The largest default in 2020 was from U.S.-based telecommunications provider Frontier Communications Corp., with $22.5 billion (6.3%) of the outstanding debt for the year. As coincident indicators, the proportion of new speculative-grade ratings at 'B-' or lower in the U.S. and the year-end U.S. speculative-grade default rate generally mirror each other throughout most of their shared history (see chart 17). The issuer was looking for alternatives while remaining operational through bankruptcy, with the help of operational free cash flows and debtor-in-possession financing, approximately US$100 million. The share of newly assigned issuer credit ratings that are speculative grade has remained elevated in 2020: 78% of newly assigned issuer credit ratings globally were speculative grade. This long-term corporate default and rating transition study uses the CreditPro database of long-term local currency issuer credit ratings. Many events over the long term have contributed to the decline of global 'AAA' rated issuers. On Jan. 21, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Panda Green Energy Group Ltd. to 'SD' from 'CC' on completion of a distressed exchange offer on its U.S. bonds due in January 2020. The transaction reduced the company's annual interest payments by about US$19.25 million. Tables 30, 31, and 32 are broken out by the broadest rating classifications (all rated, investment grade, and speculative grade). This reflects our forward-looking opinion post the reduction in outstanding gross debt by approximately $127 million. On April 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based airline company Virgin Australia Holdings Ltd. to 'D' from 'CC' after the company filed for Chapter 15 bankruptcy and announced it would not pay the coupon on its US$425 million senior unsecured notes because of a moratorium on all creditor payments. If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate entities and the cumulative share of all entities at each rating would be nearly the same, producing a Gini ratio of zero. On March 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based business parks developer and operator Yida China Holdings Ltd. to 'SD' from 'CC' after the issuer completed a distressed exchange. Liquidity also weakened as cash flows for debt repayment diminished. On April 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Utah-based credit report repair service provider PGX Holdings Inc. to 'D' from 'CCC'. Performance of project finance bank loans during the pandemic-fueled default cycle in 2020; Key findings for the power, infrastructure, and oil and gas industry sectors . For example, at the end of 2020, the one-year default rate among all financial entities was 0.23%, compared with 3.8% for all nonfinancial entities. On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based natural gas compression services and equipment provider CSI Compressco L.P. to 'SD' from 'CC'. On Aug. 14, 2020, we withdrew the issuer credit ratings on the company at its request. For the most part, the speculative-grade share of every sector has grown over the past decade, with the exception of the real estate sector. On Sept. 21, 2020, S&P Global Ratings lowered the long-term issuer credit rating on Norway-based oilfield services provider PGS ASA to 'SD' from 'CCC' after it missed a principal repayment. With these liquidity supports from central banks in place, market volatility eased after the spring. The company was continuing discussions with its debtholders, and we believed these would result in a comprehensive debt restructuring or a bankruptcy filing. Back in December, Moody's Investors Servicepegged the 2017 default rate for speculative-grade debt in the U.S. at 4% by year-end, down from 5.6%. This default and rating transition study includes industrials, utilities, financial institutions (banks, brokerages, asset managers, and other financial entities), and insurance companies globally with long-term local currency ratings from S&P Global Ratings. On Jan. 19, 2020, The Krystal Co. defaulted after the company filed for bankruptcy under Chapter 11 with the Northern District of Georgia. Credit quality declined in 2020, with increasing default and downgrade rates, while the upgrade rate fell to an all-time low of 2.8%. On Jan. 9, 2019, S&P Global Ratings lowered its issuer credit rating on Missouri-based retailer Moran Foods LLC (SAL Acquisition Corp.) to 'SD' from 'CCC' after the company elected not to make an interest payment due Dec. 31, 2019, while entering into a forbearance agreement. The default rates in the columns of these tables, associated with each static pool year, are calculated in the same way as they would be for individual years' one-year transition matrices. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. As a result, certain business units of S&P may have information that is not available to other S&P business units. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. One key reason is that financial services companies typically start with investment-grade ratings, while most nonfinancial issuers have speculative-grade initial ratings, particularly over the past 10 years. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. On June 29, 2020, S&P Global Ratings withdrew its ratings on Intelsat. Annual corporate bond issuance reached an all-time high in 2020, largely after the Fed and European Central Bank both created massive liquidity facilities in March, in response to the pandemic. On May 29, 2020, we raised the issuer credit rating on DDA to 'CCC' from 'SD' based on DDA's reliance on favorable market conditions to generate sufficient cash flow to meet its near-term debt obligations following its reopening. Issuer-weighted default rates. On May 27, 2020, Texas-based retailer Tuesday Morning Corp. defaulted as the company filed for Chapter 11. On Jan. 8, 2021, S&P Global Ratings withdrew its issuer credit rating at the company's request. PFS also announced an agreement to merge with Animal Supply Co. On May 6, 2020, S&P Global Ratings lowered its ratings on the issuer to 'D' from 'SD' upon missed interest payments, following which, on May 14, 2020, the ratings on the issuer were withdrawn. What is in the DRD? The issuer was facing a rise in additional loan loss provision, which was attributed to the large nonperforming loans. That is, when default pressure is high, economic conditions are such that the likelihood of companies from across the rating spectrum suffering a more rapid deterioration of credit quality is higher. S&P Global Ratings viewed Technicolor's completed debt-to-equity swap as equivalent to a default. Default, Transition, and Recovery: 2020 Annual Global Corporate Default And Rating Transition Study, China's Local Governments Are Shedding Their Ties To Struggling SOEs, Instant Insights: Key Takeaways From Our Research, Research Update: Dexus Wholesale Property Fund Outlook Revised To Stable From Positive On Merger Completion; 'A' Ratings Affirmed, Scenario Analysis: Higher Rates Threaten The Credit Quality Of 13 EMEA Retail And Restaurant Companies. The company extended the maturity on its revolving credit facility of US$135 million by one week. On Aug. 19, 2020, we raised our issuer credit rating on Forum to 'CCC+' from 'SD' following the completion of its debt exchange for the majority of its 6.25% senior unsecured notes due 2021. As . For the full year, there were three large downgrades (and two large upgrades), compared with two downgrades in 2019 (see chart 7). On Aug. 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Georgia-based building products producer Omnimax International Inc. to 'D' from 'CCC-' after the issuer announced that it missed a principal repayment due on its US$385 million senior notes. With the strongly improved U.S. economic outlook for 2021, the speculative-grade negative . Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. In 2010-2020, about 77% of the initial ratings that S&P Global Ratings assigned to new issuers were speculative grade. This page provides a central resource for Moody's research on default risks, impairment and loss rates, . If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated entities, the curve would capture all of the area above the diagonal on the graph (the ideal curve), and its Gini coefficient would be 1 (see chart 31). Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova Republic of, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the U.K. On Dec. 9, 2020, we raised our issuer credit rating on Revlon to 'CCC-' from 'SD' after it completed its previously announced 5.75% senior notes exchange, which we viewed as a distressed restructuring. The drilling market was under stress, and the drop in oil prices and the pandemic furthered worsened the problem. The only ratings considered in these calculations are those on entities at the beginning of each static pool and those at the end. The Content shall not be used for any unlawful or unauthorized purposes. Therefore, if an issuer has rated debt but not an issuer credit rating, we assign a proxy rating so that the CreditPro corporate dataset accurately represents the complete universe of ratings. Default rate calculation. Broadly consistent with 2019, almost 54% of defaults in 2020 came from two sectors: consumer services and energy and natural resources (with 122 defaults combined). Neglecting the randomness of the distribution of recovery rate may underestimate the risk. On May 5, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Luxembourg-based e-learning/training content software provider Evergreen Skills Lux S.ar.l. However, defaults from most other sectors increased as well. On Nov. 23, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Oklahoma-based exploration and production company Gulfport Energy Corp. to 'D' from 'CCC-' after the issuer elected to skip its interest payment on its 6% senior unsecured notes maturing Oct. 15, 2024, and enter into a 30-day grace period.
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