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Default, Transition, and Recovery: Global Defaults Are Still High Despite Dipping In March

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Default, Transition, and Recovery: Global Defaults Are Still High Despite Dipping In March

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S&P Global Ratings' 2024 global corporate default tally has reached 37 after the following defaults in March:

  • U.S. based consumer finance company Curo Group Holdings Corp.
  • Norway-based cruise lines operator Hurtigruten Group AS
  • U.S.-based fabrics and crafts retailer Joann Inc.
  • U.S.-based telecommunications service provider Lumen Technologies Inc.
  • Swedish real estate company Samhallsbyggnadsbolaget i Norden AB (publ)
  • U.S.-based global provider of solutions for enterprise customers' contact center operations Atlas Midco Inc.
  • U.S. -based telecommunications service provider Aventiv Technologies LLC
  • France-based outsourced cleaning and facility management services company La Financiere Atalian SAS

European Defaults Remain High

The number of defaults dropped to eight in March, from 15 in February and 14 in January. Globally, corporate defaults are now at 37, three fewer than at this time last year but still well above the 10-year average of 27.

The slowdown in March came from the U.S., other developed regions, and the emerging markets--all of which are now below their previous year tallies. Europe is the only region in which year-to-date defaults are above the 2023 year-to-date tally--increasing to 11 from seven on a quarterly basis and having reached their highest year-to-date tally since 2008. The quarterly rise primarily reflects companies needing to restructure their debt obligations, with the media and entertainment and consumer product sectors accounting for about 36% of total European defaults. S&P Global Ratings expects the European trailing-12-month speculative-grade corporate default rate to go down to 3.5% by December 2024, the same as in December 2023, indicating a stabilization after an expected modest increase over the summer (see "European Speculative-Grade Default Rate To Stabilize At 3.5% By December 2024," Feb. 15, 2024).

Chart 1

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The U.S. Reaches $33.2 Billion In Defaulted Debt In First-Quarter 2024

Although Europe has seen elevated defaults in first-quarter 2024, the amount of debt issuers have defaulted on remains low at US$1.5 billion compared to US$4.0 billion for the same period last year, a 63% decrease. This is likely due to the increase in distressed exchanges in the region, where the issuer has exchanged part of their capital structure to improve their liability structure or liquidity by offering creditors less than what was originally promised.

Most defaulted debt remains concentrated in the U.S. where it has reached US$33.2 billion in first-quarter 2024, up 53% from the same quarter in 2023. This has been primarily driven by telecommunication defaults, which have added US$12.8 billion to the volume of defaulted debt in March.

Chart 2

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Chart 3

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Telecoms Lead Defaults In March

In March, 25% of defaults came from the telecom sector, with two companies defaulting. For both, prolonged high interest rates have constrained their access to the capital markets, and weakened liquidity and credit ratios exposed their more leveraged capital structures. Meanwhile, consumer-sensitive sectors such as consumer products (six defaults) and media and entertainment (seven) suffered tepid consumer demand, followed by health care (five). Despite some easing, financing conditions remain challenging for companies with highly leveraged structures and weak operating metrics.

Chart 4

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Distressed Exchanges Represent 75% Of March Defaults

Distressed exchanges continue to make up the lion's share of defaults in 2024, with 20, compared to 16 at this point in 2023. Europe is driving this trend with all three defaults in March stemming from distressed exchanges. For the U.S., 54% of total defaults have been from a distressed exchange (64% in Europe).

Distressed exchanges are increasing, as are issuers who are defaulting more than once. These increases have been partly driven by more entities becoming comfortable with higher levels of leverage in their capital structures. Many of these were set up during (and in anticipation of sustained) low interest rates. For more on this, see our recently published research “Credit FAQ: The Rise Of Repeat Defaulters”).

Chart 5

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Chart 6

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Table 1

We expect the U.S. and Europe default rates to remain elevated in the coming months
Region 12-month trailing speculative-grade default rate (%) Weakest links
U.S. 4.8* 213
Emerging market 1.849405548 23
Europe 4.11* 48
Other developed 4.411764706 8
Global 3.922716628 292
*Trailing 12-month speculative grade default rates for from March 31, 2023-March 31, 2024 are preliminary and subject to change. Trailing 12-month speculative grade default rates for from Feb. 28, 2023-Feb. 29, 2024. Year-to-date data as of March 31, 2024. Weakest link data is as of Feb. 29, 2024. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Credit Research and S&P Global Market Intelligence’s CreditPro®.

Table 2

Global corporate default tally at 37 in 2024
Date Parent company Country/market Subsector To From Reason
Jan. 02, 2024 Resolute Investment Managers Inc., U.S. Financial institutions D CC Distressed exchange
Jan. 04, 2024 Toro Private Holdings I, Ltd. U.K. Transportation D CC Distressed exchange
Jan. 05, 2024 AMT TopCo, LLC U.S. Health care D CCC Missed Payments
Jan. 10, 2024 Ignition Topco BV Netherlands Chemicals, packaging, and environmental services D CCC Missed Payments
Jan. 11, 2024 Amphora Intermediate II Ltd. U.K. Consumer products SD CCC+ Missed Payments
Jan. 11, 2024 Confidential Confidential Metals, mining, & steel SD CC Confidential
Jan. 16, 2024 Covis Finco S.a r.l Switzerland Health care SD CCC- Distressed exchange
Jan. 17, 2024 TMK Hawk Parent Corp., U.S. Consumer products SD CC Distressed exchange
Jan. 18, 2024 KNS Holdco LLC U.S. Consumer products SD B- Distressed exchange
Jan. 19, 2024 System1 Inc., U.S. Media & entertainment SD CCC Distressed exchange
Jan. 24, 2024 New Trojan Parent Inc., U.S. Consumer products D CCC- Bankruptcy
Jan. 26, 2024 Gol Linhas Aereas Inteligentes S.A. Brazil Transportation D CCC- Bankruptcy
Jan. 31, 2024 AMC Entertainment Holdings Inc. U.S. Media & entertainment SD CCC+ Distressed exchange
Jan. 31, 2024 Enjoy S.A. Chile Media & entertainment D CCC- Bankruptcy
Feb. 05, 2024 Cano Health Inc., U.S. Health Care D CCC- Bankruptcy
Feb. 06, 2024 Astro Intermediate Holding II Corp. U.S. Consumer Products SD CCC Missed Payments
Feb. 08, 2024 Pluto Acquisition I Inc., U.S. Health Care SD CC Distressed exchange
Feb. 09, 2024 Confidential Confidential Telecommunications D CC Confidential
Feb. 14, 2024 CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A. Argentina Capital Goods SD CC Distressed exchange
Feb. 14, 2024 GoTo Group Inc., U.S. High Technology SD CCC+ Distressed exchange
Feb. 15, 2024 AFE S.A. SICAV-RAIF U.K. Financial Institutions SD CC Distressed exchange
Feb. 16, 2024 Enviva Inc. U.S. Utility D CCC- Missed Payments
Feb. 16, 2024 Range Parent Inc. U.S. Capital Goods D CCC- Bankruptcy
Feb. 20, 2024 Vue Entertainment International Ltd. U.K. Media & Entertainment SD CC Distressed exchange
Feb. 21, 2024 Hornblower HoldCo LLC, U.S. Media & Entertainment D CCC- Bankruptcy
Feb. 21, 2024 Tribe Buyer LLC U.S. Media & Entertainment D CCC- Missed Payments
Feb. 23, 2024 Avison Young (Canada) Inc. Canada Financial Institutions SD CCC Missed Payments
Feb. 26, 2024 Apex Tool Group LLC, U.S. Forest Products & Building Materials SD CCC+ Distressed exchange
Feb. 26, 2024 Radiology Partners Holdings LLC, U.S. Health Care SD CC Distressed exchange
Mar. 05, 2024 Curo Group Holdings Corp. U.S. Financial Institutions SD CCC- Missed Payments
Mar. 18, 2024 Hurtigruten Group AS Norway Media & Entertainment SD CC Distressed exchange
Mar. 19, 2024 JOANN Inc. U.S. Retail/Restaurants D CCC Bankruptcy
Mar. 22, 2024 Lumen Technologies Inc., U.S. Telecommunications SD CC Distressed exchange
Mar. 27, 2024 Samhallsbyggnadsbolaget i Norden AB (publ) Sweden Homebuilders/real estate companies SD CCC+ Distressed exchange
Mar. 29, 2024 Atlas Midco, Inc. U.S. High Technology D CCC+ Distressed exchange
Mar. 29, 2024 Aventiv Technologies, LLC U.S. Telecommunications SD CC Distressed exchange
Mar. 29, 2024 La Financiere Atalian SAS France Consumer Products D CC Distressed exchange
Data as of March 31, 2024. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro®

Related Research

Default Studies

More analysis and statistics are available in our annual default studies, published on RatingsDirect:

Corporate (financial and nonfinancial)
Structured finance

Public finance
Sovereign and international public finance

This report does not constitute a rating action.

Credit Research & Insights:Ekaterina Tolstova, Frankfurt +49 173 6591385;
ekaterina.tolstova@spglobal.com
Nicole Serino, New York + 1 (212) 438 1396;
nicole.serino@spglobal.com
Research Contributor:Vaishali Singh, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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