe have bolstered the increased pace. With eight defaults so far in 2024, Europe has experienced at least two times the number of defaults as in any other previous year since 2008 (see chart 1).
Given the still-high total of lower-rated companies in the region, we expect European defaults to remain elevated over the near term, adding to a slight rise in defaults rates over the summer. However, we expect the region's default rate to stabilize at around 3.5% by December 2024 (see "European Speculative-Grade Default Rate To Stabilize At 3.5% By December 2024," Feb. 15, 2024). Wage growth and disinflation support our base-case scenario for this year.
Although European defaults this year have been spread across eight different sectors, we think that as in 2023, consumer-reliant sectors such as consumer products and media and entertainment will likely lead the default tally in 2024. Subdued consumer demand remains a key challenge to issuers in these sectors, as well as tight labor markets as many consumer-facing businesses' margins face pressure from higher wages.
European chemical and health care sectors' defaults might also be relatively high, given these sectors have many issuers with negative cash flow and high proportions of issuers rated 'CCC+' or below (see "Europe Continues To Walk A Fine Line," Feb. 7, 2024). Within the chemicals sector, headwinds for European producers extend well beyond 2024 due to higher cost positions and competitive pressures, prompting issuers to examine production footprints.
Chart 1
Health Care And Media And Entertainment Led Defaults In February
Globally, health care and media and entertainment led defaults in February with three each.
This month's media and entertainment defaults were spread across both the U.S. and Europe. They stemmed from free cash flow issues or near-term refinancing risk.
Meanwhile, all three health care defaults came from issuers based in the U.S., where highly leveraged companies were struggling to generate adequate sustained free cash flows given inflationary conditions, particularly in labor, as well as high interest rates.
Additionally, some of the defaults this year have come from the implementation of the No Surprises Act in the U.S. in 2022, which has led to long delays in payments and contributed to credit deterioration among some health care service providers at the lower end of the ratings spectrum. We expect the negative impact from such developments to start to moderate in mid-2024, leading to improvement in the second half of 2024. However, if headwinds continue, credit metrics, liquidity, and credit ratings could further deteriorate (see "Industry Credit Outlook 2024: Health Care," Jan. 9, 2024).
The media and entertainment and health care sectors also show the greatest increases in defaults compared with this point in 2023, with two and three more defaults, respectively. Given both these sectors, along with consumer products, lead our tally of weakest links (issuers rated 'B-' or lower with negative rating outlooks or ratings on CreditWatch negative), we can except defaults in these sectors to continue (see "This Month In Credit: Rising Market Tides Aren't Lifting All Boats," Feb. 29, 2024).
Chart 2
Distressed Exchanges Remain The Leading Cause Of Defaults
Distressed exchange remained the primary reason for defaults in February, with seven defaults--the highest number of distressed exchanges in February since 2008. Distressed exchanges in 2024 so far outnumber the 2023 and 2021 tallies by three as lenders continue to look to avoid costly bankruptcy proceedings (see chart 3). We expect this trend to continue as struggling issuers seek options to manage looming debt maturities.
Chart 3
Chart 4
Table 1
| We expect U.S. and European default rates to increase in coming months | ||||||
|---|---|---|---|---|---|---|
| Region | 12-month-trailing speculative-grade default rate (%) | Weakest links | ||||
| U.S. | 4.71* | 221 | ||||
| Emerging markets | 1.83 | 22 | ||||
| Europe | 4.07* | 49 | ||||
| Other developed | 4.35 | 9 | ||||
| Global | 3.88 | 301 | ||||
| Year-to-date data as of Feb. 29, 2024. Weakest link data as of Jan. 31, 2024. Notes: Trailing-12-month speculative-grade default rates from Feb. 29, 2023, to Feb. 29, 2024, are preliminary and subject to change. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers.*Trailing-12-month speculative-grade default rates from Jan. 31, 2023, to Jan. 31, 2024. 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 | ||||||||
| 45293 |
Resolute Investment Managers Inc. |
U.S. | Financial institutions | D | CC | Distressed exchange | ||||||||
| 45295 |
Toro Private Holdings I Ltd. |
U.K. | Transportation | D | CC | Distressed exchange | ||||||||
| 45296 |
AMT TopCo LLC |
U.S. | Health care | D | CCC | Missed payments | ||||||||
| 45301 |
Ignition Topco B.V. |
Netherlands | Chemicals, packaging, and environmental services | D | CCC | Missed payments | ||||||||
| 45302 |
Amphora Intermediate II Ltd. |
U.K. | Consumer products | SD | CCC+ | Missed payments | ||||||||
| 45302 | Confidential | Confidential | Metals, mining, and steel | SD | CC | Confidential | ||||||||
| 45307 |
Covis Finco S.a.r.l. |
Switzerland | Health care | SD | CCC- | Distressed exchange | ||||||||
| 45308 |
TMK Hawk Parent Corp. |
U.S. | Consumer products | SD | CC | Distressed exchange | ||||||||
| 45309 |
KNS Holdco LLC |
U.S. | Consumer products | SD | B- | Distressed exchange | ||||||||
| 45310 |
System1 Inc. |
U.S. | Media and entertainment | SD | CCC | Distressed exchange | ||||||||
| 45315 |
New Trojan Parent Inc. |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
| 45317 |
Gol Linhas Aereas Inteligentes S.A. |
Brazil | Transportation | D | CCC- | Bankruptcy | ||||||||
| 45322 |
AMC Entertainment Holdings Inc. |
U.S. | Media and entertainment | SD | CCC+ | Distressed exchange | ||||||||
| 45322 |
Enjoy S.A. |
Chile | Media and entertainment | D | CCC- | Bankruptcy | ||||||||
| 45327 |
Cano Health Inc. |
U.S. | Health care | D | CCC- | Bankruptcy | ||||||||
| 45328 |
Astro Intermediate Holding II Corp. |
U.S. | Consumer products | SD | CCC | Missed payments | ||||||||
| 45330 |
Pluto Acquisition I Inc. |
U.S. | Health care | SD | CC | Distressed exchange | ||||||||
| 45331 | Confidential | Confidential | Telecommunications | D | CC | Confidential | ||||||||
| 45336 |
CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A. |
Argentina | Capital goods | SD | CC | Distressed exchange | ||||||||
| 45336 |
GoTo Group Inc. |
U.S. | High technology | SD | CCC+ | Distressed exchange | ||||||||
| 45337 |
AFE S.A. SICAV-RAIF |
U.K. | Financial Institutions | SD | CC | Distressed exchange | ||||||||
| 45338 |
Enviva Inc. |
U.S. | Utility | D | CCC- | Missed payments | ||||||||
| 45338 |
Range Parent Inc. |
U.S. | Capital goods | D | CCC- | Bankruptcy | ||||||||
| 45342 |
Vue Entertainment International Ltd. |
U.K. | Media and entertainment | SD | CC | Distressed exchange | ||||||||
| 45343 |
Hornblower HoldCo LLC |
U.S. | Media and entertainment | D | CCC- | Bankruptcy | ||||||||
| 45343 |
Tribe Buyer LLC |
U.S. | Media and entertainment | D | CCC- | Missed payments | ||||||||
| 45345 |
Avison Young (Canada) Inc. |
Canada | Financial institutions | SD | CCC | Missed payments | ||||||||
| 45348 |
Apex Tool Group LLC |
U.S. | Forest products and building materials | SD | CCC+ | Distressed exchange | ||||||||
| 45348 |
Radiology Partners Holdings LLC |
U.S. | Health care | SD | CC | Distressed exchange | ||||||||
| Data as of Feb. 29, 2024. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro. | ||||||||||||||
Related Research
- Apex Tool Group LLC Downgraded To 'SD' From 'CCC+' On Debt Exchange; Term Loan Ratings Lowered to 'D', Feb. 27, 2024
- Radiology Partners Holdings LLC Downgraded To 'SD' On Completed Debt Modification Transaction, Feb. 26, 2024
- Avison Young (Canada) Inc. Downgraded To 'SD' Following Missed Term Loan Payments; Term Loan Rating Lowered To 'D', Feb. 24, 2024
- Hornblower HoldCo LLC Downgraded To 'D' From 'CCC-' On Chapter 11 Bankruptcy Filing, Feb. 22, 2024
- Tribe Buyer LLC Downgraded To 'D' From 'CCC-' On Missed Principal Payment, Feb. 22, 2024
- Vue Entertainment International Downgraded To 'SD' On Completed Debt Restructuring, Feb. 20, 2024
- Enviva Inc. Downgraded To 'D' On Failure To Make Interest Payment, Feb. 17, 2024
- Range Parent Inc. Downgraded To 'D' From 'CCC-' On Chapter 11 Bankruptcy Filing, Feb. 17, 2024
- European Speculative-Grade Default Rate To Stabilize At 3.5% By December 2024, Feb. 16, 2024
- AFE S.A. Downgraded To 'SD' From 'CC' On Completed Debt Restructuring; Secured Note Rating Lowered To 'D', Feb. 15, 2024
- Argentine Conglomerate CLISA Issuer Credit Rating Lowered To 'SD' Following Consent Solicitation Acceptance, Feb. 15, 2024
- U.S. Speculative-Grade Corporate Default Rate To Hit 4.75% By December 2024 After Third-Quarter Peak, Feb. 15, 2024
- GoTo Group Inc. Downgraded To 'SD' From 'CCC+' On Distressed Exchange, Feb. 14, 2024
- Pluto Acquisition I Inc. Downgraded To 'SD' (Selective Default) On Distressed Exchanges, Feb. 9, 2024
- Astro Intermediate Holding II Corp. Downgraded To 'SD' On Missed Term Loan Payments; Debt Ratings Lowered, Feb. 7, 2024
- Cano Health Inc. Downgraded To 'D' On Chapter 11 Bankruptcy Filing, Feb. 6, 2024
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 |
| Ekaterina Tolstova, Frankfurt +49 173 6591385; ekaterina.tolstova@spglobal.com | |
| Research Contributor: | Vaishali Singh, Pune; vaishali.singh2@spglobal.com |
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