S&P Global Ratings' 2024 global corporate default tally has reached 55 after the following defaults in April:

• Chilean telecom service provider Wom S.A.
• U.S. IT provider Rackspace Technology Global Inc.
• U.S. footwear manufacturer Never Slip Topco Inc.
• Luxembourg-based industrial machinery manufacturer Arvos LuxCo S.a.r.l.
• Canadian iron ore mining Baffinland Iron Mines Corp.
• U.S. provider of infrastructure technology solutions Casa Systems Inc.
• U.S. collaboration technology service provider ConvergeOne Holdings Inc.
• Dutch silicone release liner manufacturer Loparex Midco B.V.
• U.S. retailer 99 Cents Only Stores LLC
• U.S. fashion retailer Express Inc.
• U.S. beverage co-manufacturer City Brewing Co. LLC
• U.S. eyecare service provider EyeCare Partners LLC
• U.S. advertising solution service provider Digital Media Solutions Inc.
• Dutch garden consumer product manufacturer Keter Group B.V.
• Canadian broadband service provider Xplore Inc.
• Three confidential issuers

Defaults More Than Doubled In April

After a slight lull in defaults in March, April experienced a sharp spike in defaults, which increased to 18, from eight in March. Year-to-date defaults amount to 55, which is on par with the number of defaults in the same period last year, and exceed the 10-year average by 25%.

The monthly default tally increased across geographies. The U.S. led with 56%, followed by Europe (22%), other developed regions (11%), and emerging markets (11%). The number of defaults in the U.S. doubled to 10 in April, compared with March, and increased to four in Europe, from three in the previous month. Year-to-date defaults in Europe are currently at their highest levels since 2008. Defaults in April accounted for one-third of defaults year to date (see chart 1).

Chart 1

Defaulted Debt Almost Halved

Defaulted debt decreased to $8.6 billion in April, from $16.3 billion in March (see chart 2). The high amount of defaulted debt in March mainly resulted from the default of U.S. telecommunications company Lumen Technologies Inc.

Most of the defaulted debt in April came from the U.S. with $7.1 billion, or 85%, of total defaulted debt, from $15.4 billion (94% of the total) in March.

Unlike in March, when most defaulted debt came from the telecommunications sector, the high technology and consumer products sectors were the main contributors to the volume of defaulted debt in April (see chart 3). High technology accounted for 41% and consumer products for 26% of defaulted debt volumes, which translated into $5.8 billion of defaulted debt in April. Still tight market conditions and exceedingly high costs of debt limited companies' ability to obtain favorable refinancing conditions, while their liquidity continued to deteriorate.

Chart 2

Chart 3

Defaults Mainly Resulted From Distressed Exchanges And Bankruptcies

Distressed exchanges led to the default of 28 companies year to date and remain the main reason for defaults in 2024. They accounted for 44% of defaults in April and 51% of year-to-date defaults. As companies become comfortable with higher leverage levels in their capital structures, they continue to use distressed exchanges to manage looming maturity dates. Europe is driving this trend, with distressed exchanges causing all defaults of publicly rated companies in April. In the U.S., 44% of total publicly rated defaults in April resulted from distressed exchanges and 56% from bankruptcies.

In addition to distressed exchanges, bankruptcies in April led to four defaults in the U.S., one default in Canada, and one in Chile. The number of defaulting issuers filing for bankruptcy increased to six in April, from one in March (see chart 4). In comparison, the total number of issuers filing for bankruptcy in the first quarter of 2024 was seven. Looming maturities, strained operations, and elevated refinancing costs were among the main reasons for the increase in bankruptcies. In general, bankruptcies slowed in recent years, with most issuers leaning toward distressed exchanges. Defaulted issuers that opted for bankruptcy filings faced increasing free operating cash flow deficits, weak operating metrics, or liquidity issues.

Chart 4

Consumer Products Sector Led Defaults In April

The consumer products sector contributed to four of the 18 defaults in April, while another three defaults came from the media and entertainment sector (see chart 5). Defaults in both sectors resulted from distressed exchanges and bankruptcies alike. Year-to-date, these two sectors continue to lead the tally, with each sector accounting for 10 defaults. The consumer products sector has consistently been the highest contributor to defaults since the start of the COVID-19-induced recession. If spending remains subdued, this trend could continue (see chart 6).

Chart 5

Chart 6

Table 1

Table 2

Related Research

• Digital Media Solutions Inc. Downgraded To 'SD' On Distressed Debt Restructuring; Issue-Level Ratings Lowered To 'D', April 29, 2024
• Keter Group B.V. Downgraded To 'SD' On Lenders Consent To Implement Distressed Debt Exchange, April 29, 2024
• Xplore Inc. Downgraded To 'D' From 'CCC-' On Missed Interest Payments, April 29, 2024
• EyeCare Partners LLC Downgraded To 'SD' On Announced Private Exchange; First-Lien Ratings Placed On CreditWatch Negative, April 24, 2024
• City Brewing Co. LLC Downgraded To 'SD' From 'CCC' On Distressed Debt Exchange, April 23, 2024
• 99 Cents Only Stores LLC Downgraded To 'D' From 'CCC' On Chapter 11 Bankruptcy Filing, April 10, 2024
• PHM Netherlands Midco B.V. Downgraded To 'SD' (Selective Default) On Super-Priority Debt Issuance, April 8, 2024
• Baffinland Iron Mines Corp. Downgraded To 'SD' From 'CCC' On Credit Facility Extension, April 5, 2024
• ConvergeOne Holdings Inc. Downgraded To 'D' From 'CCC+' On Bankruptcy Filing; Debt Ratings Also Lowered To 'D', April 5, 2024
• Industrial Heat Exchange Solutions Provider Arvos LuxCo S.a.r.l. Downgraded To 'D' On Distressed Exchange, April 5, 2024
• Casa Systems Inc. Downgraded To 'D' From 'CCC+' Following Chapter 11 Bankruptcy Filing, April 5, 2024
• Never Slip Topco Inc. Downgraded To 'D' On Chapter 11 Bankruptcy Filing, April 4, 2024
• Rackspace Technology Global Inc. Downgraded To 'SD' From 'CCC-' Following Below-Par Debt Transactions, April 3, 2024
• Wom S.A. Downgraded To 'D' On Chapter 11 Bankruptcy Filing, April 1, 2024
• European Speculative-Grade Default Rate To Stabilize At 3.5% By December 2024, Feb. 15, 2024
• U.S. Speculative-Grade Corporate Default Rate To Hit 4.75% By December 2024 After Third-Quarter Peak, Feb. 15, 2024

Default Studies

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

Corporate (financial and non-financial)

• 2023 Annual Japanese Corporate Default And Rating Transition Study, March 22, 2024
• 2022 Annual Greater China Corporate Default And Rating Transition Study, Sept. 27, 2023
• 2022 Annual Asia Corporate Default And Rating Transition Study, June 27, 2023
• 2022 Annual U.S. Corporate Default And Rating Transition Study, June 13, 2023
• 2022 Annual Global Financial Services Default And Rating Transition Study, June 12, 2023
• 2022 United Kingdom Corporate Default And Rating Transition Study, June 12, 2023
• 2022 Annual European Corporate Default And Rating Transition Study, May 25, 2023
• 2022 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study, May 23, 2023
• 2023 Annual Global Corporate Default And Rating Transition Study, March 28, 2024
• 2023 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study, March 26, 2024

Structured finance

• 2023 Annual Taiwan Ratings Corp. Structured Finance Default And Rating Transition Study, March 26, 2024
• 2023 Annual Global Structured Finance Default And Rating Transition Study, March 18, 2024
• 2022 Annual Mexican Structured Finance Default And Rating Transition Study, Dec. 12, 2023
• 2022 Annual European Structured Finance Default And Rating Transition Study, July 21, 2023
• 2022 Annual Global Leveraged Loan CLO Default And Rating Transition Study, May 26, 2023
• 2022 Annual Japanese Structured Finance Default And Rating Transition Study, March 27, 2023

Public finance

• 2023 Annual U.S. Public Finance Default And Rating Transition Study, March 28, 2024
• 2022 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study, Dec. 12, 2023
• 2022 Annual International Public Finance Default And Rating Transition Study, May 23, 2023

Sovereign and international public finance

• 2023 Annual Global Sovereign Default And Rating Transition Study, March 27, 2024