Other sectors, such as consumer services, have had more frequent default cycles, both during and between economic cycles. The principal liquidity sources for the issuer involves US$48 million cash on hand and about US$35 million to US$55 million available in revolving credits. 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. Many of the tables and charts in this study display averages of default rates, transition rates, and Gini ratios. On April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Wisconsin-based industrial products manufacturer Jason Inc. to 'SD' from 'CCC'. Later, on May 15, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. The issuer is exploring other strategic alternatives as liquidity remains constrained. On June 4, 2020, we raised the issuer credit rating to 'CCC-' from 'SD', reflecting our view of the company's still unsustainable capital structure, very high debt service burden, and weak liquidity.
CLO Myth-Busting: The Top Three Misconceptions 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. On May 4, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based apparel retailer J. Crew Group Inc. to 'D' from 'CCC-' following the company's announced petitions filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The differences between each rating category's minimum and maximum times to default are in the last column, under "range." Data Report. 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. In other words, the use of a rating category suggests that transitions, for example, to 'AA' from 'AA-' or to 'BBB+' from 'BBB-', are not considered to be rating transitions because the rating remained within the rating category. 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 June 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based oil and gas exploration and production company SM Energy Co. to 'SD' from 'CC' after the issuer announced the results of its previous exchange offer. 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%. 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 Nov. 19, 2020, we lowered our issuer credit rating to 'SD' from 'CC 'as the company completed its previously announced 5.75% senior notes exchange. Overall, ultimate recovery rates for project finance bank loans are similar to those for senior secured corporate bank loans and overall corporate bank loans. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Noble to 'D' from 'CCC-' as the company skipped the interest payment on its 7.75% senior notes due 2024. Over the long term (since 1981), financial services defaulters show a median rating of 'BB+' five years prior to default. Such rating categories with smaller populations will experience high rating transition rates when even a small number of issuers are upgraded or downgraded. 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. After beginning with heightened credit market stress and a 45-plus-day stretch without any speculative-grade issuance in the U.S. and Europe, 2019 ultimately saw only marginally higher default and downgrade rates than 2018. 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. As the default rate rose globally, credit quality also showed a net decline in 2020, with many more companies downgraded than upgraded. The amendment includes a discount on debt for some of its debtholders, which we assess as equivalent to default. The only exceptions to the correspondence between lower ratings and higher default rates occur when the number of defaults is low or when the underlying number of issuers is very small--such as at the rating modifier level among the higher rating categories (see table 26). In the summary section at the bottom of tables 30-32, the first row shows the issuer-weighted averages of the marginal default rates. We believe this bankruptcy filing is due to the combined effect of the coronavirus pandemic and the company's weak performance in 2019. In 2020, speculative-grade rating categories had higher default rates than in 2019, with an increase in the 'BB' category to 0.93% from 0.00%, 'B' category to 3.5% from 1.5%, and 'CCC'/'C' category to 47.5% from 29.8% (see table 3). 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 . On Dec. 10, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' following the company's debt repurchase. Cross-Sector: The . These are calculated in the same way as the default column in table 20, though table 20 shows the one-year default rates for each rating category for 2020 exclusively. 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. We also incorporated the company's weak operating performance, negative cash flow generation, and near-term debt maturities. NPC is the largest franchisee of Pizza Hut and Wendy's restaurants operating nearly 1,600 locations in the U.S. On July 1, 2020, S&P Global Ratings lowered the ratings on the issuer to 'D' from 'SD' following its Chapter 11 bankruptcy filing, following which, on Aug. 5, 2020, the ratings on the issuer were withdrawn. On June 25, 2020, we raised our long-term issuer credit rating on Jo-Ann to 'CCC' from 'SD', reflecting the ongoing risk of a conventional default. Of the 226 defaults in 2020, 198 were from companies rated as of the beginning of the year. On Nov. 16, 2020, Libbey announced that it had successfully emerged from Chapter 11 by completing its financial restructuring. Over the 40 years this study covers, 70.5% of financial entities were initially rated investment grade, compared with only 29.4% of nonfinancial companies. On April 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chilean casino operator Enjoy S.A. to 'D' from 'B-' after the company announced suspension of its shareholder meeting to treat a capital increase while the board decided to file for judicial reorganization. On March 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based cyber security provider Optiv Inc. to 'SD' from 'CCC+' after the issuer completed a distressed exchange, repurchasing about US$47 million of second-lien debt for about US$23 million. Growth during the year partially reflected temporarily heightened demand due to stay-at-home activities. 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+'. On June 24, 2020, S&P Global Ratings withdrew its issuer credit rating at the company's request. On Nov. 27, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' following the company's debt issuance. The rating process begins when an arranger, issuer, sponsor, or underwriter contacts a member of Fitch's Business Relationship Management (BRM) group with a request to engage Fitch. Australia, Canada, Japan, and New Zealand. Counterparty credit ratings, corporate credit ratings, and sovereign credit ratings are all forms of issuer credit ratings. The largest gap between the two was in financial institutions, which had a five-notch difference: The 233 financial institutions that defaulted had a median original rating of 'B+', compared with a sector median of 'BBB'. The issuer was unable to raise capital to maintain the regulatory minimum, and subsequently the principal and interest payments to the depositors were suspended. On July 20, 2020, we withdrew the ratings on the issuer. 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. On Feb. 26, 2020, S&P Global Ratings withdrew its ratings on the issuer. However, this poses no continuity problem because each study reports statistics back to Dec. 31, 1980. This was the second-largest default since 2014, when Texas Competitive Electric Holdings Co. LLC defaulted with $28.7 billion in associated debt (see table 5). After speculative-grade ratings reached a peak of 51% of U.S. corporate ratings in 2007, the default rate hit its cyclical peak of 12% in 2009, following the Great Recession (see chart 23). 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 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. The shareholder made an offer to purchase the remaining 2023 notes. On Nov. 25, 2020, S&P Global Ratings raised the issuer credit rating to 'B-' from 'SD' on its improved maturity profile. On Aug. 30, 2020, Ohio-based automotive components manufacturer Shiloh Industries Inc. defaulted after the issuer filed for Chapter 11 of the U.S. Bankruptcy Code. 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. The average amount of debt per defaulter in 2020 was the same as in 2019: $1.6 billion. We also include the defaulting instruments for each company that S&P Global Ratings rates. On Dec. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based financial products and services provider Populus Financial Group Inc. to 'SD' from 'CC'. Sovereign default and recovery rates, 1983-2020 - Excel Data: 15 Sep 2009 . On May 22, 2020, S&P Global Ratings lowered its issuer credit rating on Illinois-based generic pharmaceutical manufacturer company Akorn Inc. to 'D' from 'CC' after the issuer petitioned for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Annual speculative-grade default rates increased in all major regions in 2020, relative to 2019. If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal. The issuer submitted a prepackaged plan. 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'. Before 2010, the majority of newly assigned European issuer credit ratings were investment grade, but since then, roughly 73.6% of newly assigned ratings have been speculative grade annually. 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. 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. We utilize the Lorenz curve, a graphical representation of the proportionality of a distribution, as one measure of ratings performance, and we summarize this via the Gini coefficient. On Oct. 15, 2020, S&P Global Ratings lowered the issuer credit rating to 'CC' and on Nov. 16, 2020, lowered it to 'SD' from 'CC'. S&P assumes no obligation to update the Content following publication in any form or format. 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. The company exchanged $315 million of its existing unsecured notes for new 9% convertible secured notes due 2025, which we considered less than the original promise and tantamount to default.
PDF Corporate Default and Recovery Rates, 1920-2009 - Is My Money Safe Corporate Defaults Slow, Lifting Debt Market - WSJ Default & Recovery Database | Moody's Analytics The new notes are in a payment favorable position. With the strongly improved U.S. economic outlook for 2021, the speculative-grade negative . On Aug. 7, 2020, we lowered the issuer credit ratings to 'D' from 'SD' following GFamsa's bankruptcy filing in both Mexico and the U.S. On Dec. 12, 2020, we withdrew the issuer credit ratings on the company at its request. 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'. But despite the noticeable increase in defaults in 2020, peak default rates were much lower than during the financial crisis. The majority (94%) began the year rated in the 'B' or 'CCC'/'C' category (57% 'CCC'/'C' and 37% 'B'). 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. Investment-grade ratings are proportionately more prevalent among financial services companies as well (relative to nonfinancials).
Default, Transition, and Recovery: The 2021 Global Corporate Default (EDGAR Online via COMTEX) -- NETSCOUT SYSTEMS INC false 0001078075 0001078075 2023-02-22 2023-02-22 Four other sectors' speculative-grade proportions are greater than 70%, and telecommunications reached nearly 68% at the end of 2020. On Dec. 17, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD', which reflects the completion of the distressed exchange and significant risks over the next few months given looming debt maturities and very high leverage. On Jan. 13, 2021, we raised the issuer credit rating to 'CCC+' form 'SD' after the issuer retired a huge sum of principal in second half of 2020, approximately US$550 million by early December 2020. On May 20, 2020, S&P Global Ratings lowered its issuer credit rating on Oklahoma-based casino resort operator Downstream Development Authority (DDA) to 'SD' from 'CCC'. The CreditWatch negative reflected Avianca's weakening liquidity and that the absence of extraordinary financial support from shareholders or the Colombian government could force the company to default on the repayment of its 8.375% senior unsecured notes due 2020. On Aug. 5, 2020, S&P Global Ratings raised the issuer credit ratings to 'CCC+' from 'D', as the company completed a distressed restructuring and amended its first-and second-lien credit agreements. Back in December, Moody's Investors Servicepegged the 2017 default rate for speculative-grade debt in the U.S. at 4% by year-end, down from 5.6%. This scheme was expected to save about 7.6 million per year in cash, but the company was still facing an interest payment of about 35 million and huge rent payments. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. On May 27, 2020, Texas-based retailer Tuesday Morning Corp. defaulted as the company filed for Chapter 11. S&Ps opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. On July 2, 2020, we raised the issuer credit rating to 'B-' from 'D' after RGIS completed its debt restructuring and eliminated over US$ 230 million of debt, which, in turn, improved leverage. In this case, however, the 'AA+' figure was derived from a much smaller sample than that for the 'AA' rating. Later, on May 2, 2020, the issuer entered into standstill agreement with the lenders of the notes due 2021 and the term loan due 2023, until July 31, 2020.
Annual Report 2021 - Moody's Investors Service On Oct. 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Hampshire-based specialty apparel retailer Jill Acquisition LLC to 'SD' from 'CC', as the issuer closed its previously announced transaction to extend the maturity on its debt by two years, which we consider distressed and tantamount to default. All intermediate ratings are disregarded. bp by year-end 2020. On March 17, 2020, we withdrew our issuer credit rating at the issuer's request. On Sept. 14, 2020, we withdrew our ratings on the company. On Dec. 16, 2020, S&P Global Ratings withdrew the issuer credit ratings at the issuer's request. Second-lien lenders agreed to convert scheduled cash interest payments to payment-in-kind (PIK) interest for three quarters (starting Sept. 30, 2020). The company entered into a forbearance agreement with its senior debt lenders and is expected to pursue a debt restructuring. On July 9, 2020, S&P Global Ratings withdrew its issuer credit rating at the company's request. 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. 27, 2020, Texas-based oil and gas exploration and production company SAExploration Holdings Inc. defaulted after the issuer filed for reorganization under Chapter 11. The company will not make the interest payments within the 30-day grace period. Multiyear transitions were also calculated for periods of two up to 20 years. On Dec. 10, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' following the company's debt exchange. 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 Jan. 29, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based engineered components manufacturer and marketer Doncasters Group Ltd. after the issuer received lender support for financial restructuring. 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.