With the region moving to promote disintermediation, this share of speculative-grade issuers could continue to grow. On June 5, 2020, we withdrew our ratings on the issuer. Default & Recovery Analytics - Moody's Investors Service A key consideration when analyzing transition matrices that present averages computed over multiple static pools is that the standard deviations associated with each transition point in the matrix are large relative to the averages (outside of stability rates). On Nov. 20, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Minnesota-based exploration and production (E&P) company Northern Oil and Gas Inc. to 'SD' from 'CCC+' after the issuer disclosed debt exchanges, which over the past few quarters represent a meaningful amount of the original principal. The shareholder made an offer to purchase the remaining 2023 notes. Earlier, on April 8, 2020, we lowered our issuer credit rating on W&T Offshore to 'CCC+' from 'B-'. COMMENTS; 4 May, 2022 | 17:17; . Moody's Default and Ratings Analytics team publishes Moody's default studies, ratings transitions and ratings performance studies for corporates, financial institutions, sovereign and sub-sovereign, public finance and infrastructure sectors. 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. On Oct. 9, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Florida-based glass packaging producer company Anchor Glass Container Corp. to 'SD' from 'CC' after the issuer closed its previously announced exchange offer for its second-lien term loan at a discount to par, which was considered to be distressed and tantamount to default. On May 28, 2020, S&P Global Ratings withdrew its ratings on the issuer. Multiplying 92.81% by 96.77% results in a 89.82% survival rate to the end of the third year, which results in a three-year average cumulative default rate of 10.18%. 0 ratings 0% found this document useful (0 votes) 2 views. The depressed commodity prices, the company's liquidity position, and the ongoing capital needs to maintain production were the main factors behind the decision. 8-K: ROYAL CARIBBEAN CRUISES LTD - MarketWatch Of the 226 corporate defaults in 2020, the majority (146) were from companies in the U.S. and associated tax havens (Bermuda and the Cayman Islands). The fixed rate loan and the floating rates loans were repurchased at 85% and 84.875% of the original price, respectively. On March 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Illinois-based engineered fastener distributor Optimas OE Solutions Holding LLC to 'SD' from 'CCC+'. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. On May 11, 2020, we withdrew the ratings at the issuer's request. At that point, LetterOne owned 89.7% of 2023 notes. PDF Default Recovery Rates and LGD in Credit Risk Modeling and Practice Default, Transition, and Recovery: 2019 Annual Global Corporate Default Of these new issuers, 78% were rated speculative grade. 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. For example, 427 defaults were recorded in the five-year pool that began in January 2016, of which 414 were rated speculative grade on Jan. 1, 2016. On Dec. 22, 2020, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'SD'. The rating action followed the issuer's completed exchange of its unsecured notes of cash and PIK. The issuer entered into a forbearance agreement with its first-lien lenders and missed the quarterly interest payment on second-lien debt. On Jan. 18, 2021, S&P Global Ratings withdrew its ratings at the issuer's request. The issuer is still under high execution risk after its Chapter 11 filing in 2019. Average cumulative default rate calculation. Combined global bond issuance for nonfinancial corporates and financial services companies hit $5.7 trillion--a 27% increase from the high in 2019. An improving picture in 2017 . 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. However, defaults from most other sectors increased as well. On Sept, 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Switzerland-based automobiles and components manufacturing company Garrett Motion Inc. to 'D' from 'B' after the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. . Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. The issuer's financial and operational situation had worsened because of the coronavirus pandemic. Often these are issuer-weighted averages. Bond price data for firms at default are obtained from Moody's Investor Services, and are supplemented with information from Standard & Poor's and Merrill 5 A similar point is made in Pykhtin (2003). The issuer has long struggled to adapt to the business model in a challenging domestic department store space, which shrank further because of the coronavirus pandemic. The Default & Recovery Database provides access to the most comprehensive default dataset in the market. On the same day, we withdrew the ratings at the company'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 April 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Canada-based theatrical and live entertainment company CDS Group to 'D' from 'CCC-', reflecting payment default after the issuer didn't made interest and principal payments on first lien-debt and interest payment on second-lien debt, both of which were due March 31, 2020. On June 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Hudson, Ohio-based fabric and crafts retailer Jo-Ann Stores LLC to 'SD' from 'CCC' as the company repurchased $5.6 million of its second-lien term loan at a 57% discount in the first quarter of fiscal 2021 ended May 2, 2020, and subsequently agreed to repurchase $206 million face value of first- and second-lien debt at approximately 50% discount in the second quarter ended Aug. 1, 2020. 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. S&P Global Ratings lowered its oil and natural gas price assumptions and forecasted that Brent crude would average $30 per barrel while West Texas Intermediate (WTI) averages $25 per barrel for the remainder of 2020. Project Finance Bank Loans: Default and Recovery Rates for 1983-2020 (APAC) APAC Edition. We view the nonpayment of interest as akin to default on the senior secured notes. The issuer announced that it completed a transaction to exchange US$700 million of the US$1.476 billion senior unsecured debt due in 2028 with US$400 million in cash and 10 million common shares. Investment-grade-rated issuers seldom default, so the number of defaults among these rating categories is particularly low. On March 16, 2020, S&P Global Ratings raised its rating on the issuer to 'CCC-' from 'SD'. The nonfinancial sector tends to have a much higher share of companies rated speculative grade, with 60.6% globally as of the beginning of 2020, compared with just 24.7% of financial services companies. On Oct. 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Bermuda-based onshore drilling contractor Nabors Industries Ltd to 'SD' from 'CCC+' after the issuer completed a distressed private exchange, whereby it exchanged US$115 million of the principal amount of its 0.75% exchangeable bonds due 2024 for US$50.485 million of new senior priority guaranteed notes due 2025. Historically, nonfinancial defaulters tend to have a much smoother and shorter path to default (see chart 12). On May 15, 2020, S&P Global Ratings lowered the issuer credit rating on Texas-based oilfield products and services provider Forum Energy Technologies Inc. to 'SD' from 'CC'. On Feb. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based home dcor and furniture retailer Pier 1 Imports Inc. to 'D' from 'CCC-' after the issuer filed for Chapter 11 bankruptcy. On Oct. 12, 2020, Texas-based oil and gas exploration and production company MD America Energy LLC filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, which S&P Global Ratings considers a default. Amid the fast and robust economic rebound, the speculative-grade rating bias has rapidly recovered, but the number of upgrades has not yet matched the magnitude of downgrades seen last year. Default, Transition, and Recovery: 2021 Annual Global Corporate Default On May 29, 2020, we raised the issuer credit rating to 'CCC+' from 'SD' following the distressed debt exchange. *This total does not match table 1 because it excludes confidentially rated defaults. 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). Investment-grade-rated issuers globally tend to exhibit greater ratings stability (as measured by the frequency of rating transitions) than those rated speculative grade (see table 20). We considered this exchange as a distressed exchange. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. On Oct. 20, 2020, S&P Global Ratings raised its issuer credit ratings to 'B-' from 'D' after the issuer announced it had completed a debt restructuring transaction, resulting in US$400 million of debt reduction. All speculative-grade categories had higher default rates in 2020 than their long-term averages, though in the cases of the 'BB' and 'B' categories, these increases were relatively small. The downgrade followed the completion of the partial repurchase of senior secured notes. Sector In-Depth . What is in the DRD? On Feb. 21, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based high technology service provider Tunghsu Group Co. Ltd. to 'SD' from 'CCC-' after the issuer missed interest and principal payments on three onshore bonds. Default rate calculation. On Oct. 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based health care provider Alliance HealthCare Services to 'SD' from 'B-' after the issuer completed a distressed exchange of its second-lien debt. On April 23, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Canadian diamond company Northwest Acquisitions ULC to 'D' from 'CCC+' after the issuer's subsidiary, Dominion Diamond Mines ULC, announced filing for insolvency protection under The Companies' Creditors Arrangement Act. Earlier, on Oct. 1, 2020, S&P Global Ratings lowered the long-term issuer credit rating to 'CC' from 'CCC' after the issuer announced the restructuring transaction. . On June 5, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based APC Automotive Technologies Intermediate Holdings LLC to 'D' from 'CCC' after the issuer announced it was commencing Chapter 11 bankruptcy proceedings. The issuer was engaged in discussions with creditors for a debt restructuring. The majority of the company's revenue comes from airports, depending on airline passenger travel, which has declined sharply because of the pandemic. 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. The transaction was approved by 100% of lenders, and it provided the issuer with additional liquidity. 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 May 11, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chinese furniture maker Yihua Enterprise (Group) Co. Ltd. to 'SD' from 'CCC' after the issuer failed to make interest payment on its domestic medium-term notes due 2022. The median rating for all recently defaulted entities was solidly in the speculative-grade category in the seven years preceding default, and for all of that period, it was at least one notch below that of the long-term equivalent. Post the transaction, the company will have new senior secured three-and-half-year US$171.4 million notes due in 2024 and five-year US$251 million notes due in 2025. 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. 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. On June 1, 2020, we lowered the credit ratings to 'D' after the issuer commenced Chapter 11 bankruptcy restructuring, and subsequently on June 25, 2020, the ratings were withdrawn at the issuer's request. On Dec. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on France-based car rental service provider company Europcar Mobility Group S.A. to 'SD' from 'CC' after the issuer elected not to pay the interest due on its 2024 and 2026 corporate senior notes prior to the end of the 30-day grace period. The filing preceded Covia's entry into a restructuring support agreement with its lenders, which was to involve a comprehensive restructuring of the company's debt against the backdrop of energy price shocks and the recession caused by the global pandemic. The average number of notches for an upgrade moved to 1.19 in 2020, while downgrades remained at an average of 1.46 notches--the highest rate since 2010 (when the average was 1.52 notches) (see chart 8). 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'. This transaction was aimed at preserving liquidity as sales volume and operating income had been adversely affected by the pandemic. The company aimed to restructure its debt, capital structure, and business model to adapt to post-COVID-19 prospects. There were no downgrades among the eight 'AAA' rated companies in 2020. For the full year, there were three large downgrades (and two large upgrades), compared with two downgrades in 2019 (see chart 7). Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. Fitch Ratings: Credit Ratings & Analysis For Financial Markets Reduced EBITDA amid the pandemic and oil price crisis in early 2020 stressed the operating performance of the issuer. The issuer has been facing negative free cash flows and unsustainable leverage because of its high debt balance and uneven operating performance. The transaction was viewed as distressed because the remaining US$42 million will now become subordinated, while the noteholders who agreed to the exchange will receive US$850 per US$1,000 principal amount. This compares with a Gini of 88.3% and a default rate of 2.5% in 2019. The default rate Jennifer Tennant for all Moody's-rated corporate issuers rose to 1.9% at the end of 2008 Analyst from 0.3% at year-end 2007. Earlier, on July 2, 2020, S&P Global Ratings lowered the issuer credit rating to 'CC' from 'CCC+' after the issuer defaulted on its unrated asset-backed lending credit facility. The company had a $135 million interest payment due in mid-July and a $208 million debt maturity in August 2020, and its bonds traded at less than $0.10 on the dollar. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Delaware-based oil and gas exploration and production company Bruin E&P Partners LLC to 'D' from 'CC' after the issuer filed for Chapter 11 bankruptcy. The holders of the existing notes will receive $750 principal amount of the new notes for every $1,000 of existing notes, and $50 of cash as a consent fee if they agree to an early tender. The issuer also amended the terms of its first- and second-lien credit agreements to extend the maturity of revolving credit and temporary allow itself to make partial PIK interest payments. On Dec. 7, 2020, S&P Global Ratings raised the issuer credit rating to 'B-' from 'SD' on improved liquidity with constraints from high leverage. Research & Ratings: Default & Ratings Analytics - Moody's In a year marked by the worst economic contraction since the Great Depression, our ratings performed well, with all rated defaults in 2020 beginning the year with speculative-grade ratings. For the purposes of this study, a corporate rating may also be withdrawn as a result of mergers and acquisitions. On July 20, 2020, S&P Global Ratings raised the issuer ratings to 'B-' from 'SD' after the issuer completed its debt restructuring, resulting in its syndicated debt falling to 242 million from 575 million and the extension of debt maturities on its 160 million senior term loan and 82 million junior term loan by five and six years, respectively. On Feb. 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Commercial Barge Line Co. to 'D' from 'CC' after its subsidiary, American Commercial Lines Inc., filed for Chapter 11 bankruptcy with the Southern District of Texas. On March 18, 2020, S&P Global Ratings raised its ratings on the issuer to 'CCC' from 'SD', reflecting our view that there was a possibility of additional debt restructuring. The company noted that the filing resulted from the financial strain from the prolonged COVID-19 restaurant closures. expect solid corporate bond issuance and low defaults. On Dec. 10, 2020, we raised the issuer credit rating on Jo-Ann to 'B-' from 'CCC' on the basis of its good business performance and extension of its asset-based lending facility. Default Trends and Rating Transitions | Moody's As a supplement to many of the averages and time series presented in this study, standard deviations are also shown to provide a gauge of the dispersion of data behind these averages. This transaction brought remaining principal balance to US$29 million. On June 5, 2020, we raised the rating on the issuer to 'CCC+' from 'D' on revised credit agreements, which reduced its annual cash interest payments by $10 million, which, in turn, alleviated near-term liquidity concern. The rating action followed the company's exchange of about $58.3 million in aggregate principal amount of its senior unsecured notes for $23.3 million in cash, or a 60% discount to par value. 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. This does not necessarily indicate a default event, but during the period of regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. 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'). 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. As a result, the noteholders received less than the original promise. On Sept. 17, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On Oct. 5, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD'. 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'. Default, Transition, and Recovery: 2020 Annual Global Corporate Default

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