In other words, the Gini coefficient captures the extent to which actual ratings accuracy diverges from the random scenario and aspires to the ideal scenario. On Dec. 16, 2020, S&P Global Ratings withdrew the issuer credit ratings at the issuer's request. During 2020, the company increased its stake in V.E from 69.2% to 99.8%. S&P Global Ratings had previously withdrawn its ratings on Techniplas. On April 21, 2020, S&P Global Ratings lowered the long-term issuer credit ratings on New Jersey-based advertising agency Engine Holding LLC to 'D' from 'CCC-' after the issuer entered into a forbearance agreement with its lenders on its failure to pay the debt interest and principal payments for the first quarter of 2020. Later, on Aug. 11, 2020, we withdrew our issuer credit ratings on the company at its request. In connection with the filing, the company entered into a restructuring support agreement with the holders of approximately 92% of the principal amount of its tranche B-2 term loan and approximately 87% of the principal amount of its asset-based lending FILO term loan. The transaction reduced the company's annual interest payments by about US$19.25 million. Australia, Canada, Japan, and New Zealand. of 15.1%. Some countries can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country. In our view, continued supply-demand rebalancing will be necessary to slow wage . On April 2, 2020, we lowered our issuer credit rating to 'CCC' from 'B-' and removed all of the ratings from CreditWatch negative, where they had been placed on March 19, 2020, as the company faced significant operational headwinds due to the coronavirus pandemic and had about $215 million of 8% senior unsecured notes maturing in less than two years. Research & Ratings: Default & Ratings Analytics - Moody's Cross-Sector: The . On July 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Ohio-based oil and gas exploration and production company Chaparral Energy Inc. to 'D' from 'CCC-' after the issuer elected not to make interest payments of US$13.1 million due on its unsecured notes due 2023. With the strongly improved U.S. economic outlook for 2021, the speculative-grade negative . On March 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Singapore-based Geo Energy Resources Ltd. to 'SD' from 'B-' after the issuer completed debt buybacks. Similarly, if it defaulted in the middle of 1991, it would be included in the column representing transitions to 'D' in the 1991 one-year transition matrix. 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 . U.S., Bermuda, and the Cayman Islands, Other developed: On Dec. 17, 2020, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'D', reflecting the company's position post restructuring. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. Historically, a growing concentration of speculative-grade ratings often precedes a period of increased defaults. The latter are companies with obligations that are not legally guaranteed by a parent but that have operating or financing activities that are so inextricably entwined with those of the parent that it would be impossible to imagine the default of one and not the other. On March 26, 2020, we withdrew our issuer ratings at the company's request. On Nov. 25, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD' following the debt repurchases. The global speculative-grade corporate default rate edged up to 2.8% for the 12 months ended in December from 2.6% in November, and will rise to 5.1% by the end of 2023 under our baseline forecasts. On Dec. 4, 2020, S&P Global Ratings lowered the issuer credit rating to 'D' from 'SD' after the company filed for Chapter 11 bankruptcy. On Nov. 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Argentina-based diversified real estate company IRSA Inversiones y Representaciones S.A. to 'SD' from 'CC' following the settlement of a distressed exchange offer for 98.3% of its outstanding US$181.5 million series I 10.00% senior unsecured notes due Nov. 14, 2020. On Oct. 9, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Brazil-based telecom operator Oi S.A. to 'SD' from 'CC' after the issuer announced that the judicial court ratified the amendment to the company's judicial reorganization plan, which was approved by the majority of its creditholders on Sept. 8, 2020. An improving picture in 2017 . Later, on Dec. 10, 2020, we raised the issuer credit rating to 'CCC+' from 'SD' after the company completed debt repurchases on favorable terms. On May 4, 2020, we raised the credit ratings to 'CCC' from 'SD' after the reduction of debt by approximately US$329 million. On Feb. 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based newspaper publisher The McClatchy Co. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11. Given this track record, monitoring the trends of newly assigned ratings could prove useful in anticipating future default activity, based on the observation that years with high numbers of new 'B-' and lower ratings will likely be followed by increased default risk. bp by year-end 2020. The pandemic, low demand, and oil prices crisis pushed the company into a weaker liquidity position, making it difficult for the company to repay the amount. For both axes of the Lorenz curve, the observations are ordered from the low end of the ratings scale ('CCC'/'C') to the high end ('AAA'). Various forms of bankruptcy accounted for just over 24% of all defaults. Earlier, on Dec. 5, 2019, we lowered the rating on the company to 'CCC+' from 'B' because it was facing heightened risk in addressing the US$550 million secured notes maturing in November 2022. Sector In-Depth . On April 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Zealand-based nonbank financier FE Investments Ltd. to 'D' from 'CCC'. On Aug. 5, 2020, S&P Global Ratings raised the issuer credit ratings to 'CCC+' from 'D', as the company completed a distressed restructuring and amended its first-and second-lien credit agreements. Earlier, on March 20, 2020, we lowered the issuer credit rating to 'CCC' from 'B' because the gaming operator and gaming equipment sectors were facing an unprecedented decline in revenue resulting from the temporary closures of casinos across the U.S. On May 20, 2020, S&P Global Ratings lowered its issuer credit rating on New York-based fitness club operator Equinox Holdings Inc. to 'SD' from 'CCC' after the issuer completed an amendment to its partial guarantee on affiliate company SoulCycle Inc.'s credit facility that will allow it to delay a mandatory payment, which we view as tantamount to a default. Earlier, on Dec. 30, 2019, S&P Global Ratings lowered its long-term issuer credit rating on Constellis to 'CC' from 'CCC+' after the company entered into a new $110 million priority first-lien term loan. On May 6, 2020, Techniplas LLC filed for Chapter 11 protection under the U.S. Bankruptcy Code with a bondholders' offer of US$105 million, which involves exchanging equity for debt. Speculative-grade bond spreads in the U.S. widened to 991 basis points (bps) on March 23, but finished the year at 434 bps. Earlier, on April 20, 2020, we lowered our issuer credit rating on Valaris to 'CCC-' from 'CCC+' following the collapse in oil prices that led to a sharp drop in demand for all oilfield services, and the offshore activity that was expected to be weak over at least the next two years, given the higher cost, higher operating risk, and longer payback periods for offshore projects relative to onshore plays. Exploring Industry-Distress Effects on Loan Recovery: A Double Machine The company aimed to restructure its debt, capital structure, and business model to adapt to post-COVID-19 prospects. On Nov. 3, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'D' on the completed exchange offer. On Aug. 17, 2020, we withdrew the rating on the company at its request. The issuer also received a waiver on its total leverage ratio through June 12, 2020. Subsequently, on June 29, 2020, S&P Global Ratings withdrew its ratings on the issuer. Export PDF Export CSV Email . The issuer announced that it had tendered approximately US$215 million principal payment of the US$ 296 million senior unsecured notes due 2022. This transaction was viewed as distressed because the exchange was at a much discounted rate, of about 70 cents on a dollar. A 'D' rating is assigned when S&P Global Ratings believes that the default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. Post default, the issuer has been upgraded three times, leading to a 'B' rating on Dec. 14, 2020, with a positive outlook, due to its improved financials and liquidity. On April 17, 2020, we raised the issuer credit ratings to 'CCC-' after the issuer was able to shift a huge portion of debt maturing in the second quarter of 2020 to the next quarter. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On Dec. 8, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' following debt repurchases. On May 28, 2020, S&P Global Ratings withdrew its ratings on the issuer. Meaningfully lower yoy default rates in 2021 are expected for the energy and retail industries, which produced a significant volume of defaults over the prior five years. The number of companies rated in the 'BBB' category has grown by 27% since the beginning of 2008, to roughly 1,847 at the end of 2020. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. On March 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Jersey-based apparel retailer Ascena Retail Group Inc. to 'SD' from 'CCC' after the issuer repurchased US$122 million debt in two tranches, at approximately 37% below par. Our data on defaulted corporate issuers globally shows that defaults among speculative-grade entities tend to be clustered in the third year after the initial rating, particularly in the 'B' rating category (see chart 9). 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. We believe that COVID-19-related fitness club closures have materially impaired the company's liquidity position. On Sept. 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based hydraulic fracturing services provider FTS International Inc. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. For each rating listed in the matrix's leftmost column, there are nine ratios listed in the rows, corresponding to the ratings from 'AAA' to 'D', plus an entry for NR (see table 22). Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. If any defaulting entity reemerges from bankruptcy--or otherwise restructures its defaulted debt instruments, thereby reestablishing regular, timely payment of all its debts--we reenter this issuer into the database as a new entity. On Oct. 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Netherlands-based general merchandise retailer Hema B.V. to 'SD' from 'CC' after the issuer completed a distressed debt restructuring transaction on Oct. 19, 2020. Note: Excludes confidentially rated defaults. The issuer reached an agreement with 78% of its intellectual property notes lender and 71% of its term loan lenders to exchange around US$1.65 billion of debt for equity. On April 29, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Kansas-based consumer products supplier CSM Bakery Solutions LLC to 'SD' from 'CCC' after the issuer executed an amendment to extend the maturity of its US$105 million asset-based lending and has not completed refinancing of its first-lien term loan due July 2020. Default, Transition, and Recovery: 2019 Annual Global Corporate Default Nick W Kraemer, FRM, New York+ 1 (212) 438 1698; Nivritti Mishra Richhariya, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai, Sundaram Iyer, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Abinash Meher, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Shripati Pranshu, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, APAC, United States of America, Latin America, Canada, EMEA, APAC. This study limits the reporting of default rates to the 15-year time horizon. PDF Moody's Analytics Default & Recovery Database (DRD): Frequently Asked On June 29, 2020, S&P Global Ratings withdrew its ratings on Intelsat. *U.S., Bermuda, and Cayman Islands. The Content shall not be used for any unlawful or unauthorized purposes. On Oct. 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Ireland-based manufacturer and distributer of specialty pharmaceutical products Mallinckrodt PLC to 'D' from 'CCC' after the issuer announced that it voluntarily initiated Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to modify its capital structure, including to restructure portions of its debt and resolve several billion dollars of potential legal liabilities. On July 31, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on the basis of increased liquidity. As an example, if 'CCC'/'C' rated entities made up 10% of the total population of issuers at the start of the time frame examined (x-axis) and 50% of the defaulters (y-axis), then the coordinate (10, 50) would be the first point on the curve. In its base case, Moody's analyzed the underlying collateral pool as having a performing par of USD267.4 million, Default & Recovery Database | Moody's Analytics In the transaction, the issuer raised another US$200 million notes due in 2026. On July 2, 2020, we raised our issuer credit rating on BLY to 'CCC+' from 'SD' as the company completed amending interest payments on its senior secured notes to PIK from cash for 2020. Earlier, on Jan. 17, 2020, we withdrew our ratings on the issuer due to insufficient information. The status of the issuer's subsidiary, Anagram International, is changed to unrestricted subsidiary, which raised another US$110 million of secured debt. On May 27, 2020, S&P Global Ratings lowered its issuer credit rating on Chile-based Latam Airlines Group S.A. to 'D' from 'CCC-' after the issuer volunteered a reorganization process under Chapter 11 of the Bankruptcy Code in the U.S. We consider that the debt restructuring under Chapter 11 constitutes a default. For instance, in table 32, the weighted average first-year default rate for all speculative-grade-rated companies for all 40 pools was 3.71%, meaning that an average of 96.29% survived one year. On Nov. 6, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' on completion of restructuring. Subsequently, we withdrew the ratings due to insufficient information. In addition, at the same share price, SAS offset SEK1,500 million of subordinated perpetual capital securities with about 1,164 million of common shares. Our analysis is conducted at the bond level with RAD as the recovery rate measure. On Aug. 24, 2020, S&P Global Ratings lowered the issuer credit ratings to 'D' from 'SD' after Travelex completed its restructuring plan, including the write-off of 225 million of debt. On Feb. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pennsylvania-based pet food distributor PFS Holding Corp. (PFS) to 'SD' from 'CCC-' after the issuer missed interest payments on its US$ 280 million first-lien bank loan due on Feb. 18, 2020. This included two main components: first, the conversion of about 1,234 million of debt into a new 574 million facility and 660 million of equity on Sept. 22, 2020, and second, the issuance of 457 million of new debt to repay the US$110 million J.P. Morgan bridge facility and to support Technicolor's liquidity needs, undertaken in July and September 2020. For instance, an issuer continually rated from the middle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transition matrices from 1985-1991. The higher default rates for nonfinancial sectors are not surprising, given their higher concentration of speculative-grade issuers. Only in longer time frames do companies with higher original ratings surface among the defaulters. Global: Default and recovery rates for sustainable project finance bank loans, 1983-2020 MOODY'S INVESTORS SERVICE. Although dollar amounts provide information about the portion of the market that is affected by defaults or rating changes, issuer-weighted averages are more useful measures of the performance of ratings. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating.
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