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    Default, Transition, and Recovery: Europe Leads February Defaults

    Key Takeaways

    • The number of global corporate defaults fell to seven in February 2025, down from 10 in January and below the five-year average of 20.
    • European monthly defaults exceeded those in the U.S., both by number and defaulted debt amount, for the first time in over two years.
    • By sector, 57% of the defaults in February occurred in the consumer products and media and entertainment sectors, with two each, while two-thirds of the defaulted debt came from the utilities sector.
    • Distressed exchanges continue to be the primary reason for defaults, accounting for six defaults in February.

    image

    S&P Global Ratings' February 2025 global corporate default tally stood at seven after the following defaults in the month:

    • Luxembourg-based integrated real estate service provider Altisource Portfolio Solutions S.A.
    • Netherlands-based retail and coffee services company Selecta Group B.V.
    • Norway-based cruise ship operator Hurtigruten Newco AS
    • U.K.-based water and wastewater services provider Thames Water Utilities Ltd.
    • U.S.-based investment data management automation company Confluence Technologies, Inc.
    • U.S.-based sewing machine and accessories company Stitch Acquisition Corp.
    • U.S.-based cutting tool manufacturer OT Merger Corp.

    Europe Outpaced The U.S. By Default Count In February

    There were seven defaults in February, down from 10 in January and below the five-year average of 20 (see chart 1). Although the U.S. leads the total year-to-date tally with 10 defaults, the pace of defaults in the U.S. slowed to three in February from seven in January. This is in line with our expectation that the U.S. speculative-grade corporate default rate will fall to 3.5% by December 2025 from 5.1% as of end-December 2024, supported by a resilient economy, sustained earnings growth, and a more manageable near-term refinancing burden.

    Chart 1

    image

    In contrast, the European default tally doubled in February to four defaults. With six defaults so far in 2025, February marked the first month since September 2022 when European monthly defaults outpaced U.S. ones. The European default rate started to decline in the first two months of 2025, but historically, it remains elevated, largely because of the increased use of distressed exchanges and debt restructurings (see chart 2). However, we expect the European trailing-12-month speculative-grade corporate default rate to drop to 3.75% by December 2025 from 4.1% as of the end of January 2025. We expect the impact on Europe from potential U.S. tariff increases to be modest.

    Chart 2

    image

    Consumer Products Continue To Lead The Default Tally

    Defaults were spread across multiple sectors in February, with consumer products and media and entertainment each having two, and financial institutions, capital goods, and utilities each having one. The consumer products and media and entertainment sectors also led the year-to date default tally and accounted for close to 47% of defaults in the first two months of 2025 (see chart 3).

    Chart 3

    image

    The consumer products and media and entertainment sectors had the highest number of weakest links (issuers rated 'B-' and below with a negative outlook) at the end of February, which highlights the higher default risk for these sectors. Some speculative-grade issuers addressed their debt maturities as interest rates fell. Nevertheless, default risk persists because of higher-for-longer borrowing costs and geopolitical uncertainty. Lower global demand, weaker economic growth, and high inflation also weigh on issuers in these sectors.

    The Utilities Sector Led By Defaulted Debt Volumes In February

    The amount of defaulted debt rose slightly in February, to $8.9 billion, from $8.1 billion in January. Europe led by defaulted debt volumes in February, accounting for 74% of defaulted debt--the highest level since August 2023 (see chart 4).

    Chart 4

    image

    The largest amount of defaulted debt was at U.K. utility company Thames Water Utilities due to a distressed exchange in February. The default followed the High Court of Justice of England and Wales' decision, on Feb. 18, 2025, to sanction the restructuring plan that Thames Water Utilities Holdings Ltd. proposed in connection with a liquidity extension transaction. This was the largest default in the utilities sector globally since the start 2023 (see chart 5).

    Chart 5

    image

    Distressed Exchanges Accounted For Nearly 86% Of Defaults In February

    Distressed exchanges remained the primary reason for defaults in February, constituting six out of seven defaults, continuing the trend of the past two years. This marks a notable increase in defaults due to distressed exchanges to 85.7% in February from 60.0% in January 2025. This is also the highest number of year-to-date distressed exchanges since 2008, as issuers continue to avoid costly bankruptcy proceedings (see chart 6).

    Chart 6

    image

    Table 1

    Estimated European and U.S. default rates remain elevated
    Region 12-month trailing speculative-grade default rate (%) Weakest links
    U.S. 4.7 156
    Emerging markets 0.9 11
    Europe 4.1 48
    Other developed 2.3 10
    Global 3.8 225
    Trailing 12-month speculative-grade default rates are from Jan. 31, 2024, to Jan. 31, 2025, except for the U.S. and Europe. For these two regions, they are from Feb. 29, 2024, to Feb. 28, 2025, preliminary, and subject to change. Weakest link data as of Feb. 28, 2025. Other developed includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Credit Research, S&P Global Market Intelligence's CreditPro.

    Table 2

    2025 global corporate default tally stands at 17
    Date Parent company Country/Market Subsector To From Reason
    08/01/2025

    City Brewing Co. LLC

    		 U.S. Consumer products SD B- Missed payments
    16/01/2025

    Blue Ribbon LLC

    		 U.S. Consumer products SD CCC- Distressed exchange
    16/01/2025

    JOANN Inc.

    		 U.S. Retail/restaurants D CCC Bankruptcy
    16/01/2025

    Packers Holdings LLC

    		 U.S. Consumer products SD CCC- Distressed exchange
    17/01/2025

    Aimbridge Acquisition Co. Inc.

    		 U.S. Media and entertainment D CCC Missed payments
    17/01/2025

    Trinseo PLC

    		 Ireland Chemicals, packaging, and environmental services SD CC Distressed exchange
    23/01/2025

    Physician Partners LLC

    		 U.S. Health care SD CCC+ Distressed exchange
    28/01/2025

    Intrum AB (publ)

    		 Sweden Finance companies SD CC Missed payments
    29/01/2025

    Azul S.A.

    		 Brazil Transportation SD CC Distressed exchange
    31/01/2025

    MultiPlan Corp.

    		 U.S. Health care SD CC Distressed exchange
    04/02/2025

    Selecta Group B.V.

    		 Netherlands Consumer products SD CCC- Missed payments
    20/02/2025

    Altisource Portfolio Solutions S.A.

    		 Luxembourg Finance companies SD CC Distressed exchange
    20/02/2025

    Hurtigruten Newco AS

    		 Norway Media and entertainment D CC Distressed exchange
    21/02/2025

    Confluence Technologies, Inc.

    		 U.S. Media and entertainment SD CCC+ Distressed exchange
    21/02/2025

    Stitch Acquisition Corp.

    		 U.S. Consumer products SD CCC Distressed exchange
    24/02/2025

    OT Merger Corp.

    		 U.S. Capital goods SD CCC+ Distressed exchange
    25/02/2025

    Thames Water Utilities Ltd.

    		 U.K. Utilities D CC Distressed exchange
    Data as of Feb. 28, 2025. NR--Not rated. D--Default. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence's CreditPro®.

    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 Market Research:Ekaterina Tolstova, Frankfurt +49 173 6591385;
    ekaterina.tolstova@spglobal.com
    Nicole Serino, New York + 1 (212) 438 1396;
    nicole.serino@spglobal.com
    Research Contributor:Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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