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%. To avoid overcounting, we exclude subsidiaries with debt that is fully guaranteed by a parent or with default risk that is considered identical to that of a parent. As the default rate rose globally, credit quality also showed a net decline in 2020, with many more companies downgraded than upgraded. to 'SD' from 'B-' after the issuer missed the Oct. 31 coupon payment on its senior secured notes due 2023. The coronavirus pandemic-related business disruption (i.e., diamond sales and marketing) affected the cash flow of the issuer. 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'. While these payments would have a higher interest rate, we considered this modification a selective default since investors were receiving less than they were originally promised under the security, partly because the amendment would delay the timing of the interest payments. S&P Global Ratings lowers its rating on an obligor to 'D' or 'SD' if the obligor is conducting a distressed exchange offer. The issuer with the longest time to default in 2020 was U.S.-based Revlon Inc., with an initial issuer credit rating of 'AA' as of Dec. 31, 1980, 39.4 years before the rating was lowered to 'SD' (selective default) in May 2020. The default rates that we refer to as weighted averages in this study use the number of issuers at the beginning of each year as the basis for each year's weight. The negative outlook reflects the possibility that we could lower the rating if we believe a near-term conventional default, restructuring, or transaction that we view as tantamount to a default becomes a near certainty. On Sept. 14, 2020, we withdrew our ratings on the company. 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. On July 29, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' following the issuer's completion of the distressed exchange. 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. That was below the . Angola, Argentina, Armenia, Aruba, Azerbaijan, Bahamas, Bahrain, Bangladesh, Barbados, Belarus, Belize, Bhutan, Bolivia, Bosnia-Herzegovina, Brazil, Brunei Darussalam, Cambodia, Chile, China, Colombia, Costa Rica, Curacao, Dominican Republic, Ecuador, Egypt, El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Honduras, Hong Kong, India, Indonesia, Israel, Jamaica, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Lebanon, Liberia, Macao Special Administrative Region of China, Malaysia, Marshall Islands, Mauritius, Mexico, Mongolia, Morocco, Namibia, Netherlands Antilles, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Qatar, Russian Federation, Saudi Arabia, Singapore, South Africa, Sri Lanka, Syrian Arab Republic, Taiwan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela, Vietnam, and Yemen. On May 25, 2020, S&P Global Ratings withdrew its credit ratings on the issuer. On Sept. 28, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD' following the debt exchange. Note: Descriptive statistics for regions other than U.S. calculated from 1996 to 2020 due to sample size considerations. Once again, the default rate in the 'AAA' rating category was zero, consistent with historical trends. 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). On May 4, 2020, we raised the credit ratings to 'CCC' from 'SD' after the reduction of debt by approximately US$329 million. risen in recent months, direct lending's floating rate has allowed it to deliver superior yields while . Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages. These two sectors, along with leisure time/media, had 2020 default rates in excess of 6%, which were much higher than other sectors and were markedly higher than their sectoral long-term weighted averages (see table 19). On Oct. 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Spain-based private gaming service provider Codere S.A. to 'SD' from 'CCC' after the scheme of arrangement was approved by the courts, after 99.6% of creditors participating in the scheme voted in favor. 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. Second Party Opinions & Transaction Evaluations, U.S. Local Governments Credit Scenario Builder, Annual Global Trends: Defaults Reach Their Highest Level Since 2009, Lower Ratings Are Much More Vulnerable To Default, Industry Variations: Energy And Consumer Services Lead Again, But Defaults Were Widespread In 2020, Speculative-Grade Ratings Represent About Half Of Corporate Issuers, Transition And Cumulative Default Rates Demonstrate Ratings Performance, Criteria For Assigning CCC+, CCC, CCC-, And CC Ratings, U.S. Recovery Study: Clouds Loom As Defaults Rise. 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. Cumulative default rates are one minus the product of the proportion of survivors (nondefaulters). On Jan. 18, 2021, S&P Global Ratings withdrew its ratings at the issuer's request. In cases where an issuer emerges from a prior default (including distressed exchanges), we consider it a separate entity, and the original rating is the first after the default event. The default rate for all Moody's-rated corporate issuers rose to 5.4% at the end of 2009 from 2.0% at year-end 2008. 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. The lenders could accelerate the payment of the outstanding term loan balance, which as of December 2019 was about US$178 million. On Oct. 13, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' following the completion of the exchange. Even with a 60-day grace period, we did not expect payments. The exchange occurred at a weighted average ratio of approximately US$557 per US$1,000 of principal exchanged plus a total of 1.76 million warrants with a strike price of US$5.60. 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. On Oct. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on the Netherlands-based self-service retail and coffee services company Selecta Group B.V. to 'SD' from 'CC' after the England and Wales High Court sanctioned the scheme of arrangement proposed by pan-European vending machine operator Selecta Group B.V. and backed by the group's creditors. 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. Since 1981, the 'B' rating category has accounted for 1,735 defaults (56% of the total from initial rating), well more than double the number of defaulters from the 'BB' category (see tables 10 and 12). The issuer entered into a forbearance agreement with its first-lien lenders and missed the quarterly interest payment on second-lien debt. Later, on Aug. 11, 2020, we withdrew our issuer credit ratings on the company at its request. The company eliminated its prepetition debt during the bankruptcy process. Data Report. However, the data was gathered for 40 years, and all calculations are based on the rating experience of that period. Average cumulative default rate calculation. We viewed this transaction as tantamount to a default on the term loan because the company's operations were distressed, making it difficult for it to meet its obligations. On April 15, 2020, S&P Global Ratings lowered its rating on the issuer to 'D' from 'SD' upon the company filing for Chapter 11 bankruptcy, following which, on May 28, 2021, the ratings on the issuer were withdrawn. At that point, LetterOne owned 89.7% of 2023 notes. With these liquidity supports from central banks in place, market volatility eased after the spring. These were Macy's Inc., Ally Financial Inc., Ambac Assurance Corp., Mutual Benefit Life Insurance Co., Executive Life Insurance Co. CA, Confederation Life Insurance Co., Motors Liquidation Co. (formerly known as General Motors Corp.), and Eastman Kodak Co. Table 13 shows the cumulative defaults over various time horizons from all ratings received subsequent to initial ratings. Throughout the 40-year span, only eight companies initially rated 'AAA' have ever defaulted. On Dec. 8, 2020, we raised the rating on the issuer to 'CCC' from 'SD', reflecting our view of reduced refinancing risk. The company noted that the filing resulted from the financial strain from the prolonged COVID-19 restaurant closures. Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. Subsequently, we withdrew the ratings due to insufficient information. Later, on May 15, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. On May 28, 2020, S&P Global Ratings withdrew its ratings on the issuer. On July 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based oil and gas exploration and production company Lonestar Resources U.S. Inc. to 'D' from 'CCC-' after the issuer elected to skip an interest payment on its unsecured notes due 2023, and was not likely to pay within the 30-day grace period. DB's 'Core Bank' reported an adjusted net return on tangible equity (ROTE) of 7.3% in Q3 following a strong 9.1% and 11.9% in Q2 and Q1, respectively, close to the bank's 8% target set for 2022. 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. On Nov. 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based exploration and production company Jonah Energy LLC to 'D' from 'CCC-' after the issuer elected not to make its full US$30 million reserve-based lending facility deficiency payment for September. The largest defaulter in 2020 was U.S.-based telecommunications provider Frontier Communications Corp., with $22.5 billion outstanding at the time of its default. Some countries can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country. As per the forbearance agreement, the term loan and ABL lenders agreed to not exercise or enforce certain remedies with respect to this nonpayment for 60 days, ending May 31, 2020. Often these are issuer-weighted averages. CEC expects to achieve a balance sheet restructuring that supports its reopenings and long-term strategic plans. Its Gini coefficient--which is a summary statistic of the Lorenz curve--would thus be zero. On Feb. 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on RentPath LLC to 'D' after the issuer defaulted and filed for Chapter 11 bankruptcy. On June 8, 2020, we lowered our issuer credit rating to 'D' from 'SD' after the issuer's announcement of a reorganization petition filed under Chapter 11 of the Bankruptcy Code. Over the long term, the global weighted average Gini coefficient was 82.8% over the one-year horizon, 75.3% over three years, 71.5% over five years, and 69.2% over seven years (see table 27). It is expected to reduce debt by US$500 million. In 2020, 216 of the 226 defaults, or 96%, were from companies originally rated speculative grade, which is nearly eight percentage points higher than the long-term average of 88.3%. On May 27, 2020, we withdrew all the ratings on Extraction Oil & Gas Inc., including the 'D' issuer credit rating, at the company's request. During 2020, the company increased its stake in V.E from 69.2% to 99.8%. In this study, the insurance industry includes life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, and title insurance. Normally, recessions include, or are followed shortly by, marked increases in corporate defaults. 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. 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. On Oct. 9, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD'. The 50.3% at the end of 2020 does represent an all-time high, albeit by a margin of only 0.1%. On April 9, 2020, we raised the ratings on the issuer to 'CCC' from 'D' on the expectation of average leverage above 15x. 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. This is an extremely high level, just surpassing 2009, when the ratio hit 56.3% amid a wave of distressed exchanges, which, once completed, often result in 'B-' ratings. In line with expectations, the majority of companies that defaulted within one year of the original rating are from the lowest speculative-grade rating categories, 'B' and lower. On June 25, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Houston-based exploration and production (E&P) company W&T Offshore Inc. to 'SD' from 'CCC+' following the company's announcement that it repurchased about $72.5 million of its second-lien notes due 2023, about 10% of its total year-end 2019 long-term debt, for roughly $23.9 million, or an average 33% of par value.

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