As in most years, the U.S. accounted for the majority of defaults in 2020, by both count and the amount of affected debt. On July 28, 2020, we lowered the issuer credit rating to 'CC' from 'CCC- 'following the company's announcement that it commenced an offer to exchange any and all of its outstanding amounts of 5.75% notes due February 2021 for a combination of new 5.75% notes due February 2024 and an early tender/consent fee. 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. Issuer-weighted default rates. 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. On Sept. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based oil and gas exploration and production company Oasis Petroleum Inc. to 'D' from 'CCC-' after the issuer missed an interest payment and entered into the 30-day grace period. Annual speculative-grade default rates increased in all major regions in 2020, relative to 2019. On Nov. 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Florida-based health care service provider CDRH Parent Inc. to 'SD' from 'CCC+' because of the distressed nature of its credit agreement amendment, where the issuer amended its credit agreement to provide covenant relief and improve liquidity. Structured finance vehicles, public-sector issuers, and sovereign issuers are the subjects of separate default and transition studies, and we exclude them from this study. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated entities, the curve would capture all of the area above the diagonal on the graph (the ideal curve), and its Gini coefficient would be 1 (see chart 31). Earlier, on April 1, 2020, we lowered our issuer credit rating on Gavilan to 'CCC-' from 'CCC+' after the issuer drew the full amount on the US$200 million reserve-based lending facility, which was up for redetermination in April 2020. On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Alta-based frac sand producer and supplier Source Energy Services Ltd. to 'D' from 'CCC-' after the issuer missed the interest payment due on June 15, and we believed the company was unlikely to make the interest payment within the 60-day grace period. For additional details on the 2020 defaulters, see Appendix III. 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. On July 6, 2020, we raised our issue credit rating on Serta Simmons to 'CCC+' from 'SD', reflecting the improved liquidity profile, although the capital structure is still highly leveraged, and the company amended and extended its asset-based lending credit facility maturity to August 2023 from November 2021. The issuer announced that it completed an amend-and-extend transaction for all of its US$100 million senior term loans due in February 2022 and most of its US$300 million junior term loans. On Dec. 28, 2020, S&P Global Ratings withdrew its rating at the issuer's request. On May 11, 2020, we withdrew the ratings on the issuer. The average amount of debt per defaulter in 2020 was the same as in 2019: $1.6 billion. 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+'. A market share war between Saudi Arabia and Russia led to a crash in crude oil prices, on top of the significant demand destruction for crude oil and natural gas due to the coronavirus. Date Document Type Title Issuer/Entity 24 Feb 2023 Data Report Fleet Lease Securitizations: Loss Severity Modeling 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. The negative outlook reflects that we could lower the rating on Outerstuff if operating underperformance continues to pressure liquidity such that we believe a default is inevitable within the subsequent six months. 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. Furthermore, weak liquidity supports our view of O1 Properties' general default. We calculated all default rates on an issuer-weighted basis. If an issuer defaults or if the rating on the issuer is withdrawn in the middle of the year, then it would be considered rated 'D' or not rated as of Dec. 31 of that particular year. The issuer entered into an agreement with the majority of its lenders for recapitalization of its funded debt. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. The company finalized a tender offer to repurchase $213 million of its outstanding $255 million 12% senior secured notes due 2022. The issuer aims to eliminate US$840 million of debt by using restructuring and a US$230 million debtor-in-possession facility. We considered this exchange as a distressed exchange. On July 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based retailer Missouri TopCo Ltd. to 'SD' from 'CCC-' after the issuer converted its 80 million second-lien notes into a payment-in-kind (PIK) toggle instrument. 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. Forest and building products/homebuilders. We considered the transaction as distressed given the company's weak operating performance, negative cash flow generation, and near-term debt maturities. The company was operating at a reduced rate of utilization--a production rate of 5.7 million tons per year against total nameplate capacity of 17.3 million tons per year. Reduced EBITDA amid the pandemic and oil price crisis in early 2020 stressed the operating performance of the issuer. 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. What is in the DRD? On Aug. 28, 2020, we withdrew our ratings on the company. 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. In Europe, by contrast, the share of speculative-grade ratings remains in the minority. The issuer's financial and operational situation had worsened because of the coronavirus pandemic. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. Moody's Investors Service (MIS) First Quarter Revenue Down 20%. On March 16, 2020, S&P Global Ratings raised its rating on the issuer 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%. Table 10 displays the median, average, and standard deviations for the time to default from the original rating. The Gini coefficient is defined as area B divided by the total of area A plus area B. 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. 11, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Spain-based transportation company Bahia de las Isletas S.L. Adding those companies first rated in 1981 to the surviving members (those still actively rated and not in default) of the 1981 static pool forms the 1982 static pool. (For details on the Gini methodology, refer to Appendix II.). In 2019, the issuer derived about 41% of its revenue from the food service segment and about 32% from the retail segment. The depressed commodity prices, the company's liquidity position, and the ongoing capital needs to maintain production were the main factors behind the decision. It is expected that North American and international markets are likely to contract up to 50% and 20%, respectively. These weights are based on each cohort's rating level's contribution to the 40-year total issuer base for each rating level. Entities that have had ratings withdrawn--that is, revised to not rated (NR)--are surveilled with the aim of capturing a potential default. Table 29 displays the summary of one-year transitions in the investment-grade and speculative-grade rating categories. 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. S&P Global Ratings does not require all issuers with rated debt to have an issuer credit rating. Earlier, on March 31, 2020, we lowered our issuer credit rating on Global Knowledge to 'CC' from 'CCC-' as the company's liquidity remained very weak and it faced substantial near-term debt maturities, as well as needed to address its unsustainable capital structure. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. Earlier, on March 17, 2020, we lowered the long-term issuer credit rating to 'CCC+' from 'B' after the issuer's refinancing prospects were difficult and capital structure was unsustainable. On April 17, 2020, S&P Global Ratings lowered the issuer credit ratings on Texas-based oil and gas exploration and production company Ultra Petroleum Corp. to 'D' from 'CCC-' after the issuer announced it would not be making interest payments of about US$13.2 million due on April 15, 2020, and entered into a 30-day grace period. 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. Defaults reached a multiyear high in 2020, but this was largely limited to nonfinancial corporates. The issuer entered into a forbearance agreement for deferring the interest payments on its second lien-term loan until June 30, 2020. On Aug. 14, 2020, we withdrew the issuer credit ratings on the company at its request. That is, when default pressure is high, economic conditions are such that the likelihood of companies from across the rating spectrum suffering a more rapid deterioration of credit quality is higher. 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). These include industrials, utilities, financial institutions, and insurance companies around the world with long-term local currency ratings. Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages. Default activity in 2020 did increase, but to a lesser extent than recent recessions (see chart 1 and table 1). At that point, LetterOne owned 89.7% of 2023 notes. Even with a 60-day grace period, we did not expect 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. We then divide this by the ratio of the total number of nonzero weights minus one and the total number of nonzero weights. S&P assumes no obligation to update the Content following publication in any form or format. 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. 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. S&P Global Ratings had previously withdrawn the issuer credit ratings at the issuer's request. In 2020, the share of new speculative-grade issuers rated 'B-' and lower reached 56.8%. On June 29, 2020, S&P Global Ratings withdrew its ratings on Intelsat. 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. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. In both cases, the standard deviation of the times to default generally shrinks progressively as the rating gets lower. The issuer is facing challenges in adapting to the ongoing changes in the department store sector. On Nov. 4, 2020, S&P Global Ratings withdrew its ratings on the issuer. The rating action followed the company's distressed exchange after repaying only a portion of amount outstanding on its 1.5-lien notes. The differences between each rating category's minimum and maximum times to default are in the last column, under "range." 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. On Aug. 17, 2020, S&P Global Ratings withdrew its ratings on the issuer. On June 2, 2020, S&P Global Ratings lowered its issuer credit rating on U.K.-based offshore drilling contractor Noble Corp. PLC to 'SD' from 'CCC-'as the company paid off 85% of its two seller loans (unrated) in exchange for a discount to the outstanding balance, effectively repurchasing both loans at about 85% of par value. Only in longer time frames do companies with higher original ratings surface among the defaulters. The company eliminated its prepetition debt during the bankruptcy process. Although MCS had sufficient liquidity to make the interest payment, S&P Global Ratings believed that the company was unlikely to pay it within the five-day grace period, given its unsustainable capital structure. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. But in a report issued today, the credit ratings. 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. Some methods for calculating default and rating transition rates might charge defaults against only the initial rating on the issuer, ignoring more recent rating changes that supply more current information. In years with lower-than-average default rates, often more than 90% of defaulters were initially rated speculative grade, as reflected in the rating path observed for defaulters in the trailing 12 quarters (see chart 10). 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+'. On June 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Virginia-based tobacco leaf merchant Pyxus International Inc to 'D' from 'CCC-' after the issuer announced a reorganization process under Chapter 11 of the U.S. Bankruptcy Code with 92% of principal amount of its first-lien notes and 67% of its second-lien notes holders. 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. On July 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based party goods retailer and wholesaler Party City Holdings Inc. to 'SD' from 'CC' after the issuer completed a distressed exchange, at 33.5% of par value for the debt exchanged. 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. We also incorporated the company's weak operating performance, negative cash flow generation, and near-term debt maturities. On Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' following completion of the distressed exchange. 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. The debt structure of the issuer became unsustainable, with adjusted debt to EBITDA close to 8x in 2019. to 'D' from 'CCC-'. As the default rate rose globally, credit quality also showed a net decline in 2020, with many more companies downgraded than upgraded. On April 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Massachusetts-based department store operator Neiman Marcus Group Ltd. LLC to 'D' from 'CCC-' after the issuer missed paying interest due on unsecured notes maturing October 2021. 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). 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. 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. 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 April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based telecom service provider Speedcast International Ltd. to 'D' from 'CCC' after the issuer missed interest payments on its US$600 million term loan, due on March 31, 2020. On Dec. 17, 2020, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'D', reflecting the company's position post restructuring. Financial services had some defaults, but at a lower rate than in 2019 (see table 16). 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. It shows the ratio of actual rank-ordering performance to theoretically perfect rank ordering. 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. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On June 20, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Cary, N.C.-based information technology and business skills learning solutions provider GK Holdings Inc. to 'D' from 'CC' as the company did not make the interest payments due March 31, 2020, on its revolver and first- and second-lien term loans. 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. On Jan. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Virginia-based aerospace and defense service provider Constellis Holdings LLC to 'SD' (selective default) from 'CC' after the company failed to make a mandatory principal payment on its $872 million first-lien term loan. Earlier, on Feb. 7, 2020, we lowered the long-term issuer credit rating to 'CCC-' from 'CCC' after it reported some operational missteps, resulting in a covenant violation. S&P Global Ratings then withdrew its issuer credit ratings on the company at its request. The transactions announced represented about 23% of total first- and second-lien term loans. 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. On Nov. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based debt issuing company Summit Midstream Partners Holdings LLC to 'D' from 'CC' after the issuer closed its sole debt restructuring transaction, at a significant discount. (For a detailed explanation of our data sources and methodology, see Appendix I.). The lenders could accelerate the payment of the outstanding term loan balance, which as of December 2019 was about US$178 million. Earlier, on April 16, 2020, we lowered our long-term issuer credit rating on Diamond Offshore Drilling to 'CC' from 'CCC+' after the issuer missed an interest payment due on April 15 on the senior notes due 2039, and hired advisers to evaluate alternatives for its capital restructuring. On July 29, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' following the issuer's completion of the distressed exchange. The issuer used 43 million of cash proceeds to repurchase 51 million of notes. The number of 'AAA' rated issuers globally declined to just eight by the end of 2020 from 89 at the beginning of 2008. On Nov. 3, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' after the company completed the distressed exchange. Financial services companies are typically more sensitive to sudden declines in investor and stakeholder confidence than nonfinancial companies, which can contribute to a rapid decline in funding liquidity and credit quality. 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. 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. 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. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. On Oct. 2, 2020, S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'SD'. (See table 15 for the 13 publicly rated investment-grade defaults during this period.) This was the highest count since 2016, when a wave of defaults in the energy and natural resources sector followed the prolonged collapse in oil prices that began in the second half of 2014 (see chart 5). 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 June 5, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based fitness service provider 24 Hour Fitness Worldwide Inc. to 'D' from 'CCC+' after the issuer missed interest payments on its senior notes due 2022 and entered into the grace period. One-year Gini coefficients appear to be broadly cyclical and negatively correlated with default rates (see chart 30). There were no downgrades among the eight 'AAA' rated companies in 2020. Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. On Sept. 14, 2020, we withdrew the issuer credit ratings on the company at its request. Defaulted issuers initially rated 'BB' show a similar pattern but peak a little later, in the fourth year. If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal. On Jan. 18, 2021, S&P Global Ratings withdrew its ratings at the issuer's request. The issuer, doing business as Elara Caring, completed the exchange of its US$195 million second-lien debt for US$186 million new junior 1.5-lien debt.
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