On the same day, we withdrew the issuer ratings. On April 29, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. On April 22, 2020, we lowered our issuer credit rating on Serta Simmons to 'CCC-' from 'CCC' as the spread of the COVID-19 pandemic and stay-at-home orders forced retail store closures, which resulted in a severe drop in mattress sales and minimal production. Furthermore, weak liquidity supports our view of O1 Properties' general default. Includes investment-grade and speculative-grade entities. On March 26, 2020, we withdrew our issuer ratings at the company's request. On May 14, we lowered the ratings on the issuer to 'D' after it filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. . We also do not include short-term issuer credit ratings. 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. 8-K: NETSCOUT SYSTEMS INC - MarketWatch The issuer was hit by an ongoing bankruptcy proceeding of its joint venture partner Sanchez Energy and by the decline in oil prices owing to the Saudi-Russia price war and decline in demand related to the coronavirus pandemic. During 2020, the company increased its stake in V.E from 69.2% to 99.8%. The issuer aims to eliminate US$840 million of debt by using restructuring and a US$230 million debtor-in-possession facility. In this case, however, the 'AA+' figure was derived from a much smaller sample than that for the 'AA' rating. On July 29, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' following the issuer's completion of the distressed exchange. This influx of new speculative-grade issuers has contributed to the growing share of speculative-grade ratings globally, with the U.S. and European regions accounting for roughly two-thirds of the total since 2010. Therefore, each annual default study is self-contained and effectively supersedes all previous versions. For example, if an entity was rated 'A' on Jan. 1, 2020, and was downgraded to 'BBB' in the middle of the year and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would be included only in the percentage of issuers that began the year as 'A' that ended the year as 'A'. This would be considered a default since S&P Global Ratings believes the second-lien noteholders will receive less than they were originally promised. Later, on Oct. 15, 2020, we withdrew the ratings at the issuer's request. On Sept. 16, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. We understood that the company was making those amendments to preserve cash because customers have had to suspend their mining operations or delay their project spending due to the coronavirus pandemic. On Dec. 8, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' following debt repurchases. 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. Defaults in 2020 came from all sectors, but--consistent with recent years--were heavily represented by two sectors: the energy and natural resources sector (with 62 defaults) and the consumer services sector (with 60 defaults). This brought the downgrade-to-upgrade ratio to a new high of 6.6. On Aug. 5, 2020, we raised our issuer credit rating on SMLP to 'CCC' from 'SD' on completion of the distressed exchanges. We make our best effort to capture such defaults in the database, and we include an entity in the annual default rate calculations if it was rated as of Jan. 1 in the year of default. As a result, the trustee placed the issuer into receivership (with KordaMentha as receivers). However, despite posting the 10th-highest annual default rate in 2020, the global Gini ratio finished closer to the middle of the annual distribution (18th), based on 40 years of observations. The issuer used 43 million of cash proceeds to repurchase 51 million of notes. On April 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Arizona-based retailer Mister Car Wash Holdings Inc. to 'SD' from 'CCC+'. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. The issuer missed the aggregate interest payments on first-, second-, and 1.5-lien term loans due in 2021 and 2022, which was unlikely to be paid in the 30-day grace period. For example, leisure and media has a much higher proportion of speculative-grade ratings than financial institutions or insurance (see chart 20). On Dec. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based payroll software provider Zellis Holdings Ltd. to 'SD' from 'CCC+'. 16 FEB 2023. Over this same period, as the number of the highest-rated investment-grade companies dwindled, the count of the lowest-rated investment-grade companies surged. We calculated average transition matrices on the basis of the multiyear matrices just described. The downgrade reflected our belief that continued low crude oil prices, the weak outlook for offshore drilling services, and the distressed level at which Valaris' debt is trading made it likely the company would not make the interest payments within the grace period. An obligor is considered in default unless S&P Global Ratings believes that such payments will be made within five business days of the due date in the absence of a stated grace period, or within the earlier of the stated grace period or 30 calendar days. This long-term corporate default and rating transition study uses the CreditPro database of long-term local currency issuer credit ratings. In both cases, the standard deviation of the times to default generally shrinks progressively as the rating gets lower. On July 20, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. Infrastructure debt remained resilient during the pandemic - GI Hub Earlier, on April 8, 2020, we lowered the issuer credit rating on Fieldwood to 'CCC' from 'B-', reflecting the issuer's weak credit metrics, constrained liquidity, and the potential that it may breach covenants on its first-lien term loan. Static pool methodology. to 'D' from 'CCC-'. Globally, speculative-grade issuers constituted 50.3% of rated corporate issuers at the end of 2020, whereas at the end of 2019, speculative-grade ratings represented 49.9% of global ratings (see chart 22). Earlier, on April 14, 2020, we lowered the issuer credit ratings on the company to 'CCC-' from 'CCC' as it was contending with the disruption and recessionary conditions stemming from the coronavirus pandemic, the challenging trends facing department stores, and an unsustainable capital structure. On Sept. 9, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Luxembourg-based global airport ground handler Swissport Group S.a.r.l to 'SD' from 'CCC' after the issuer completed issuing 230 million super senior secured debt for liquidity purposes and was planning to issue another 70 million. On Sept. 28, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD' following the debt exchange. Since the beginning of 2020, secured debtholders had received 95% of par, on average, in the form of cash, preferred stock, and common equity for US$130 million of secured notes due 2023. Kathrin was a lead analyst in Moody's EMEA Corporate Finance Group in Frankfurt, Germany, covering a diverse set of heavy industrial corporations across Europe. The procedure for calculating the Gini coefficients is illustrated in chart 31: Area B is bounded by the random curve and the Lorenz curve, while area A is bounded by the Lorenz curve and the ideal curve. The Content is provided on an as is basis. On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on United Arab Emirates-based health care service provider NMC Health PLC to 'D' from 'CCC-' after the issuer missed interest payments on its bank loans. Default and recovery rates for sustainable project finance bank loans, 1983-2020: 16 Feb 2023 . As an example, the two-year column of table 32 shows the two-year default rates (not conditional on survival) for each static pool. On July 8, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Indonesia-based property developer PT Modernland Realty Tbk. On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chicago-based printing and digital media company LSC Communications Inc. to 'D' from 'CC' after the issuer filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. We used the same method to form static pools for 1983-2020. The transactions announced represented about 23% of total first- and second-lien term loans. However, in most of the relatively benign period since the financial crisis, the two series have diverged somewhat, as they did in 2004-2007. 2021 US Loan Default Rate In Line with 2020; HY Trending Lower Esma50 165 2229 TRV 2 22 | PDF | Inflation | Monetary Policy On July 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based specialty apparel retailer Tailored Brands Inc. to 'D' from 'CCC+', reflecting interest payment default on its senior notes due 2022. The Gini ratio is a measure of the rank-ordering power of ratings over a given time horizon, from one through seven years. For example, in the average one-year global transition matrix in table 33, each cell's weighted standard deviation is calculated from the series of that particular cell in each of the 40 cohorts beginning with the 1981 cohort and ending with the 2020 cohort. On May 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based Guitar Center Inc. to 'SD' from 'CCC'. 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). On June 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mexican retailer Grupo Famsa S.A.B. On June 25, 2020, we withdrew the issuer credit rating on Unit Corp. at its request. On March 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based oilfield services provider Pioneer Energy Services Corp. to 'D' from 'CCC-'. Default rate will rise this year, Moody's says | CFO Dive On May 29, 2020, we raised the issuer credit rating to 'CCC-' from 'SD', reflecting our view of the approaching maturities that may have led to further restructuring of its capital. On April 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based oilfield services company KCA DEUTAG Alpha Ltd. to 'SD' from 'CCC+' after the issuer announced it would use the grace period for interest payments. We consider companies reemerging from prior defaults to be separate entities, and their rating histories begin with the post-default rating. On July 5, 2019, we removed the 'R' symbol from all rating scales. Earlier, on April 10, 2020, we lowered the rating on the issuer to 'CC' from 'CCC-' after it was unable to obtain mezzanine debt lenders' consent to extend the loan and had insufficient liquidity. On Nov. 11, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Spain-based transportation company Bahia de las Isletas S.L. On Oct. 7, 2020, Tennessee-based casual dining operator Ruby Tuesday Inc. filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, which S&P Global Ratings considers a default. All rating changes that occur in between are ignored. The company entered a "stalking horse" asset purchase agreement with private equity firm KPS Capital Partners L.P. As part of the agreement, KPS will purchase a substantial part of Garrett's assets and liabilities for US$2.1 billion in cash. Once again, the default rate in the 'AAA' rating category was zero, consistent with historical trends. On Feb. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Italy-based maritime transportation services Moby SpA to 'SD' from 'CCC-' after the company entered into a standstill agreement to not pay scheduled payments in mid-February. However, some transition tables may use full rating categories for practical reasons. Earlier, on Jan. 17, 2020, we withdrew our ratings on the issuer due to insufficient information. On Sept. 21, 2020, S&P Global Ratings assigned its point-in-time 'BB-' issue-level rating to the $100 million debtor-in-possession facility provided to Fieldwood, which filed for Chapter 11 protection under the U.S. Bankruptcy Code on Aug. 3, 2020. On July 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based frac-sand and logistics company Hi-Crush Inc. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11 and entered into a restructuring support agreement with noteholders who control 94% of the company's senior unsecured notes due in 2026. Prior studies have shown that fluctuations within default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. The issuer's operation was suffering from weak crude oil prices and depressed demand. Defaults increased in many sectors in 2020, though the consumer services and energy and natural resources sectors once again led the global default tally, together accounting for almost 54% of the total. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. As is the case globally, the proportion of speculative-grade ratings reached an all-time high in the U.S. as well, at 57.8%. 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, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and U.K. Australia, Canada, Japan, and New Zealand. In turn, this can result in a relatively fast descent into default (see chart 11). In this proceeding, the issuer was to obtain US$80 million in debtor-in-possession, and if the prepackaged plan was approved, then the issuer would emerge with US$400 million of debt. On Feb. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pennsylvania-based pet food distributor PFS Holding Corp. (PFS) to 'SD' from 'CCC-' after the issuer missed interest payments on its US$ 280 million first-lien bank loan due on Feb. 18, 2020. On April 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-headquartered home health provider BW Homecare Holdings LLC to 'SD' from 'CCC'. Earlier, on May 13, 2020, we lowered our issuer credit rating and senior unsecured issue-level ratings on Extraction to 'CC' from 'CCC+', reflecting the increased likelihood that the issuer would enter a debt restructuring that we would view as distressed in the near term. The issuer is exploring other strategic alternatives as liquidity remains constrained. The majority of the company's revenue comes from airports, depending on airline passenger travel, which has declined sharply because of the pandemic. It is expected to reduce debt by US$500 million. The majority (94%) began the year rated in the 'B' or 'CCC'/'C' category (57% 'CCC'/'C' and 37% 'B'). All default rates that appear in this study are based on the number of issuers rather than the dollar amounts affected by defaults or rating changes. The leading shareholder, LetterOne, purchased 97.5% of its 300 million 1% notes due in 2021 and 76% of its 300 million 0.875% notes due in 2023. Default, Transition, and Recovery: 2021 Annual Global Corporate Default The company will continue its operation with operating cash flow liquidity and another US$50 million from debtors. On June 23, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Doraville, Georgiabased leading U.S. bedding manufacturer Serta Simmons Bedding LLC to 'SD' from 'CC' as the company completed its distressed debt exchange, swapping $992 million first-lien debt and $300 million of second-lien debt for $851 million of super-priority second-out debt, and issued $200 million new super-priority first-out debt provided by the debt-exchange lenders. 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. The shareholder made an offer to purchase the remaining 2023 notes. The cumulative default rates in this study average the experience of all static pools by first calculating marginal default rates for each possible time horizon and for each static pool, weight-averaging the marginal default rates conditional on survival (survivors being nondefaulters), and accumulating the average conditional marginal default rates (see tables 24-26 and 30-32). On May 12, 2020, S&P Global Ratings lowered the issuer credit rating on Texas-based oil and gas exploration and production company Fieldwood Energy LLC to 'D' from 'CCC' after the issuer failed to make the interest payments on its first- and second-lien term loans. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. On Aug. 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Missouri-based motion picture exhibitor AMC Entertainment Holdings Inc. to 'SD' from 'CC' after the issuer completed the distressed exchange of its subordinated debt at 70%-75% of its par value. On Aug. 28, 2020, we withdrew our ratings on the company. On May 21, 2020, after the settlement of the exchange, we raised the issuer credit rating to 'CCC+' from 'SD'. Table 10 displays the median, average, and standard deviations for the time to default from the original rating. bp by year-end 2020. However, given that machine learning currently receives a lot of attention in the credit risk community, further reviews and benchmark studies would certainly be welcome. Distribuidora Internacional de Alimentacion S.A. On a year-over-year basis, the number of rated defaults globally was higher in every quarter of 2020 relative to 2019 (see chart 14). On May 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Jersey-based vehicle renting and leasing service provider Hertz Global Holdings Inc. to 'SD' from 'CCC-' after the issuer missed lease payments on some of its asset-backed securities. Qinghai Provincial Investment Group Co. Ltd. APC Automotive Technologies Intermediate Holdings LLC. The issuer announced that it had tendered approximately US$215 million principal payment of the US$ 296 million senior unsecured notes due 2022. Project Finance Bank Loans: Default and Recovery Rates for 1983-2020 (APAC) APAC Edition. 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. This caused high liquidity constraints for Hertz. The proposed reorganization involves the company eliminating more than half of its debt and transferring up to 97% of its equity to lenders. As a result, certain business units of S&P may have information that is not available to other S&P business units. This difference results from the different methods of calculating default rates. If, however, S&P Global Ratings withdrew the rating prior to Jan. 1 of the year of default, we do not include the issuer in the default rate calculation in that year. Earlier, on June 10, 2020, we lowered our issuer credit rating on Serta Simmons to 'CC' from 'CCC-' following the company's announcement that it entered into a transaction support agreement with a majority of its first- and second-lien term loan lenders to recapitalize the company. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages. The company noted that the filing resulted from the financial strain from the prolonged COVID-19 restaurant closures. It is important to note that S&P Global Ratings' credit ratings do not imply a specific probability of default. Earlier, on March 20, 2020, we lowered the ratings to 'CC' from 'CCC-' based on our view that the issuer has an unsustainable capital structure and weak liquidity. On April 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based contract drilling services Diamond Offshore Drilling Inc. to 'D' from 'CC' after a review of market conditions for contract drilling services. On May 20, 2020, S&P Global Ratings lowered its issuer credit rating on Oklahoma-based casino resort operator Downstream Development Authority (DDA) to 'SD' from 'CCC'. As the Gini ratios show, corporate ratings also serve as effective measures of relative risk over time, particularly in low-default years. Sector In-Depth . On Aug. 18, 2020, S&P Global Ratings withdrew its ratings on the issuer. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Marshall Islands-based offshore driller Seadrill Partners LLC, a subsidiary of Seadrill Ltd., to 'SD' from 'CCC' after the issuer announced that it would use the 30-day grace period for interest payment. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com. On April 1, 2020, we raised the issuer credit rating on Yida to CCC-' from 'SD' on a reassessment of the company's credit profile. On July 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Delaware-based footwear provider Never Slip Topco Inc. to 'D' from 'CCC' after the issuer entered a distressed exchange to amend first- and second-lien credit agreements. On Nov. 25, 2020, S&P Global Ratings withdrew its rating at the issuer's request. Its Gini coefficient--which is a summary statistic of the Lorenz curve--would thus be zero. That was below the . The estimated cross section of recovery rates is plausible, with an average recovery rate of 54% and substantial cross-sectional variation. PDF China Banking System Credit trends amid policy-led recovery and a All of S&P Global Ratings Research's default studies have found a clear correlation between ratings and defaults: The higher the rating, the lower the observed frequency of default, and vice versa. The issuer borrowed a US$20.2 million new term loan, including US$10.1 million of priming new money and rolling up an existing US$10.1 million term loan. Weights are based on the number of issuers in each static pool. On Oct. 30, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' following the completion of the distressed exchange. This also followed the issuer's missed $65.6 million principal payment on its 8.375% unsecured notes due on May 10, 2020. Average and standard deviation for Europe calculated for the period 1996-2020 due to sample size considerations. The one-year Gini in 2020 was well above the one-year weighted average (since 1981) Gini ratio of 82.8% and was higher than the median annual Gini ratio over the last 40 years of 85.7% (see table 2 and chart 30). The transaction was viewed as distressed because lenders got less than they were originally promised. For the Gini ratios in tables 2, 27, and 28, the standard deviations are derived from the time series of Gini ratios for all of their constituent annual cohorts. On Dec. 22, 2020, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'SD'. Default Trends and Rating Transitions | Moody's In addition, the company exchanged US$307.5 million of its existing first-lien term loan for a new super-priority second out term loan. The defaulters are: Argentina-based oil and gas company YPF S.A., and Cayman Islands-incorporated (China-based) real estate developer Sunshine 100 China Holdings Ltd. We have also revised our default tally in a monthly reconciliation process to include Oregon-based digital media and . On July 23, 2020, S&P Global Ratings raised the rating on the issuer to 'CCC-' from 'SD', as the new priming loan is at a senior collateral position relative to the existing debt. On July 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based oil and gas exploration and production company California Resources Corp. to 'D' from 'CC'. to 'D' from 'CC' after the issuer completed a distressed debt exchange for both its US$115 million notes due in April 2021 and US$370 million notes due in April 2022. Liquidity also weakened as cash flows for debt repayment diminished. On June 26, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Irving, Texas-based CEC Entertainment Inc. to 'D' from 'CC' as the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
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