S&P Global Ratings' 2024 global corporate default tally has reached 123 after the following 14 defaults in October:

• U.S.-based telecommunications service provider Lumen Technologies Inc.
• France-based distressed debt purchaser iQera Group SAS
• U.S.-based distributor of fibers and inorganic materials ASP Unifrax Holdings Inc.
• U.S.-based risk program management service provider New Constellis Borrower LLC
• U.S.-based blood glucose monitoring system provider LifeScan Global Corp.
• U.S.-based manufacturer and supplier of wheel-end systems Accuride Corp.
• U.S.-based software and service provider for hiring and managing employees CareerBuilder LLC
• U.S.-based health care services provider WellPath Holdings Inc.
• U.S.-based logistics services provider Reception Purchaser LLC
• Netherlands-based bike manufacturer Sprint HoldCo B.V.
• U.S.-based cable overbuilder WideOpenWest Finance LLC
• U.S.-based distributor and supplier of tires American Tire Distributors Inc.
• Two confidential defaults

October Was Marked By Redefaults

The number of monthly defaults reached 14 in October, up from 11 in September. The global corporate default tally stood at 123 at end-October, just four defaults shy of the previous year-to-date total of 127 and six above the five-year average of 117. With 11 defaults (close to 80%) occurring in the U.S., the region recorded the highest monthly count since May 2023 (see chart 1). However, S&P Global Ratings Credit Research & Insights expects the U.S. trailing 12-month speculative-grade corporate default rate will decline slightly to 3.25% by September 2025, from 4.40% in September 2024 (see chart 2). This is because of falling rates, declining inflation, and lower upcoming maturities, alongside a still resilient economy and earnings growth.

Chart 1

Chart 2

Redefaulters--issuers defaulting more than once--accounted for six defaults globally (43% of the total) in October, five of which came from the U.S. We have found that highly leveraged companies with fundamental operating and liquidity issues will likely redefault, even though a revised capital structure could provide some reprieve. 38 redefaults accounted for 31% of the total through October, down from 46 over the same period last year but above the five-year average of 35 (see chart 3).

Chart 3

Telecommunications Contributed Significantly To Defaulted Debt

Monthly defaulted debt volumes continue to differ across regions and largely depend on individual names and sectors. Total defaulted debt rose to $11.2 billion in October, compared with $7.5 billion in September. This 50% increase resulted from the rise in U.S. defaulted debt to $10.2 billion, with the telecommunications ($6.0 billion), capital goods ($1.2 billion), and automotive ($1.3 billion) sectors comprising $8.5 billion (76%) of total defaulted debt (see charts 4 and 5). U.S. defaulted debt accounted for 90% of total defaulted debt in October, compared with 66% in September. Historically, the U.S. exhibits higher defaulted debt levels with fewer defaults.

Chart 4

Chart 5

The significant month-over-month increase in defaulted debt was mainly due to a distressed exchange of U.S. telecommunications service provider Lumen Technologies--the company's second this year. Lumen Technologies' capital structure remains unsustainable, and we expect EBITDA will decline sharply in 2025 as the company accelerates investments in networks and IT systems. Even though upfront cash payments more than offset these cash outflows, we still expect Lumen Technologies' leverage ratio will increase to about 5.0x by 2025. This is elevated for a business in secular decline.

Media And Entertainment Led Defaults

With three defaults in October and 20 defaults year to date, compared with 26 over the same period last year, the media and entertainment sector led monthly and year-to-date default numbers (see chart 6). The overall year-to-date default number is concentrated on five sectors, which accounted for 56% of global defaults: media and entertainment (20), consumer products (16), health care (16), telecommunications (9), and financial institutions (8). In this group, consumer products is the only sector without any defaults over two consecutive months since August, while the financial institutions, health care, telecommunications, and automotive sectors recorded two defaults each in October.

Chart 6

Across sectors, most defaults resulted from unsustainable capital structures, squeezed liquidity, forecast growth in capital expenditures, and elevated to high leverage ratios. Additionally, still elevated borrowing costs mean that many lower-rated companies struggle to refinance their debt.

Most issuers are rated 'CCC+' and below prior to default. These issuers are more prone to defaults, considering their vulnerable business models and dependency on favorable business, financial, and economic conditions to meet financial commitments. In October, however, two companies were rated 'B-' (U.S. telecommunications and transportation issuer) and 'B' (confidential) prior to default, suggesting that risks can materialize quickly for issuers rated 'B-' and above. For the first time this year, defaults resulted from multi-notch downgrades across multiple sectors instead of just one sector, as was the case in February and August 2024.

Distressed Exchanges Accounted For More Than 50% Of Defaults

Distressed exchanges remain the primary contributor to monthly and year-to-date default numbers. They accounted for seven defaults in October, bringing the year-to-date total of issuers defaulting due to distressed exchanges to 66 or 54% of total defaults--the highest number since 2009 (see chart 7). This constitutes a 20% increase compared with the same period last year.

Chart 7

The reasons for defaults in October were sector-specific. Defaults resulted from distressed exchanges in the case of publicly rated media and entertainment companies, missed principal or interest payments in the case of health care companies and financial institutions, and bankruptcy procedures in the case of automotive companies.

Table 1

Table 2

Related Research

• Default, Transition, and Recovery: European Speculative-Grade Default Rate Should Fall To 4.25% By September 2025, Nov. 18, 2024
• U.S. Speculative-Grade Corporate Default Rate To Fall Further To 3.25% By September 2025, Nov. 15, 2024
• Credit Trends: Risky Credits: Defaults Have Driven A Decline In European Risky Credits, Oct. 30, 2024
• Distressed Exchanges Underpin Rise In North American Selective Defaults, Oct. 28, 2024
• American Tire Distributors Inc. Downgraded To 'D' From 'CCC+' On Chapter 11 Bankruptcy Filing, Oct. 24, 2024
• WideOpenWest Finance LLC Downgraded To 'SD' On Distressed Debt Restructuring, Oct. 18, 2024
• Dutch E-Bike Maker Accell Group (Sprint HoldCo) Downgraded To 'SD' On Distressed Transaction, Oct. 15, 2024
• Reception Purchaser LLC Downgraded To 'D' From 'B-' Following Distressed Debt Exchange, Oct. 14, 2024
• WellPath Holdings Inc. Rating Lowered To 'D' On Missed Principal And Interest Payments, Oct. 14, 2024
• CareerBuilder LLC Downgraded To 'SD' On Amended Credit Agreement, Oct. 10, 2024
• Accuride Corp. Downgraded To 'D' From 'CCC+' On Chapter 11 Bankruptcy Filing, Oct. 11, 2024
• LifeScan Global Corp. Issuer Credit Rating Lowered To 'SD' (Selective Default) On Missed Principal And Interest Payments, Oct. 8, 2024
• Lumen Technologies Inc. Downgraded To 'SD' (Selective Default) On Distressed Exchange, Oct. 3, 2024
• New Constellis Borrower LLC Downgraded To 'SD' On Distressed Exchange; Debt Ratings Lowered To 'D', Oct. 3, 2024
• IQera Downgraded To 'SD' From 'CCC-' On Missed Principal Payment; Defaulted Senior Secured Note Rating Lowered To 'D', Oct. 2, 2024
• ASP Unifrax Holdings Inc. Downgraded To 'SD' On Note Exchange; Note Ratings Lowered To 'D', Oct. 2, 2024
• Industry Credit Outlook Update North America: Telecommunications, July 18, 2024