In 2023, defaults declined to 19 in emerging and frontier markets--14 of which were among companies with active ratings at the beginning of the year--down from 26 in 2022 (see chart 1).

All 2023 defaulters were in emerging markets as opposed to frontier markets, with the large majority in Latin America.

All of defaults occurred among speculative-grade ('BB-' or lower) rated companies, more than half of which were rated 'CCC+' and below.

Key Analytical Observations

We reached the following key conclusions regarding corporate ratings performance in emerging and frontier markets in 2023:

• Emerging and frontier market defaults represented 12% of global corporate defaults in 2023, sharply down from 31% in 2022 and lower than the 1997-2023 average of 14%.
• Of the 19 emerging and frontier market defaulters in 2023, five were confidentially rated. Sixteen were in Latin America, two in Eastern Europe, Middle East, and Africa (EEMEA), and one in Asia-Pacific (see Appendix I for regional repartition of countries).
• In order to manage looming maturity dates, corporations opted for distressed exchanges, which represented 53% of defaults, a higher portion than of missed interest/principal payments (26%), as companies became comfortable with higher leverage in their capital structures and were looking to avoid costly bankruptcy proceedings.
• Among nonfinancial entities, the aggregate one-year default rate in 2023 was 1.62%, down from last year's 1.76% and lower than the median value of 1.76%. The financial sector's default rate in 2023 was 0.32%, below the 1997-2023 median of 0.45%.
• The average time to default--the average number of years elapsed between the initial rating date and the default date--for all defaulters in emerging markets for 1997-2023 was 4.4 years and 4.9 years for frontier markets, both below the global average for 1981-2023 of 5.9 years. The shorter time to default may be attributable to more volatile economic and financial conditions, emerging markets' relatively smaller number of data points as well as their rating distribution, less centered towards the higher end of the rating scale ('A' and above) with respect to developed markets.
• The defaulted with the highest debt amount in 2023 was Brazil-based telecom company Oi S.A., which transitioned to default from a rating of 'CCC-' at the beginning of the year. Its debt amount outstanding totaled $1.65 billion.
• The speculative-grade corporate default rate in emerging and frontier markets decreased to 2.10% in 2023 from 2.38% in 2022, but still higher than the median figure for 1997-2023 of 2.07%, while lower than the 2023 global default rate of 3.67% (see chart 2).
• Among the rated emerging market corporate issuers, the one-year Gini coefficient was 76.71% in 2023, lower than the global average of 82.63%.
• The balance of rating actions was more positive across emerging and frontier market corporations than that of their global peers: downgrades decreased to 4.92% in 2023 from 5.39% in 2022 (versus 7.35% from 6.16%) and upgrades increased to 11.76% in 2023 from 7.23% in 2022 (versus 8.84% from 8.25%). Upgrades were recorded at their highest level since 2013, while downgrades at their lowest since 2007.
• Ratings stability, measured by the proportion of unchanged ratings, increased to 77.15% in 2023 from 72.73% in 2022, above the median value of 68.54%.
• S&P Global Ratings assigned ratings on 81 new emerging and frontier market issuers in 2023, down from 106 in 2022. Of the 81 new issuers, 65 entities (80%) were rated speculative grade (see table 4).
• Of the total of 1,355 actively rated emerging and frontier issuers at the end of 2023, 48.5% were at speculative grade, lower than the long-term average of 57.4% (1997-2023). Globally, the number of active speculative-grade ratings at the end of 2023 was 3,287 or 48.25% of total rated entities.

Credit Stress Decreased In 2023

In 2023, the emerging market speculative-grade corporate default rate was 2.13%, slightly lower than last year and 1.54 percentage points (ppts) lower than the global speculative-grade corporate default rate of 3.67%. For the 27 years of our analysis, emerging market speculative-grade corporate default rate has exceeded the global speculative-grade corporate default rate only in six years: 1998, 1999, 2002, 2015, 2021, and 2022 (see chart 2). Credit stress stemming from inflation and liquidity strain surged sooner in emerging markets than in advanced economies, especially as emerging market central banks started interest-rate hikes earlier than the Federal Reserve, the European Central Bank, the Bank of England, etc. As our most recent analyses suggest, the impact of tightening monetary policy on the credit profile of corporations domiciled in advanced economies accelerated the pace of defaults in 2023, while credit stress already started in 2022 in emerging and frontier markets, particularly in Greater China, where the government tightened regulations on developers' leverage and the escrow rule compliance requirements.

Historically, emerging markets display a lower speculative-grade default rate mainly due to the stronger relative rating distribution there than in advanced economies (a smaller proportion of issuers rated 'B+' or lower). Since 1997, the proportion of speculative-grade ratings that were rated 'B+' or lower has been, on average, 14 ppts lower in emerging markets than globally, while 10 ppts lower in 2023. This gap has grown since 2009, as accommodative financial conditions have led to an even larger share of 'B+' or lower issuers among speculative-grade corporate issuers in developed markets, particularly in the U.S. and Europe, while that same proportion has remained unchanged in emerging markets.

Table 1

Emerging and frontier markets corporate default summary
Year	Total defaults*	Investment grade defaults	Speculative grade defaults	Default rate (%)	Investment grade default rate (%)	Speculative grade default rate (%)
1997	1	1	0	0.81	1.33	0.00
1998	16	2	13	5.68	1.71	8.84
1999	16	0	15	4.63	0.00	7.32
2000	6	0	5	1.36	0.00	2.07
2001	29	0	18	4.32	0.00	6.55
2002	60	0	53	11.75	0.00	17.21
2003	15	0	13	2.62	0.00	3.83
2004	3	0	3	0.54	0.00	0.83
2005	2	0	1	0.15	0.00	0.24
2006	2	0	2	0.27	0.00	0.43
2007	1	0	1	0.13	0.00	0.20
2008	16	1	12	1.41	0.27	2.18
2009	36	3	32	3.64	0.71	5.94
2010	9	0	8	0.87	0.00	1.54
2011	2	0	2	0.21	0.00	0.38
2012	19	0	13	1.28	0.00	2.36
2013	13	0	11	1.00	0.00	1.80
2014	15	0	9	0.73	0.00	1.30
2015	24	0	22	1.67	0.00	3.13
2016	30	1	27	2.07	0.16	3.65
2017	7	0	7	0.49	0.00	0.92
2018	16	0	10	0.69	0.00	1.25
2019	22	0	16	1.06	0.00	1.99
2020	26	0	25	1.67	0.00	3.23
2021	14	0	14	0.97	0.00	1.87
2022	26	0	18	1.23	0.00	2.38
2023	19	0	14	1.03	0.00	2.10
Average	16	0	13	1.94	0.15	3.09
Median	16	0	13	1.06	0.00	2.07
Std. dev.	13	1	11	2.43	0.42	3.61
Min	1	0	0	0.13	0.00	0.00
Max	60	3	53	11.75	1.71	17.21
* This column includes companies that were not rated as of the beginning of the year. Investment-grade (speculative-grade) defaults refer to defaulting entities within the year that were rated investment-grade (speculative-grade) in the beginning of the period. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 2

Global corporate default summary
Year	Total defaults*	Investment grade defaults	Speculative grade defaults	Default rate (%)	Investment grade default rate (%)	Speculative grade default rate (%)	Total debt outstanding (Bil. $)
1981	2	0	2	0.15	0.00	0.63	0.1
1982	18	2	15	1.22	0.19	4.46	0.9
1983	12	1	10	0.77	0.09	2.96	0.4
1984	14	2	12	0.93	0.17	3.29	0.4
1985	19	0	18	1.12	0.00	4.34	0.3
1986	34	2	30	1.73	0.15	5.73	0.5
1987	19	0	19	0.94	0.00	2.82	1.6
1988	32	0	29	1.38	0.00	3.88	3.3
1989	44	3	35	1.77	0.21	4.70	7.3
1990	70	2	56	2.71	0.14	8.10	21.2
1991	93	2	65	3.22	0.13	11.02	23.7
1992	39	0	32	1.49	0.00	6.10	5.4
1993	26	0	14	0.60	0.00	2.50	2.4
1994	21	1	15	0.62	0.05	2.12	2.3
1995	35	1	29	1.05	0.05	3.54	9.0
1996	20	0	16	0.51	0.00	1.81	2.7
1997	23	2	20	0.63	0.08	2.01	4.9
1998	57	4	49	1.30	0.14	3.74	11.3
1999	109	5	92	2.14	0.17	5.57	39.4
2000	136	7	109	2.46	0.24	6.20	43.3
2001	230	7	172	3.70	0.23	9.70	118.8
2002	226	13	159	3.52	0.41	9.34	190.9
2003	120	3	89	1.88	0.10	4.97	62.9
2004	56	1	38	0.77	0.03	2.02	20.7
2005	40	1	31	0.60	0.03	1.50	42.0
2006	30	0	26	0.47	0.00	1.18	7.13
2007	24	0	21	0.37	0.00	0.91	8.15
2008	127	14	89	1.79	0.42	3.71	429.63
2009	268	11	223	4.15	0.33	9.89	627.70
2010	83	0	64	1.20	0.00	3.02	97.48
2011	53	1	44	0.80	0.03	1.85	84.30
2012	83	0	66	1.13	0.00	2.59	86.70
2013	81	0	62	1.02	0.00	2.23	97.29
2014	60	0	45	0.69	0.00	1.44	91.55
2015	113	0	94	1.36	0.00	2.77	110.31
2016	163	1	143	2.08	0.03	4.23	239.79
2017	95	0	83	1.21	0.00	2.47	104.57
2018	82	0	71	1.02	0.00	2.07	131.65
2019	118	2	92	1.31	0.06	2.55	183.21
2020	225	0	198	2.76	0.00	5.53	353.43
2021	72	0	60	0.85	0.00	1.68	66.28
2022	85	0	71	0.98	0.00	1.93	106.98
2023	153	2	127	1.85	0.06	3.67	222.44
Average	79	2	64	1.45	0.08	3.88	85.21
Median	60	1	49	1.20	0.03	3.02	39.38
Std. dev.	66	3	53	0.94	0.11	2.55	126.83
Min	2	0	2	0.15	0.00	0.63	0.06
Max	268	14	223	4.15	0.42	11.02	627.70
* This column includes companies that were not rated as of the beginning of the year. Investment-grade (speculative-grade) defaults refer to defaulting entities within the year that were rated investment-grade (speculative-grade) in the beginning of the period. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Unless noted otherwise, the statistics we present in this study refer to S&P Global Market Intelligence's CreditPro® corporate local currency ratings. Rated issuers include financial and nonfinancial companies in emerging and frontier markets but exclude sovereigns and public finance issuers. We calculated default and transition rates based on the number of issuers in the sample period. The 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 data we present in this study, unless labeled otherwise, refers to only public and confidential issuer credit ratings on nonfinancial and financial issuers and excludes credit estimates. For our full methodology and definitions of the terms used, as well as a full list of the emerging and frontier market countries used in this study, see Appendix I.

The Vast Majority Of Defaults Occurred In Latin America

In 2023, Latin America led with 16 defaults (up from five in 2022), accounting for 84% of total emerging market defaults in the year. Protracted tight financing conditions imperiled corporations with precarious liquidity conditions and in need of external financing (mostly denominated in dollars) to survive. It is no surprise that 11 defaults (almost 60% of the overall count) happened in Brazil, up from one in 2022. The country has historically displayed a widespread use of floating interest rates for financing purposes, and therefore, it was the most impacted by higher borrowing costs.

Two defaults occurred in EEMEA, down from four in 2022, and one in Asia-Pacific, down from 17 in 2022, mainly in the real estate sector in Greater China.

Of the 19 emerging and frontier market defaulters in 2023, five were rated confidentially (see table 3 that lists publicly-rated entities). These defaulters had a total of US$7.30 billion of debt outstanding (including confidential issuers).

Table 3

Itemized 2023 emerging and frontier markets corporate defaults
Company name	Reason for default	Country	Industry	Debt amt. (Mil.$)	Default Date	Next to last rating	Date of next to last rating	Rating one year prior to default	Rating three years prior to default	First rating	Date of first rating	Sub region
Americanas S.A. (Lojas Americanas S.A.)	Payment suspension	Brazil	Consumer/service sector	1,000	1/16/2023	B	1/13/2023	-	-	B	1/13/2023	Latin America
Mexarrend, S.A.P.I. de C.V.	Missed principal	Mexico	Financial institutions	300	1/20/2023	CC	1/17/2023	B	BB-	B+	11/4/2010	Latin America
Oi S.A.	Grace period default	Brazil	Telecommunications	1,654	2/3/2023	CCC-	11/7/2022	CCC+	-	CCC+	10/16/2020	Latin America
Gol Linhas Aereas Inteligentes S.A.	Distressed exchange	Brazil	Transportation	650	3/14/2023	CC	2/9/2023	CCC+	B	CCC	7/6/2016	Latin America
TV Azteca, S.A.B de C.V.	Chapter 11	Mexico	Leisure time/media	0	3/20/2023	NR	12/27/2004	NR	NR	B	1/22/1997	Latin America
Guacolda Energia S.A.(A)	Distressed exchange	Chile	Utilities	500	4/12/2023	CC	3/14/2023	B	BB-	BB+	8/10/2016	Latin America
Grupo IDESA, S.A. de C.V.	Distressed exchange	Mexico	Health care/chemicals	300	4/27/2023	CC	3/30/2023	CCC+	CCC-	BB-	12/2/2013	Latin America
InterCement Brasil S.A. (InterCement Participacoes S.A.)	Missed principal/interest	Brazil	Forest and building products/homebuilders	0	6/12/2023	CC	5/29/2023	NR	NR	BB	7/4/2005	Latin America
Azul S.A.	Distressed exchange	Brazil	Transportation	1,000	7/14/2023	CC	6/16/2023	CCC+	CCC+	B+	10/11/2017	Latin America
Guacolda Energia S.A.(B)	Distressed exchange	Chile	Utilities	500	8/16/2023	CC	7/25/2023	-	-	CCC+	4/14/2023	Latin America
Investimentos e Participacoes em Infraestrutura S.A. - Invepar	Distressed exchange	Brazil	Transportation	0	10/25/2023	CCC-	5/30/2023	CCC+	-	CCC+	1/19/2022	Latin America
Muganbank OJSC	Regulatory directive	Azerbaijan	Financial institutions	0	10/25/2023	B-	6/22/2021	B-	CCC+	CCC+	4/6/2010	EEMEA
Unigel Participacoes S.A.	Missed interest	Brazil	Health care/chemicals	0	11/2/2023	CCC-	9/6/2023	BB-	B+	B+	5/21/2018	Latin America
MHP SE	Distressed exchange	Ukraine	Consumer/service sector	1,400	11/14/2023	CC	4/21/2023	-	-	CC	4/21/2023	EEMEA
		Total		7,304
Debt excludes confidential debt. ** Excludes confidential issuers. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

From 1997 until the end of 2023, there were five historical periods with relatively high emerging and frontier markets default rates.

The first one resulted from shocks that stemmed from the Asian financial crisis of the late 1990s. In 1998, defaults were mostly among Indonesian nonfinancial companies and Russian financial companies. The defaults in Indonesia came amid the political unrest that ensued from the crisis, and those in Russia amid the collapse of its banking system. The following year, defaults in Asia-Pacific continued, but as the financial crisis spilled into other regions, the majority of defaults were in Latin America.

Then, in 2002, the emerging and frontier market corporate default rate spiked to its all-time high (11.75%) when recession in Argentina, which began in 1998, deepened into a financial crisis, with nearly three-quarters of emerging market defaults that year occurring among Argentine issuers.

Emerging and frontier market corporate default rates climbed during the 2008-2009 financial crisis, with a rate of 1.41% in 2008 and 3.64% in 2009 (lower than global levels).

In 2015-2016, most emerging market corporate defaults occurred among Brazilian nonfinancial issuers amid the deepening recession, and among Russian financial issuers during the financial crisis, which in part stemmed from sanctions imposed on the country following its 2014 invasion of Ukraine.

In 2020, the credit quality of corporate issuers in emerging and frontier markets sharply deteriorated as the COVID-19 pandemic pushed the world into recession.

Relatively Even Distribution of Defaults Across Sectors

2023 defaults did not display any industry concentration, as opposed to those in 2022 with real estate and consumer services. The most impacted sectors in 2023 were transportation (21%; four defaults) and utilities (16%; three defaults). The former, especially air transportation, suffered extensively from the Covid-19 restrictions, resulting in strained cash flow, exacerbated by refinancing risk. Indeed, the rise in borrowing costs triggered by local central banks' efforts to tame stubborn inflation proved to detrimental to companies with unsustainable capital structures, leading to distressed exchanges among 10 of the 19 defaults.

Default rates in 2023 across the following industries were above their long-term weighted average: the two sectors mentioned above, leisure time/media (two defaults; 6.67% versus 5.52%), health care/chemicals (two defaults; 3.77% versus 1.74%), and real estate (one default; 2.04% versus 1.62%).

Table 4

Annual emerging and frontier markets corporate default rates by industry (%)
Year	Aerospace / automotive / capital goods / metal	Consumer / service sector	Energy and natural resources	Financial institutions	Forest and building products / homebuilders	Health care / chemicals	High technology / computers / office equipment	Insurance	Leisure time / media	Real estate	Telecom	Transportation	Utility
1997	0.00	0.00	0.00	2.56	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	4.55	3.85	0.00	8.75	5.00	25.00	0.00	0.00	5.88	11.11	0.00	6.67	0.00
1999	19.23	8.11	0.00	1.19	4.55	12.50	0.00	0.00	12.50	0.00	0.00	5.88	0.00
2000	0.00	2.78	6.67	0.00	0.00	14.29	0.00	0.00	0.00	0.00	3.13	6.25	0.00
2001	17.86	2.33	0.00	4.14	15.79	0.00	33.33	0.00	0.00	0.00	6.06	0.00	0.00
2002	7.69	6.67	16.67	2.48	12.50	18.18	0.00	0.00	47.37	12.50	15.38	0.00	28.57
2003	0.00	0.00	0.00	0.00	5.88	0.00	9.09	0.00	9.09	0.00	13.64	5.26	5.56
2004	0.00	0.00	3.13	0.44	5.88	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	0.00	0.00	2.56	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	2.27	1.79	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	2.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	0.00	5.00	4.05	0.60	2.70	0.00	0.00	0.00	4.55	0.00	3.39	0.00	0.00
2009	12.96	9.52	2.82	2.73	5.26	8.70	0.00	0.00	10.00	0.00	3.39	3.03	1.05
2010	2.22	0.00	3.13	0.82	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.13	1.03
2011	0.00	0.00	0.00	0.28	0.00	0.00	0.00	0.00	0.00	3.57	0.00	0.00	0.00
2012	4.08	0.00	2.74	0.52	2.78	2.86	0.00	0.00	0.00	0.00	0.00	2.50	3.77
2013	0.00	1.28	2.56	0.24	5.26	2.38	0.00	0.00	0.00	0.00	5.88	2.13	0.00
2014	1.79	2.06	3.16	0.43	0.00	0.00	0.00	0.00	4.35	0.00	0.00	0.00	0.00
2015	4.84	5.38	3.30	1.43	4.55	0.00	0.00	0.00	0.00	0.00	0.00	2.70	0.00
2016	4.62	5.49	4.76	1.18	0.00	0.00	9.09	0.68	0.00	1.56	3.57	6.10	0.00
2017	0.00	1.11	2.22	0.39	0.00	0.00	0.00	0.00	0.00	0.00	1.92	0.00	0.80
2018	2.22	2.08	0.00	0.58	0.00	0.00	0.00	0.00	5.00	0.00	0.00	1.96	0.00
2019	2.94	0.98	0.00	0.76	3.51	1.54	0.00	0.00	0.00	0.00	5.45	2.04	0.00
2020	0.00	1.89	2.46	0.38	0.00	1.59	9.09	0.69	23.81	7.14	2.04	3.06	0.00
2021	1.27	0.93	1.80	0.38	3.13	1.79	0.00	0.00	0.00	0.00	2.08	3.26	0.80
2022	0.00	4.96	0.87	0.77	1.67	0.00	0.00	0.00	6.25	8.93	0.00	0.00	0.00
2023	0.00	0.00	0.00	0.42	2.13	3.77	0.00	0.00	6.67	2.04	1.92	4.60	1.74
Weighted average	2.70	2.42	2.05	0.79	2.41	1.74	1.60	0.09	5.52	1.62	2.42	2.17	1.36
Average	3.35	2.45	2.33	1.17	2.98	3.43	2.24	0.05	5.02	1.74	2.51	2.17	1.60
Median	1.79	1.79	2.22	0.52	2.13	0.00	0.00	0.00	0.00	0.00	0.00	2.04	0.00
Std. dev.	5.29	2.74	3.39	1.82	3.92	6.53	6.86	0.18	10.10	3.66	3.99	2.34	5.54
Min	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max	19.23	9.52	16.67	8.75	15.79	25.00	33.33	0.69	47.37	12.50	15.38	6.67	28.57
Includes investment-grade and speculative-grade rated entities. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 5

Cumulative emerging an frontier markets corporate default rates by sector (%)
	All financials			All nonfinancials
Year	One-year	Three-year	10-year	One-year	Three-year	10-year
1997	2.50	N/A	N/A	0.00	N/A	N/A
1998	8.33	N/A	N/A	4.44	N/A	N/A
1999	1.12	5.00	N/A	5.96	10.71	N/A
2000	0.00	9.52	N/A	2.12	10.56	N/A
2001	3.92	7.87	N/A	4.55	12.77	N/A
2002	2.35	5.30	N/A	17.44	24.15	N/A
2003	0.00	4.58	N/A	4.63	25.76	N/A
2004	0.40	2.35	N/A	0.67	22.06	N/A
2005	0.00	0.46	N/A	0.28	5.69	N/A
2006	0.00	0.40	15.00	0.50	1.00	25.00
2007	0.00	0.00	16.67	0.23	0.56	31.67
2008	0.48	0.00	11.24	2.15	1.26	31.91
2009	2.16	2.25	5.30	5.02	3.61	30.51
2010	0.65	3.15	5.88	1.09	7.42	27.65
2011	0.22	3.02	3.53	0.20	6.02	23.84
2012	0.40	1.08	1.39	2.14	3.05	7.47
2013	0.18	1.09	1.19	1.81	4.09	4.35
2014	0.34	1.01	1.37	1.08	4.85	4.52
2015	1.12	1.10	1.80	2.18	4.51	6.53
2016	1.07	1.89	4.79	3.01	5.68	7.90
2017	0.30	2.39	4.84	0.67	5.66	11.72
2018	0.45	1.83	4.96	0.88	4.44	11.24
2019	0.60	1.19	3.47	1.43	2.02	7.63
2020	0.45	1.50	3.70	2.68	4.05	9.41
2021	0.30	1.35	3.42	1.55	4.39	10.49
2022	0.60	1.19	3.85	1.76	4.99	9.93
2023	0.32	1.04	4.47	1.62	4.27	10.45
Average	1.05	2.42	5.38	2.60	7.34	15.12
Median	0.45	1.50	4.16	1.76	4.85	10.47
Std. dev.	1.73	2.37	4.44	3.38	6.93	10.06
Min	0.00	0.00	1.19	0.00	0.56	4.35
Max	8.33	9.52	16.67	17.44	25.76	31.91
Note: All Financials refers to financial institutions and insurance combined. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Improved Credit Quality In Emerging And Frontier Markets

The share of upgrades in emerging and frontier markets increased to 11.76% in 2023 from 7.23% in 2022, the highest level since 2013. Close to 77% of rated issuers kept their ratings unchanged in 2023, above the long-term median of 68.54% as a consequence of a lower withdrawal rate (5.14%, down from 13.43% in 2022) and a lower downgrade rate. The downgrade rate dropped to 4.92% in 2023 (lowest since 2007) from 5.39% in 2022 and significantly lower than its median value of 10.27%.

2023 recorded a lower amount of new corporate ratings in emerging and frontier markets with respect to historical standards: 81 new ratings versus the long-term median of 140. All came from emerging markets. Brazil accounted for 40% of the new additions to the tally. Out of 81, 80% were at speculative grade: roughly half of the pool were rated 'B'.

Table 6

Summary of emerging and frontier markets net annual rating activity (%)*
Year	Issuers	Upgrades (%)	Downgrades** (%)	Defaults (%)	Withdrawn ratings (%)	Changed ratings (%)	Unchanged ratings (%)	Downgrade/ upgrade ratio
1997	124	5.65	12.90	0.81	5.65	25.00	75.00	2.29
1998	264	2.65	27.27	5.68	4.92	40.53	59.47	10.29
1999	324	1.23	15.43	4.63	8.02	29.32	70.68	12.50
2000	368	10.33	9.78	1.36	5.43	26.90	73.10	0.95
2001	417	8.39	17.51	4.32	8.39	38.61	61.39	2.09
2002	451	8.87	15.08	11.75	7.10	42.79	57.21	1.70
2003	497	14.29	5.03	2.62	9.26	31.19	68.81	0.35
2004	552	16.49	1.81	0.54	5.80	24.64	75.36	0.11
2005	646	25.08	2.48	0.15	8.51	36.22	63.78	0.10
2006	732	20.90	2.60	0.27	14.89	38.66	61.34	0.12
2007	798	21.93	3.88	0.13	9.52	35.46	64.54	0.18
2008	925	11.14	9.73	1.41	9.51	31.78	68.22	0.87
2009	962	4.89	18.71	3.64	11.23	38.46	61.54	3.83
2010	920	16.63	5.43	0.87	9.13	32.07	67.93	0.33
2011	949	18.44	8.32	0.21	9.91	36.88	63.12	0.45
2012	1012	9.09	10.87	1.28	8.10	29.35	70.65	1.20
2013	1100	14.55	10.27	1.00	7.45	33.27	66.73	0.71
2014	1233	6.08	13.87	0.73	8.27	28.95	71.05	2.28
2015	1316	5.93	17.02	1.67	9.19	33.81	66.19	2.87
2016	1352	6.80	18.49	2.07	8.58	35.95	64.05	2.72
2017	1418	7.69	12.55	0.49	9.87	30.61	69.39	1.63
2018	1459	9.18	12.20	0.69	8.70	30.77	69.23	1.33
2019	1509	6.96	6.36	1.06	10.27	24.65	75.35	0.91
2020	1494	2.01	18.88	1.67	8.90	31.46	68.54	9.40
2021	1448	9.46	5.04	0.97	7.73	23.20	76.80	0.53
2022	1467	7.23	5.39	1.23	13.43	27.27	72.73	0.75
2023	1361	11.76	4.92	1.03	5.14	22.85	77.15	0.42
Weighted average		10.12	10.50	1.48	9.01	31.11	68.89	1.04
Average		10.50	10.81	1.94	8.63	31.88	68.12	2.26
Median		9.09	10.27	1.06	8.58	31.46	68.54	0.95
Std. dev.		6.18	6.36	2.43	2.29	5.50	5.50	3.23
Min		1.23	1.81	0.13	4.92	22.85	57.21	0.10
Max		25.08	27.27	11.75	14.89	42.79	77.15	12.50
* This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded.** Excludes downgrades to D, shown separately in the default column. Excludes confidential ratings. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 7

Rating classification of new corporate issuers* in emerging and frontier markets
	First rating
Year	AAA	AA	A	BBB	BB	B	CCC/C	Total	% IG	% SG
1997	0	2	2	43	55	46	0	148	32%	68%
1998	0	1	6	20	30	31	0	88	31%	69%
1999	0	1	2	13	41	24	3	84	19%	81%
2000	0	0	4	13	23	29	4	73	23%	77%
2001	0	3	3	20	27	32	11	96	27%	73%
2002	0	2	4	23	43	55	13	140	21%	79%
2003	0	0	5	24	31	37	19	116	25%	75%
2004	0	0	9	24	50	29	12	124	27%	73%
2005	0	0	10	28	38	56	5	137	28%	72%
2006	0	1	12	31	51	74	12	181	24%	76%
2007	1	0	27	36	52	79	8	203	32%	68%
2008	0	1	21	35	41	34	9	141	40%	60%
2009	0	0	8	18	34	30	13	103	25%	75%
2010	0	2	5	28	24	54	9	122	29%	71%
2011	0	2	9	36	42	60	7	156	30%	70%
2012	0	1	11	30	59	74	10	185	23%	77%
2013	0	2	16	48	69	78	8	221	30%	70%
2014	0	2	23	65	46	46	8	190	47%	53%
2015	0	5	24	56	42	34	9	170	50%	50%
2016	0	0	18	67	59	38	9	191	45%	55%
2017	0	5	16	29	53	78	5	186	27%	73%
2018	0	0	13	45	57	67	10	192	30%	70%
2019	0	1	12	31	51	56	6	157	28%	72%
2020	0	2	5	26	29	29	14	105	31%	69%
2021	0	0	13	25	34	61	7	140	27%	73%
2022	0	1	4	30	24	37	10	106	33%	67%
2023	0	1	6	9	19	39	7	81	20%	80%
Total	1	35	288	853	1124	1307	228	3836	31%	69%
* Includes issuers that are assigned a new rating after default as well as those companies that receive a rating for the first time. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Issuer credit ratings on emerging market corporations are mostly within the 'BB'-'BBB' range (60.1% of all rated issuers) compared with global corporate issuer rating level of 44.6%. The concentration in the low investment-grade and high speculative-grade categories largely owes to lower sovereign credit ratings in emerging markets. Although sovereign ratings don't act as a ceiling on issuer credit ratings, a corporate issuer rated higher than the sovereign must be able to withstand a hypothetical sovereign default scenario. For example, government-related entities are typically more subject to country and sovereign intervention risks than private-sector entities, since they usually have direct links to governments. Some of the issuers have explicit or implicit links to the respective sovereign or have an eligible guarantee from a parent or sovereign. In all cases, the issuer credit rating is subject to any sovereign-related considerations.

Frontier market issuer credit ratings on corporations are mostly in the 'B'-'BB' range (71.4%), but our study is limited by a small sample, with just 14 rated issuers in frontier markets at the end of 2023, compared with 1,341 in emerging markets and 6,813 globally.

Ratings Performance Was Generally Consistent With Global Trends

The sample sizes for emerging and frontier markets present a challenge to our analysis. For this study, there were 23,290 issuers in the global pool, up from 1,981 to 2023, compared with 3,836 issuers in the combined emerging and frontier markets pool in 1997-2023. For the same period, corporate defaults in emerging and frontier markets totaled just 428 and 17, respectively: 13% of the 3,410 defaults globally.

Additionally, while the study period for emerging and frontier markets is 1997-2023, more than two-thirds of their issuers were assigned ratings after 2005, and the averages are more heavily influenced by trends in recent years. The sample sizes for emerging and frontier markets should be considered while reviewing default trends.

Average times to default and default rates by rating modifier

In emerging markets, the average time to default across most rating categories is shorter than in the global pool, with the exception of the 'CCC/C' rating category. The shorter time to default may be attributable to more volatile economic and financial conditions, emerging markets' relatively smaller number of data points, as well as their rating distribution, less centered toward the higher end of the rating scale ('A' and above) with respect to developed markets. Higher-rated companies generally take longer to default, but this is less evident in emerging markets than in the global pool because of the limited amount of investment-grade ('BBB' or higher) defaults (see table 8). Similarly, the average time to default across rating categories in frontier markets should be considered with the limited sample size in mind.

The average time to default among emerging market issuers initially rated 'A' should be considered an anomaly, with just one default in this rating category in 1997-2023. This issuer was first rated 'A+' confidentially in 2008, was downgraded twice in 2009 to 'BBB+', and then had its rating withdrawn before it defaulted later in 2009.

The emerging markets rating categories with the largest sample sizes exhibit the same relationship that appears in the global data: the higher the rating, the longer the time to default. Emerging market corporate issuers rated in the 'CCC' category took 2.6 years to default on average, in the 'B' category (3.8 years), and those in the 'BB' (5.7 years). The average time to default shortens when considering post-original rating, namely the unique rating each entity received in its path to default excluding the original rating (see table 9).

Table 8

Time to default from original rating among corporate defaulters
Emerging market (1997-2023)	Original rating	Defaults	Average years from original rating	Median years from original rating	St. dev. of years from original rating
	AAA	N/A	N/A	N/A	N/A
	AA	N/A	N/A	N/A	N/A
	A	1	1.6	1.6	N/A
	BBB	38	6.0	4.6	5.7
	BB	125	5.7	4.7	4.6
	B	197	3.8	2.7	3.7
	CCC/C	67	2.6	1.2	3.5
	Total	428	4.4	3.2	4.3
Frontier market (1997-2023)	Original rating	Defaults	Average years from original rating*	Median years from original rating	St. dev. of years from original rating
	AAA	N/A	N/A	N/A	N/A
	AA	N/A	N/A	N/A	N/A
	A	N/A	N/A	N/A	N/A
	BBB	N/A	N/A	N/A	N/A
	BB	6	8.9	8.1	5.4
	B	8	3.5	3.8	1.7
	CCC/C	3	0.6	0.5	0.4
	Total	17	4.9	4.2	4.6
Global (1981-2023)	Original rating	Defaults	Average years from original rating*	Median years from original rating	St. dev. of years from original rating
	AAA	8	18.0	18.5	11.4
	AA	33	17.2	19.3	10.5
	A	101	14.4	11.4	9.5
	BBB	234	9.6	7.7	7.0
	BB	687	7.2	5.5	5.8
	B	1885	5.1	3.8	4.4
	CCC/C	462	2.1	1.3	2.6
	Total	3410	5.9	4.0	5.7
N/A—Not available. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 9

Time to default from post-original ratings among corporate defaulters
Emerging market (1997-2023)	Rating path to default	Average years from rating category	Median years from rating category	St. dev. of years from rating category
	AAA	N/A	N/A	N/A
	AA	N/A	N/A	N/A
	A	0.7	0.7	N/A
	BBB	7.9	5.1	6.7
	BB	3.6	2.4	4.2
	B	3.0	1.2	4.2
	CCC/C	0.8	0.2	1.9
	Total	2.2	0.7	3.7
Frontier market (1997-2023)	Rating path to default	Average years from rating category	Median years from rating category	St. dev. of years from rating category
	AAA	N/A	N/A	N/A
	AA	N/A	N/A	N/A
	A	N/A	N/A	N/A
	BBB	N/A	N/A	N/A
	BB	10.9	10.9	N/A
	B	3.0	2.3	2.6
	CCC/C	1.0	0.5	1.1
	Total	2.2	1.4	2.6
Global (1981-2023)	Rating path to default	Average years from rating category	Median years from rating category	St. dev. of years from rating category
	AAA	27.4	27.7	10.0
	AA	14.9	15.8	9.4
	A	11.5	9.9	8.3
	BBB	8.5	6.6	7.0
	BB	6.2	4.3	5.9
	B	3.4	2.0	4.0
	CCC/C	0.9	0.4	1.7
	Total	3.2	1.2	4.8
N/A—Not available. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Looking at default rates by modifier shows that lower rating categories experience higher default rates on average historically, though occasional exceptions could occur, due to outliers within smaller sample sizes or rare default events. 2009 is a good example, with a higher default rate for 'B+' rated companies than among 'B' rated companies (see table 10).

Table 10

Emerging and frontier markets corporate default rates by rating modifier (%)
	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C
1997	N/A	0.00	N/A	0.00	0.00	0.00	0.00	0.00	6.67	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A
1998	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.17	3.70	3.33	0.00	16.67	21.05	22.22	N/A
1999	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.38	12.50	20.00	5.56	23.81
2000	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.44	5.26	5.56	10.00
2001	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.61	15.09	7.27	3.45	5.00	15.00
2002	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.94	3.23	10.00	2.22	19.05	16.67	58.18
2003	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.17	5.41	2.56	18.18
2004	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.49	1.64	0.00	0.00	2.56
2005	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.67	0.00	0.00
2006	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.03	0.00	0.00	0.00	4.55
2007	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.17
2008	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.04	0.00	1.14	0.75	2.91	3.49	4.00	10.00
2009	0.00	0.00	0.00	0.00	2.78	0.00	0.00	1.35	0.00	0.94	0.00	1.01	1.38	10.00	8.22	9.68	41.67
2010	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.27	0.00	1.57	0.00	0.00	0.00	15.15
2011	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.70	0.00
2012	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.20	2.25	0.00	7.69	17.39
2013	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.94	1.25	1.98	4.35	13.64
2014	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.12	0.83	2.56	9.62
2015	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.76	0.00	5.61	5.56	1.61	14.55
2016	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.80	0.00	0.56	0.00	1.71	1.92	3.66	12.79	19.51
2017	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.23	1.06	16.13
2018	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.63	3.33	19.05
2019	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.52	1.44	6.85	20.69
2020	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.81	0.00	1.02	0.00	3.42	7.78	44.00
2021	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.77	0.00	2.63	15.87
2022	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.52	2.52	2.04	5.26	16.07
2023	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.11	0.00	2.35	3.39	16.00
Average	0.00	0.00	0.00	0.00	0.10	0.00	0.00	0.05	0.28	0.23	0.34	0.41	1.53	2.88	4.18	4.94	17.03
Median	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.52	1.77	2.04	3.39	15.87
Std. dev.	0.00	0.00	0.00	0.00	0.53	0.00	0.00	0.26	1.29	0.83	0.91	0.93	3.34	4.18	6.10	5.34	13.53
Min	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max	0.00	0.00	0.00	0.00	2.78	0.00	0.00	1.35	6.67	4.17	3.70	3.33	15.09	16.67	21.05	22.22	58.18
N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Transition and cumulative default rate tables

Analysis of 2023 rating transitions suggests that rating activity in emerging and frontier markets is consistent with global trends, which have shown a clear correlation between low ratings and the probability of default.

Investment-grade issuers in emerging markets tend to have greater ratings stability (as measured by the rate of transitions) than their speculative-grade counterparts (see table 11). For instance, about 97.75% of emerging market issuers in the 'A' rating category as of Jan. 1, 2023, were still rated in that category at the end of 2023 (versus 96.79% for global corporations). The comparable metric for issuers rated in the 'B' category was 78.97% (versus 78.96%). In 2023, emerging market ratings have been more stable with respect to global trends. The main difference lies in the 'CCC/C' rating category. Seventy percent of emerging market risky credits ('CCC/C') remained within that category after a year, with very few upgrades to 'B'. On the other hand, less than half of global risky credits remained at the 'CCC/C' rating level, with a higher upward mobility (7.32% to the 'B' category), but most importantly, higher downward rating transition percentage: 30.79% of the 'CCC/C' global rated companies defaulted in the year against 16% for emerging markets. This is in line with the 2023 global corporate default study publication, showing that the U.S. accounted for most of the increase in defaults in a context of rising speculative-grade default rates in developed regions against a fall in emerging and frontier markets.

Table 11

One-year 2023 corporate transition rates
Emerging market	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	AA	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	A	0.00	0.00	97.75	0.00	0.00	0.00	0.00	0.00	2.25
	BBB	0.00	0.00	1.13	95.48	0.23	0.45	0.00	0.00	2.71
	BB	0.00	0.00	0.00	2.40	87.47	1.87	0.27	0.53	7.47
	B	0.00	0.00	0.00	0.00	7.73	78.97	3.43	1.72	8.15
	CCC/C	0.00	0.00	0.00	0.00	0.00	2.00	70.00	16.00	12.00
Frontier market	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	AA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	A	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00
	BBB	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00
	BB	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
	B	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00
	CCC/C	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Global	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	AA	0.00	96.81	1.42	0.00	0.00	0.00	0.00	0.00	1.77
	A	0.00	0.15	96.79	1.02	0.00	0.00	0.00	0.00	2.04
	BBB	0.00	0.00	1.61	92.59	1.02	0.43	0.11	0.11	4.14
	BB	0.00	0.00	0.17	3.92	85.42	3.75	0.33	0.17	6.25
	B	0.00	0.00	0.00	0.10	4.29	78.96	5.89	1.24	9.51
	CCC/C	0.00	0.00	0.00	0.00	0.00	7.32	47.56	30.79	14.33
N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Emerging market corporate rating transitions also remain similar to global corporate transitions over the long term. Of emerging market issuers in the 'A' rating category in 1997-2023, 91.89% were still rated in that category after one year, whereas 71.61% of issuers rated in the 'B' rating category remained at that rating (see table 12). Rating transition rates among emerging market corporations are also generally consistent with global patterns in periods greater than one year (see table 13).

By modifier, rating transitions generally display the same relationship, but there is some variation between adjacent rating categories; this in part reflects the sample sizes for each rating (see table 14).

Tables 12 and 13 shed further light on the 'CCC/C' trend for 2023. When averaging out for the 1997-2023 period, we note that upward transitions are actually more frequent in emerging market corporations than for their global peers for one and two years, while the transition rate to default is lower. Contributing to this effect is also the higher withdrawal ratio in emerging markets.

Table 12

Average one-year corporate transition rates (%)
Emerging market (1997-2023)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	83.78	13.51	0.00	0.00	0.00	0.00	0.00	0.00	2.70
		(39.10)	(36.26)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(17.20)
	AA	1.49	86.87	9.25	0.00	0.00	0.00	0.00	0.00	2.39
		(8.25)	(16.77)	(14.65)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.28)
	A	0.00	0.91	91.89	4.18	0.22	0.19	0.00	0.03	2.58
		(0.00)	(1.43)	(4.61)	(3.69)	(0.71)	(0.49)	(0.00)	(0.15)	(1.28)
	BBB	0.00	0.01	1.75	87.89	4.17	0.31	0.13	0.09	5.65
		(0.00)	(0.08)	(1.76)	(5.37)	(4.02)	(1.02)	(0.91)	(0.33)	(2.40)
	BB	0.00	0.00	0.01	3.64	80.69	4.50	0.57	0.56	10.03
		(0.00)	(0.00)	(0.10)	(2.50)	(4.31)	(2.44)	(1.79)	(1.11)	(3.40)
	B	0.00	0.00	0.00	0.11	5.96	71.61	4.03	3.09	15.20
		(0.00)	(0.00)	(0.00)	(0.28)	(3.89)	(4.94)	(3.68)	(3.19)	(3.62)
	CCC/C	0.00	0.00	0.00	0.00	0.37	16.22	48.66	17.32	17.44
		(0.00)	(0.00)	(0.00)	(0.00)	(0.90)	(13.87)	(16.71)	(14.50)	(9.84)
Frontier market (1997-2023)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
	AA	0.00	72.73	18.18	0.00	0.00	0.00	0.00	0.00	9.09
		(0.00)	(41.22)	(40.66)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(20.33)
	A	0.00	4.17	87.50	4.17	0.00	0.00	0.00	0.00	4.17
		(0.00)	(14.16)	(26.66)	(20.48)	(0.00)	(0.00)	(0.00)	(0.00)	(14.16)
	BBB	0.00	0.00	0.00	90.91	0.00	0.00	0.00	0.00	9.09
		(0.00)	(0.00)	(0.00)	(25.80)	(0.00)	(0.00)	(0.00)	(0.00)	(25.80)
	BB	0.00	0.00	0.00	1.19	78.57	9.52	0.00	0.00	10.71
		(0.00)	(0.00)	(0.00)	(7.77)	(24.23)	(17.25)	(0.00)	(0.00)	(20.02)
	B	0.00	0.00	0.00	0.00	2.41	81.33	6.63	2.41	7.23
		(0.00)	(0.00)	(0.00)	(0.00)	(5.44)	(16.08)	(9.70)	(7.52)	(12.24)
	CCC/C	0.00	0.00	0.00	0.00	0.00	4.35	39.13	39.13	17.39
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(11.77)	(36.67)	(31.40)	(31.35)
Global (1981-2023)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	87.26	8.94	0.51	0.03	0.10	0.03	0.05	0.00	3.08
		(7.36)	(7.16)	(0.81)	(0.13)	(0.26)	(0.17)	(0.34)	(0.00)	(2.45)
	AA	0.46	87.62	7.57	0.45	0.05	0.06	0.02	0.02	3.76
		(0.53)	(5.16)	(4.20)	(0.66)	(0.18)	(0.20)	(0.06)	(0.07)	(1.71)
	A	0.02	1.50	89.22	4.72	0.24	0.10	0.01	0.05	4.13
		(0.08)	(1.06)	(3.98)	(2.21)	(0.37)	(0.23)	(0.06)	(0.10)	(1.67)
	BBB	0.00	0.07	3.08	87.13	3.28	0.41	0.09	0.14	5.79
		(0.03)	(0.14)	(1.60)	(4.03)	(1.65)	(0.63)	(0.19)	(0.23)	(1.48)
	BB	0.01	0.02	0.10	4.46	78.58	6.39	0.52	0.57	9.34
		(0.05)	(0.08)	(0.23)	(1.91)	(4.60)	(3.09)	(0.66)	(0.77)	(2.16)
	B	0.00	0.02	0.06	0.15	4.46	75.02	4.85	2.98	12.46
		(0.00)	(0.07)	(0.18)	(0.19)	(2.03)	(3.80)	(2.63)	(2.91)	(2.30)
	CCC/C	0.00	0.00	0.08	0.14	0.43	13.33	44.98	25.97	15.07
		(0.00)	(0.00)	(0.36)	(0.55)	(0.81)	(7.39)	(8.44)	(11.65)	(4.51)
Note: The Emerging Market And Frontier Market figures are for the time period from 1997-2023. Numbers in parentheses are weighted standard deviations. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 13

Average two-year corporate transition rates (%)
Emerging market (1997-2023)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	67.57	27.03	0.00	0.00	0.00	0.00	0.00	0.00	5.41
		(49.65)	(47.10)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
	AA	3.23	75.48	17.10	0.00	0.00	0.00	0.00	0.00	4.19
		(11.90)	(23.28)	(22.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.47)
	A	0.00	1.62	84.08	8.01	0.47	0.37	0.00	0.03	5.41
		(0.00)	(1.80)	(6.08)	(4.59)	(1.17)	(0.77)	(0.00)	(0.16)	(1.98)
	BBB	0.00	0.01	3.47	77.69	7.06	0.64	0.24	0.41	10.46
		(0.00)	(0.09)	(2.72)	(6.43)	(5.44)	(1.39)	(1.19)	(1.79)	(2.82)
	BB	0.00	0.00	0.06	6.59	65.95	6.70	0.79	1.58	18.33
		(0.00)	(0.00)	(0.16)	(3.85)	(5.14)	(2.99)	(1.80)	(3.08)	(3.76)
	B	0.00	0.00	0.00	0.23	9.64	53.34	5.10	6.32	25.36
		(0.00)	(0.00)	(0.00)	(0.46)	(6.11)	(5.40)	(3.78)	(4.92)	(4.41)
	CCC/C	0.00	0.00	0.00	0.13	0.52	25.45	23.77	22.34	27.79
		(0.00)	(0.00)	(0.00)	(0.57)	(1.48)	(15.36)	(14.64)	(15.64)	(12.20)
Frontier market (1997-2023)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
		N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	AA	0.00	54.55	27.27	0.00	0.00	0.00	0.00	0.00	18.18
		(0.00)	(47.43)	(46.95)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(33.88)
	A	0.00	8.70	73.91	8.70	0.00	0.00	0.00	0.00	8.70
		(0.00)	(19.44)	(36.65)	(28.91)	(0.00)	(0.00)	(0.00)	(0.00)	(24.64)
	BBB	0.00	0.00	0.00	84.21	0.00	0.00	0.00	0.00	15.79
		(0.00)	(0.00)	(0.00)	(30.06)	(0.00)	(0.00)	(0.00)	(0.00)	(30.06)
	BB	0.00	0.00	0.00	2.50	60.00	15.00	1.25	1.25	20.00
		(0.00)	(0.00)	(0.00)	(10.10)	(29.24)	(15.38)	(4.94)	(4.94)	(24.87)
	B	0.00	0.00	0.00	0.00	3.75	65.63	10.00	6.25	14.38
		(0.00)	(0.00)	(0.00)	(0.00)	(6.31)	(18.02)	(13.11)	(10.05)	(16.07)
	CCC/C	0.00	0.00	0.00	0.00	0.00	4.35	13.04	52.17	30.43
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(11.77)	(15.85)	(33.92)	(37.58)
Global (1981-2023)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	76.04	15.98	1.42	0.08	0.21	0.05	0.10	0.03	6.10
		(10.42)	(10.49)	(1.44)	(0.24)	(0.41)	(0.23)	(0.40)	(0.17)	(4.21)
	AA	0.80	76.91	13.46	1.16	0.17	0.12	0.02	0.05	7.31
		(0.71)	(8.06)	(5.91)	(1.09)	(0.32)	(0.28)	(0.06)	(0.11)	(2.71)
	A	0.04	2.69	79.75	8.31	0.61	0.22	0.03	0.12	8.23
		(0.07)	(1.73)	(6.33)	(3.00)	(0.75)	(0.38)	(0.10)	(0.18)	(2.69)
	BBB	0.01	0.14	5.67	76.39	5.29	0.90	0.18	0.39	11.03
		(0.07)	(0.22)	(2.52)	(6.46)	(2.08)	(1.02)	(0.28)	(0.59)	(2.40)
	BB	0.01	0.03	0.24	7.85	62.15	9.63	0.94	1.80	17.34
		(0.05)	(0.09)	(0.45)	(2.99)	(6.63)	(2.85)	(0.83)	(2.02)	(2.87)
	B	0.00	0.02	0.10	0.34	7.39	56.37	5.81	7.07	22.89
		(0.00)	(0.10)	(0.27)	(0.40)	(3.17)	(4.67)	(2.36)	(5.30)	(3.62)
	CCC/C	0.00	0.00	0.10	0.35	0.81	17.19	21.94	35.65	23.95
		(0.00)	(0.00)	(0.41)	(1.01)	(1.05)	(7.19)	(7.72)	(12.96)	(6.17)
Note: The Emerging Market And Frontier Market figures are for the time period from 1997-2023. Numbers in parentheses are weighted standard deviations. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 14

Average one-year transition rates for emerging and frontier markets corporate issuers by rating modifier, 1997 to 2023 (%)
	Rating
From/To	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC	D	NR
AAA	83.78	13.51	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.70
	(39.10)	(36.26)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(17.20)
AA+	11.36	86.36	2.27	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	(33.66)	(36.40)	(15.81)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
AA	0.00	14.89	70.21	10.64	0.00	0.00	2.13	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.13
	(0.00)	(29.77)	(36.39)	(26.85)	(0.00)	(0.00)	(14.81)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(8.36)
AA-	0.00	0.00	4.31	80.00	12.16	0.39	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.14
	(0.00)	(0.00)	(13.96)	(18.59)	(16.18)	(1.66)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(7.03)
A+	0.00	0.00	0.16	4.35	83.39	7.76	0.78	0.31	0.31	0.00	0.31	0.00	0.00	0.31	0.00	0.00	0.00	0.16	2.17
	(0.00)	(0.00)	(0.65)	(6.15)	(11.12)	(10.07)	(2.52)	(1.61)	(0.91)	(0.00)	(1.30)	(0.00)	(0.00)	(1.30)	(0.00)	(0.00)	(0.00)	(0.65)	(2.44)
A	0.00	0.00	0.00	0.10	4.20	84.95	5.96	1.08	0.49	0.10	0.00	0.00	0.00	0.10	0.00	0.00	0.00	0.00	3.03
	(0.00)	(0.00)	(0.00)	(0.49)	(5.68)	(9.80)	(6.85)	(3.10)	(2.23)	(1.12)	(0.00)	(0.00)	(0.00)	(0.49)	(0.00)	(0.00)	(0.00)	(0.00)	(2.99)
A-	0.00	0.00	0.00	0.00	0.13	5.33	84.20	6.18	0.78	0.39	0.07	0.26	0.00	0.07	0.13	0.00	0.00	0.00	2.47
	(0.00)	(0.00)	(0.00)	(0.00)	(0.69)	(5.05)	(7.74)	(4.66)	(1.54)	(1.39)	(0.32)	(1.27)	(0.00)	(0.31)	(0.41)	(0.00)	(0.00)	(0.00)	(2.08)
BBB+	0.00	0.00	0.00	0.00	0.05	0.14	5.31	81.42	8.15	0.82	0.05	0.09	0.09	0.05	0.00	0.00	0.00	0.05	3.80
	(0.00)	(0.00)	(0.00)	(0.00)	(0.28)	(0.45)	(4.86)	(7.72)	(6.65)	(1.22)	(0.18)	(0.48)	(0.36)	(0.23)	(0.00)	(0.00)	(0.00)	(0.25)	(2.35)
BBB	0.00	0.00	0.00	0.04	0.04	0.00	0.20	7.96	78.09	6.85	1.14	0.37	0.12	0.16	0.00	0.04	0.04	0.08	4.86
	(0.00)	(0.00)	(0.00)	(0.24)	(0.21)	(0.00)	(0.46)	(6.95)	(8.42)	(6.21)	(2.15)	(1.31)	(0.47)	(0.57)	(0.00)	(0.32)	(0.38)	(0.56)	(3.27)
BBB-	0.00	0.00	0.00	0.00	0.00	0.04	0.11	0.57	6.51	74.55	7.58	1.49	0.32	0.21	0.25	0.14	0.32	0.14	7.79
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.25)	(0.53)	(1.05)	(4.55)	(9.96)	(7.75)	(2.36)	(0.64)	(0.69)	(1.09)	(0.77)	(2.04)	(0.60)	(4.53)
BB+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.13	0.54	10.34	67.58	9.18	1.70	0.45	0.22	0.18	0.36	0.22	9.09
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.51)	(1.73)	(8.00)	(9.23)	(8.97)	(2.26)	(0.76)	(1.10)	(0.52)	(2.18)	(0.62)	(4.27)
BB	0.00	0.00	0.00	0.00	0.00	0.00	0.04	0.08	0.08	0.72	10.66	65.17	9.78	1.72	0.60	0.24	0.68	0.28	9.94
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.26)	(0.31)	(0.30)	(0.95)	(6.59)	(9.84)	(8.58)	(1.69)	(0.85)	(0.72)	(2.49)	(0.72)	(4.54)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.10	0.17	0.69	10.81	66.61	6.88	1.89	0.34	0.62	1.03	10.84
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.60)	(1.15)	(1.23)	(8.91)	(8.30)	(4.37)	(1.71)	(0.53)	(1.30)	(2.35)	(3.73)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.14	0.28	1.36	11.52	57.19	8.76	2.95	1.45	2.25	14.10
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.38)	(0.88)	(1.79)	(6.17)	(9.17)	(5.48)	(2.37)	(2.52)	(3.19)	(5.31)
B	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.10	0.10	0.16	1.71	10.76	56.03	10.50	3.31	2.90	14.43
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.36)	(0.40)	(0.46)	(3.00)	(6.58)	(9.07)	(7.59)	(3.21)	(4.14)	(5.50)
B-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.07	0.00	0.27	0.20	2.72	12.36	54.15	8.90	4.45	16.88
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.38)	(0.00)	(0.63)	(0.79)	(4.78)	(6.75)	(7.84)	(9.65)	(4.16)	(5.56)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.36	0.71	1.90	13.29	48.40	17.91	17.44
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.88)	(2.01)	(2.11)	(11.56)	(16.74)	(14.23)	(9.61)
Note: Numbers in parentheses are weighted standard deviations. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Lower ratings and defaults in emerging and frontier markets remain correlated over longer time horizons (see charts 4 and 5, and tables 15 and 16). In emerging markets, no issuers in the 'AAA' or 'AA' rating categories has ever defaulted from that rating. There was just one default from original rating in the 'A' category in 1997-2023. Default rates increase among issuers with lower ratings. For instance, emerging market issuers in the 'BB' rating category had an average default rate of 0.56% after one year and 6.93% after 10 years, while those in the 'B' rating category had an average default rate of 3.09% after one year and 16.73% after 10 years. Charts 4 and 5 show the non-linearity of the rating scale: the point-in-time distance between the 'CCC/C' and 'B' curve is higher than the 'B' and 'BB' one. When comparing corporate cumulative average default rates (table 15), there is less 'default dispersion' in emerging markets with respect to global ratings: the difference between the cumulative default rate after 10 years and the cumulative default rate after the first one is lower for emerging markets than the global sample. For example, on average after three years, the emerging market 'CCC/C' rated category defaults in 25% of the cases. For global ratings, it is 41%. After 10 years, the same percentage is closer to year three for emerging markets (30.19%) rather than for the global rates sample (50.62%). Therefore, defaults are less incremental for a given rating category in emerging markets: historical data suggests that for a given rating category, default rates will increase by a lower percentage as years pass by in emerging markets with respect to global ratings.

Table 15

Comparison of corporate cumulative average default rates (%)
Emerging market (1997-2023)	From/To	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
	AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	AA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	A	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03
	BBB	0.09	0.41	0.76	1.17	1.55	1.78	1.87	1.96	2.04	2.07
	BB	0.56	1.57	2.66	3.68	4.56	5.19	5.75	6.19	6.61	6.93
	B	3.09	6.26	8.63	10.60	12.08	13.25	14.30	15.20	15.95	16.73
	CCC/C	17.32	22.26	25.05	25.50	26.58	27.54	28.36	29.23	29.78	30.19
	Investment grade	0.07	0.29	0.53	0.81	1.06	1.22	1.28	1.35	1.40	1.42
	Speculative grade	2.55	4.64	6.33	7.70	8.84	9.70	10.47	11.13	11.70	12.22
	All rated	1.45	2.72	3.77	4.67	5.43	5.99	6.47	6.88	7.23	7.55
Frontier market (1997-2023)	From/To	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
	AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	AA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	BBB	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	BB	0.00	1.25	1.25	2.57	3.90	6.61	6.61	9.44	12.41	13.97
	B	2.41	6.16	10.76	15.04	19.90	22.79	25.17	26.58	28.25	30.13
	CCC/C	39.13	52.17	61.74	67.20	67.20	67.20	67.20	67.20	67.20	67.20
	Investment grade	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Speculative grade	4.76	8.57	12.18	15.57	18.79	21.32	22.46	24.34	26.42	27.94
	All rated	3.94	7.11	10.13	12.98	15.69	17.83	18.79	20.38	22.16	23.48
Global (1981-2023)	From/To	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
	AAA	0.00	0.03	0.13	0.23	0.34	0.44	0.49	0.57	0.62	0.68
	AA	0.02	0.05	0.11	0.19	0.28	0.38	0.46	0.53	0.60	0.67
	A	0.05	0.12	0.20	0.30	0.41	0.53	0.68	0.80	0.93	1.07
	BBB	0.14	0.39	0.67	1.02	1.38	1.73	2.03	2.33	2.62	2.90
	BB	0.57	1.79	3.19	4.58	5.88	7.08	8.12	9.08	9.93	10.69
	B	2.98	6.99	10.55	13.44	15.75	17.60	19.05	20.20	21.23	22.19
	CCC/C	25.97	35.93	41.40	44.47	46.64	47.67	48.76	49.45	50.05	50.62
	Investment grade	0.08	0.22	0.38	0.58	0.78	0.99	1.18	1.37	1.54	1.72
	Speculative grade	3.52	6.77	9.56	11.83	13.70	15.22	16.47	17.51	18.43	19.27
	All rated	1.49	2.89	4.11	5.13	5.99	6.70	7.29	7.80	8.25	8.66
Note: The Emerging Market And Frontier Market figures are for the time period from 1997-2023. *Default rates conditional on survival. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 16

Emerging and frontier markets corporate cumulative average default rates by rating modifier, 1997 to 2023 (%)
	Time horizon
Rating	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
AA-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A+	0.16	0.16	0.16	0.16	0.16	0.16	0.16	0.16	0.16	0.16
A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
A-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
BBB+	0.05	0.09	0.09	0.09	0.16	0.22	0.22	0.22	0.22	0.22
BBB	0.08	0.13	0.27	0.63	0.91	1.09	1.09	1.16	1.24	1.24
BBB-	0.14	0.89	1.69	2.45	3.14	3.54	3.76	3.93	4.06	4.14
BB+	0.22	0.84	1.54	2.13	2.59	2.72	2.99	2.99	3.07	3.36
BB	0.28	1.36	2.44	3.31	4.17	4.68	5.24	5.75	6.44	6.90
BB-	1.03	2.32	3.66	5.19	6.45	7.68	8.46	9.31	9.83	10.10
B+	2.25	5.00	7.03	8.59	9.89	11.04	11.93	12.59	12.91	13.17
B	2.90	6.04	8.67	10.90	12.53	13.75	15.00	16.08	17.16	18.63
B-	4.45	8.33	11.07	13.51	15.40	16.70	17.84	18.87	19.89	20.61
CCC/C	17.91	23.09	26.07	26.66	27.72	28.65	29.45	30.29	30.83	31.23
Investment grade	0.07	0.28	0.52	0.80	1.06	1.22	1.28	1.34	1.40	1.42
Speculative grade	2.59	4.72	6.45	7.86	9.03	9.93	10.71	11.39	11.98	12.52
All rated	1.48	2.78	3.86	4.78	5.57	6.15	6.63	7.06	7.43	7.76
*Default rates conditional on survival. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Gini ratios and Lorenz curves

As in our global default study, the default data in emerging and frontier markets indicates that issuer credit ratings are effective indicators of relative credit risk over time. We measure this relationship with movements in Gini ratios.

Gini ratios measure the rank-ordering power of ratings over a given time horizon and show the ratio of actual rank-ordering performance to theoretically perfect rank ordering. If corporate ratings only randomly approximated default risk, the Gini coefficient would be zero. If corporate ratings were perfectly rank ordered, so that all defaults occurred only among the lowest-rated issuers, the Gini ratio would be 100%. A quantitative measure of ratings performance indicates that the relative rank ordering of ratings in emerging and frontier markets is consistent across various time horizons. Our calculations indicate that the one-year transition to default in emerging markets shows an average one-year Gini coefficient of 76.71%, a three-year of 63.46%, and a five-year of 56.66%.

Gini coefficients decline as the time horizon lengthens, because the latter allows for more credit degradation among higher-rated issuers. In the one-year emerging market Lorenz curve, for example, 98% of defaults occurred in the speculative-grade category, while such ratings accounted for 56% of all emerging market corporate issuer ratings (see chart 6). The five-year Lorenz curve shows that speculative-grade issuers made up 91% of defaulters and 57% of the entire sample (see chart 10). If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate issuers and the cumulative share of all issuers would be nearly the same.

Growth in the number of emerging and frontier market corporate issuers rated by S&P Global Ratings will continue to make weighted average Gini ratios more meaningful, as well as lower the likelihood of data distortion by outliers, which affects long-term averages. (For definitions and more information on the Gini methodology, see Appendix III).

Table 17

Corporate Gini coefficients by region (%)
	Time horizon
Region	One-year	Three-year	Five-year	Seven-year
Global	82.63	75.17	71.66	69.18
U.S.	80.51	72.40	68.86	66.35
Europe	89.95	84.99	82.58	79.76
Frontier market	80.61	65.92	62.65	63.94
Emerging market	76.71	63.46	56.66	53.69
Emerging Market And Frontier Market figures are for the period 1997-2023. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Appendix I: Default Methodology And Definitions

This long-term corporate default and rating transition study uses S&P Global Market Intelligence's CreditPro® database of long-term local currency issuer credit ratings. Most exhibits in this study are the direct output of the CreditPro® interface, while others reflect manipulation of the underlying database.

An issuer credit rating reflects S&P Global Ratings' forward-looking opinion of a company's overall creditworthiness. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation because it does not take into account the nature and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. It is not necessary for a company to have rated debt to be assigned an issuer credit rating.

While the issue credit rating is an assessment of default risk, it may also incorporate an assessment of the relative seniority or ultimate recovery of the issue in the event of default. The junior obligations of a company are typically rated lower than the senior obligations to reflect the lower priority in bankruptcy and ultimate recovery expectations. Alternatively, secured debt may receive a rating that is above the issuer credit rating. Notching also applies to the structural subordination of debt issued by operating subsidiaries or holding companies that are part of an enterprise that we view as a single economic entity.

The ongoing enhancement of the CreditPro® database used to generate this study could lead to outcomes that differ, to some degree, from those reported in previous studies. However, this poses no continuity problem because each study reports statistics going back to Dec. 31, 1996. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.

Issuers included in this study

Emerging markets in this study consist of the following subregions and respective countries:

• Asia-Pacific: Bangladesh, Bhutan, British Indian Ocean Territory, China, Fiji, Hong Kong, India, Indonesia, Macao Special Administrative Region of China, Malaysia, Mongolia, Pakistan, Papua New Guinea, the Philippines, Sri Lanka, Taiwan, Thailand, and Vietnam.
• EMEA: Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia and Herzegovina, Bulgaria, Benin, Cote d'Ivoire, Croatia, Cyprus, Egypt, Estonia, Gabon, Georgia, Ghana, Hungary, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Mauritius, Montenegro, Morocco, Namibia, Nigeria, Oman, Poland, Qatar, the Republic of Moldova, Russia, Saudi Arabia, Slovakia, South Africa, Tunisia, Turkey, Ukraine, the United Arab Emirates, and Uzbekistan.
• Latin America and the Caribbean: Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, and Uruguay.

Frontier markets in this study consist of the following subregions and respective countries:

• Asia-Pacific: Cambodia and Marshall Islands.
• EMEA: Liberia, the Syrian Arab Republic, and Togo.
• Latin America and the Caribbean: Aruba, Bahamas, Curacao, Netherlands Antilles*, Turks and Caicos Islands, and Venezuela.

*The Netherlands Antilles was dissolved in 2010.

This study analyzes the rating histories of 3,973 emerging and frontier market corporate issuers with credit ratings from S&P Global Ratings between Jan. 1, 1997, and Dec. 31, 2023. These include industrials, utilities, financial institutions, and insurance companies with long-term local currency ratings. The analysis excludes public information ("pi") ratings and ratings based on the guarantee of another company or government entity. Structured finance vehicles, public-sector issuers, and sovereign issuers are the subjects of separate default and transition studies, and we excluded these from this study.

In this study, the insurance industry includes life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, and title insurance. This study also groups insurance service providers (such as insurance brokers and third-party administrators that are rated according to corporate criteria) with the insurance industry.

To avoid double-counting, the CreditPro database excludes subsidiaries with debt that is fully guaranteed by a parent or with default risk that is considered identical to that of a parent. The latter are companies with obligations that are not legally guaranteed by a parent but that have operating or financing activities that are so inextricably entwined with those of the parent that it would be impossible to imagine the default of one and not the other. At times, however, some of these subsidiaries might not yet have been covered by a parent's guarantee, or the relationship that combines the default risk of parent and subsidiary might have come to an end or might not have begun. We included such subsidiaries for the period during which they had a distinct and separate risk of default.

Issuers with withdrawn ratings

S&P Global Ratings withdraws ratings when an entity's entire debt is paid off or when the program or programs rated are terminated and the relevant debt extinguished. For the purposes of this study, a rating may be withdrawn as a result of mergers and acquisitions. Others are withdrawn because of a lack of cooperation, particularly when a company is experiencing financial difficulties and refuses to provide all the information needed to continue surveillance on the ratings, or at the entity's request.

Definition of default

An obligor that's rated 'SD' (selective default) or 'D' (default) is in payment default on one or more of its financial obligations (rated or unrated), unless S&P Global Ratings believes that such payments will be made within five business days, irrespective of any grace period. S&P Global Ratings also lowers a rating to 'D' upon an issuer's filing for bankruptcy or taking a similar action that jeopardizes payments on a financial obligation.

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. S&P Global Ratings assigns an 'SD' rating when it believes the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. A selective default includes the completion of a distressed exchange offer, whereby one or more financial obligations are either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.

'R' (regulatory intervention) indicates that an obligor is under regulatory supervision owing to its financial condition. This does not necessarily indicate a default event, but the regulator might have the power to favor one class of obligations over others or pay some obligations and not others. Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. On July 5, 2019, we removed 'R' from all rating scales. That said, several historical defaults within the data set possessed 'R' ratings, so for the purposes of this study, we have maintained these as default events.

We deem 'D', 'SD', and 'R' issuer ratings to be defaults for the purposes of this study. A default is assumed to take place on the earliest of the date S&P Global Ratings revised the rating(s) to 'D', 'SD', or 'R'; the date a debt payment was missed; the date a distressed exchange offer was announced; or the date the debtor filed or was forced into bankruptcy.

When an issuer defaults, it is not uncommon for S&P Global Ratings to subsequently withdraw the 'D' rating. For the purposes of this study, if an issuer defaults, we end its rating history at 'D'. If any defaulting entity reemerges from bankruptcy, or otherwise restructures its defaulted debt instruments thereby reestablishing regular, timely payment of all its debts, we reenter this issuer into the database as a new entity. Its rating history after the default event is included in all calculations as entirely separate from its experience leading up to its earlier default.

Calculations

Static pool methodology.  S&P Global Ratings Research conducts its default studies on the basis of groupings called static pools. For the purposes of this study, we form static pools by grouping issuers by rating category at the beginning of each year covered by the study. Each static pool is followed from that point forward. All companies included in the study are assigned to one or more static pools. When an issuer defaults, we assign that default to all of the static pools to which the issuer belonged.

We use the static pool methodology to avoid certain pitfalls in estimating default rates, such as by ensuring that default rates account for rating migration and can be calculated across multiperiod time horizons. 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. Other methods calculate default rates using only the most recent year's default and rating data; these methods might yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.

The pools are static in the sense that their membership remains constant over time. Each static pool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by every new update and the criteria for inclusion or exclusion of companies in the default study are subject to minor revisions as time goes by, it is not possible to compare static pools across different studies. Therefore, every update revises results to the same starting date of Dec. 31, 1996, to avoid continuity problems.

Entities that have had ratings withdrawn--that is, revised to not rated (NR)--are surveilled with the aim of capturing a potential default. Because static pools only include entities with active ratings as of the beginning date of a given pool, we exclude companies with withdrawn ratings, as well as those that have defaulted, from subsequent static pools. If the rating on an entity is withdrawn after the start date of a particular static pool and the entity subsequently defaults, we will include it in that static pool as a default and categorize it in the rating category of which it was a member at that time.

For instance, the 1998 static pool consists of all companies rated as of 12:01 a.m. on Jan. 1, 1998, while the 1999 static pool consists of those companies first rated in 1998 and the surviving members of the 1998 static pool. All rating changes that took place in 1998 are reflected in the newly formed 1999 static pool. We used this same method to form static pools for each year in the study.

Consider the following example: S&P Global Ratings downgraded an issuer that was originally rated 'BB' in mid-1998 to 'B' in 2000 and then withdrew the rating (NR) in 2002; the company subsequently defaulted ('D') in 2005. This hypothetical company would be included in the 1999 and 2000 pools with the 'BB' rating, which was the rating at the beginning of those years. Likewise, the company would be included in the 2001 and 2002 pools with the 'B' rating. The company would not be part of the 1998 pool because it was not rated as of the first day of that year, and we would not include it in any pool after the last day of 2002 because S&P Global Ratings had withdrawn the rating by then. Yet each of the four pools in which this company was included (1999-2002) would record its 2005 default at the appropriate time horizon.

Default rates.  We calculated annual default rates for each static pool, first in units and then as percentages with respect to the number of issuers in each rating category. Finally, we combined these percentages to obtain cumulative default rates for the 27 years the study covers.

Issuer-weighted default rates.  All default rates that appear in this study are calculated based on the number of issuers rather than the dollar amounts affected by defaults or rating changes. Although dollar amounts provide information about the portion of the market that is affected by defaults or rating changes, issuer-weighted averages are more useful measures of the performance of ratings.

Many practitioners use statistics from this default study and CreditPro® to estimate "probability of default" and "probability of rating transition." It is important to note that S&P Global Ratings' credit ratings do not imply a specific probability of default.

Cumulative average default rates.  The cumulative default rates in this study average the experience of all static pools by first calculating marginal default rates for each possible time horizon and for each static pool, weight-averaging the marginal default rates conditional on survival (survivors being non-defaulters), and accumulating the average conditional marginal default rates. We calculate conditional default rates by dividing the number of issuers in a static pool that default at a specific time horizon by the number of issuers that survived (did not default) to that point in time. The weights are based on the number of issuers in each static pool. The cumulative default rate is one minus the product of the proportion of survivors (nondefaulters).

Standard deviations.  Many of the exhibits in this study display averages of default rates, transition rates, and Gini ratios. Often these are issuer-weighted averages. Prior studies have shown that fluctuations in default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. Standard deviations are also shown to provide a gauge of the dispersion of the ranges of data behind these averages.

For the transition matrices in tables 12-14 and 24-27, the standard deviation for each cell in a given matrix is calculated using the data from each of the underlying cohort years that contribute to the averages. For example, in the average one-year emerging market transition matrix in table 12, each cell's standard deviation is calculated from the series of that particular cell in each of the 27 cohorts beginning with the 1997 cohort and ending with the 2023 cohort.

Time sample.  This study limits the reporting of default rates in the emerging markets to the 27-year time horizon, and we based all calculations on the rating experience of that period. Global data is based on a 43-year time horizon. The maturities of most obligations are much shorter than 27 years. In addition, average default statistics become less reliable at longer time horizons because the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.

Default patterns share broad similarities across all static pools, suggesting that S&P Global Ratings' standards have been consistent over time. Adverse business conditions tend to coincide with default upswings for all pools. Speculative-grade issuers have been hit the hardest by these upswings, but investment-grade default rates also increase in stressful periods.

Transition analysis

Transition rates compare the issuer credit ratings at the beginning of a period with the ratings at the end of the period. To compute one-year rating transition rates by rating category, we compared the rating on each entity at the end of a particular year with the rating at the beginning of the same year. We counted an issuer that remained rated for more than one year as many times as the number of years it was rated.

For instance, an issuer continuously rated from mid-1999 to mid-2006 would appear in the six consecutive one-year transition matrices from 2000 to 2005. If the rating on the issuer was withdrawn in the middle of 2006, it would be included in the column representing transitions to NR in the 2006 transition matrix. Similarly, if it defaulted in the middle of 2006, it would be included in the column representing transitions to 'D' in the 2006 one-year transition matrix.

All 1997 static pool members still rated on Dec. 31, 2023, had 27 one-year transitions, while companies first rated on Jan. 1, 2023, had only one. Each one-year transition matrix displays all rating movements from the beginning of the year through year-end. 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. The ratios represent the historical incidence of the ratings listed in the first column changing to the ones listed in the top row over the course of the reference period (see tables 12 and 13).

The only ratings considered in these calculations are those on entities at the beginning of each static pool and those at the end. All rating changes that occur in between are ignored. For example, if an entity was rated 'A' on Jan. 1, 2023, downgraded to 'BBB' in the middle of the year, and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would only be included in the percentage of issuers that began the year as 'A' that ended the year as 'A'. This also applies to transition matrices that span longer time horizons. If an issuer defaults or the rating is withdrawn in the middle of the year, then it would be considered either rated 'D' or not rated as of Dec. 31 of that particular year.

Multiyear transitions

We also calculated multiyear transitions for periods of two years to five years. In this case, we compared the rating at the beginning of the multiyear period with the rating at the end. For example, we could calculate two-year transition matrices by comparing the ratings at the beginning of the years 1997-2021 with the ratings at the end of the years 1999-2023 (see table 13). Otherwise, the methodology was identical to that used for single-year transitions.

We calculated average transition matrices on the basis of the multiyear matrices just described. These average matrices are a true summary, the ratios of which represent the historical incidence of the ratings listed in the first column changing to the ones listed in the top row over the course of the multiyear period (see tables 13 and 24-27). Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.

Comparing transition rates with default rates

Rating transition rates may be compared with the marginal and cumulative default rates. For example, the one-year default rate column of table 15 is equivalent to column 'D' of the average one-year transition matrix in table 12; the year one investment grade cumulative average default rate in table 15 is equivalent to the cumulative average in the summary statistics of the year one column in table 20.

However, the two-year default rate column in table 15 is not the same as column 'D' of the average two-year transition matrix in table 13. This difference results from the different methods of calculating default rates. The default rates in table 13 are calculated as not conditional on survival, while those in table 15 are average default rates conditional on survival. The two-year default rates in table 15 are calculated in the same way as those in the cumulative average section for the year two column in table 20, while those in the 'D' column of table 13 are equivalent to the sum of all the defaults behind the year two column's annual default rates in table 20 divided by the sum of all the issuers in table 20.

Tables 18-23 best illustrate the links between transition matrices and average cumulative default rates. The default rates in the columns of these tables, associated with each static pool year, are calculated in the same way as they would be for each individual year's transition matrices. Tables 18-23 are broken out by the broadest rating classifications (all rated, investment-grade, and speculative-grade). These tables can also be constructed for each rating category.

As an example, the year two column of table 20 shows the two-year default rates (not conditional on survival) for each static pool. These are calculated in the same way as the default column in table 11, though table 11 shows the one-year default rates for each rating category for 2023 exclusively. In the summary section at the bottom of tables 18-23, the first row shows the issuer-weighted averages of the marginal default rates. These marginal averages are then used to calculate the cumulative average default rates in the row directly beneath them. These default rates are the same that appear in table 15 and are average cumulative default rates conditional on survival.

Appendix II: Additional Tables

Table 18

Static pool cumulative corporate default rates among all rated emerging market issuers, 1997 to 2023
Rating: All rated
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	122	0.82	4.10	9.02	9.02	13.11	20.49	22.13	22.13	22.13	22.13
1998	259	5.79	9.27	10.04	14.67	23.94	26.64	26.64	26.64	26.64	26.64
1999	316	4.11	6.01	10.76	22.47	25.32	25.32	25.32	25.32	25.32	25.63
2000	363	1.38	6.06	17.63	20.39	20.39	20.39	20.39	20.66	20.94	21.49
2001	413	4.36	15.74	18.16	18.16	18.40	18.40	18.64	18.89	19.61	19.85
2002	445	11.91	14.61	14.83	15.06	15.06	15.28	15.51	16.18	16.40	16.40
2003	492	2.64	3.25	3.46	3.46	3.66	3.86	4.47	4.88	4.88	4.88
2004	546	0.55	0.73	0.73	0.92	1.10	1.65	2.20	2.20	2.38	2.75
2005	639	0.16	0.16	0.31	0.47	1.41	2.03	2.03	2.50	2.82	2.97
2006	725	0.28	0.41	0.69	2.07	2.62	2.62	3.45	3.86	4.00	4.28
2007	791	0.13	0.63	3.03	3.92	4.05	4.93	5.56	5.69	6.07	6.45
2008	916	1.42	4.69	5.57	5.68	6.77	7.31	7.42	7.97	8.41	8.52
2009	952	3.68	4.52	4.62	5.67	6.30	6.51	7.04	7.56	7.67	8.09
2010	910	0.88	0.99	2.09	2.75	3.19	3.74	4.29	4.40	4.84	5.38
2011	936	0.21	1.71	2.56	3.21	3.95	4.70	4.81	5.24	5.77	6.41
2012	998	1.30	2.30	2.91	3.91	4.71	4.91	5.41	5.91	6.51	6.71
2013	1085	0.92	1.47	2.76	4.06	4.33	4.79	5.25	5.99	6.27	6.54
2014	1216	0.74	2.38	3.78	4.03	4.52	5.02	6.00	6.33	6.91	7.32
2015	1296	1.70	3.47	3.78	4.32	4.86	5.79	6.17	6.79	7.18	N/A
2016	1329	1.88	2.18	2.78	3.24	4.21	4.59	5.19	5.64	N/A	N/A
2017	1397	0.29	0.79	1.36	2.36	2.72	3.36	3.94	N/A	N/A	N/A
2018	1436	0.63	1.53	2.79	3.27	4.18	4.81	N/A	N/A	N/A	N/A
2019	1485	1.01	2.42	2.96	3.70	4.38	N/A	N/A	N/A	N/A	N/A
2020	1473	1.63	2.38	3.19	3.87	N/A	N/A	N/A	N/A	N/A	N/A
2021	1431	0.98	1.96	2.73	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	1450	1.17	1.93	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	1347	1.04	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		1.45	1.29	1.09	0.93	0.79	0.60	0.50	0.44	0.38	0.34
Cumulative average		1.45	2.72	3.77	4.67	5.43	5.99	6.47	6.88	7.23	7.55
Standard deviation		2.45	3.97	5.12	6.38	7.40	7.98	8.05	8.04	8.11	8.24
Median		1.04	2.34	3.03	3.91	4.38	4.92	5.56	6.16	6.91	7.02
Min		0.13	0.16	0.31	0.47	1.10	1.65	2.03	2.20	2.38	2.75
Max		11.91	15.74	18.16	22.47	25.32	26.64	26.64	26.64	26.64	26.64
*Default rates conditional on survival. N/A--Not applicable. Source: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 19

Static pool cumulative corporate default rates among all rated frontier market issuers, 1997 to 2023
Rating: All rated
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5	0.00	20.00	20.00	20.00	20.00	40.00	40.00	40.00	40.00	40.00
1999	8	25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
2000	5	0.00	0.00	0.00	20.00	20.00	20.00	20.00	20.00	20.00	20.00
2001	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67
2005	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	14.29
2006	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	14.29	14.29
2007	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29
2008	9	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	22.22	22.22
2009	10	0.00	0.00	0.00	0.00	0.00	0.00	0.00	20.00	20.00	20.00
2010	10	0.00	0.00	0.00	0.00	0.00	0.00	20.00	20.00	20.00	20.00
2011	13	0.00	0.00	7.69	7.69	7.69	23.08	23.08	23.08	23.08	23.08
2012	14	0.00	7.14	7.14	7.14	21.43	28.57	28.57	28.57	28.57	28.57
2013	15	6.67	6.67	6.67	20.00	33.33	33.33	33.33	33.33	33.33	33.33
2014	17	0.00	0.00	11.76	23.53	29.41	29.41	29.41	29.41	29.41	29.41
2015	20	0.00	15.00	25.00	30.00	30.00	35.00	35.00	35.00	35.00	N/A
2016	23	13.04	21.74	26.09	26.09	30.43	30.43	30.43	30.43	N/A	N/A
2017	21	14.29	19.05	19.05	23.81	23.81	23.81	23.81	N/A	N/A	N/A
2018	23	4.35	4.35	8.70	8.70	8.70	8.70	N/A	N/A	N/A	N/A
2019	24	4.17	8.33	8.33	12.50	12.50	N/A	N/A	N/A	N/A	N/A
2020	21	4.76	4.76	9.52	9.52	N/A	N/A	N/A	N/A	N/A	N/A
2021	17	0.00	5.88	5.88	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	17	5.88	5.88	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	14	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		3.94	3.30	3.25	3.17	3.11	2.54	1.17	1.96	2.24	1.69
Cumulative average		3.94	7.11	10.13	12.98	15.69	17.83	18.79	20.38	22.16	23.48
Standard deviation		5.92	7.91	10.29	11.81	14.82	16.76	16.80	16.32	15.45	14.04
Median		0.00	0.00	5.88	7.42	7.69	4.35	20.00	20.00	20.00	20.00
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max		25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
*Default rates conditional on survival. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 20

Static pool cumulative corporate default rates among investment-grade emerging market issuers, 1997 to 2023
Rating: Investment-grade
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	75	1.33	2.67	2.67	2.67	4.00	12.00	12.00	12.00	12.00	12.00
1998	117	1.71	1.71	1.71	3.42	13.68	14.53	14.53	14.53	14.53	14.53
1999	119	0.00	0.00	0.84	12.61	13.45	13.45	13.45	13.45	13.45	13.45
2000	126	0.00	0.00	11.90	12.70	12.70	12.70	12.70	12.70	12.70	12.70
2001	142	0.00	10.56	10.56	10.56	11.27	11.27	11.27	11.97	11.97	11.97
2002	142	0.00	0.00	0.00	0.70	0.70	0.70	1.41	1.41	1.41	1.41
2003	157	0.00	0.00	0.00	0.00	0.00	0.64	0.64	0.64	0.64	0.64
2004	189	0.00	0.00	0.00	0.00	0.53	0.53	0.53	0.53	0.53	0.53
2005	223	0.00	0.00	0.00	0.45	0.45	0.45	0.45	0.45	0.45	0.45
2006	267	0.00	0.00	0.37	0.37	0.37	0.37	0.37	0.37	0.37	0.37
2007	297	0.00	0.34	0.67	1.01	1.01	1.35	1.35	1.35	1.35	1.35
2008	374	0.27	0.80	1.07	1.07	1.34	1.34	1.34	1.34	1.87	1.87
2009	421	0.71	0.95	0.95	1.19	1.19	1.19	1.19	1.66	1.66	1.66
2010	401	0.00	0.00	0.00	0.00	0.00	0.00	0.50	0.50	0.50	0.50
2011	426	0.00	0.00	0.00	0.00	0.00	0.47	0.47	0.47	0.47	0.47
2012	457	0.00	0.00	0.00	0.00	0.66	0.66	0.66	0.66	0.66	0.88
2013	487	0.00	0.00	0.00	0.62	0.62	0.82	0.82	0.82	0.82	0.82
2014	538	0.00	0.00	0.56	0.56	0.74	0.74	0.74	0.74	0.93	0.93
2015	609	0.00	0.33	0.33	0.49	0.49	0.49	0.49	0.66	0.66	N/A
2016	609	0.16	0.16	0.33	0.33	0.33	0.33	0.49	0.49	N/A	N/A
2017	652	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A
2018	656	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A
2019	699	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A
2020	717	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A
2021	696	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	707	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	689	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		0.07	0.21	0.24	0.28	0.26	0.16	0.06	0.07	0.06	0.02
Cumulative average		0.07	0.29	0.53	0.81	1.06	1.22	1.28	1.35	1.40	1.42
Standard deviation		0.42	2.11	3.07	3.94	4.78	5.27	5.31	5.42	5.49	5.58
Median		0.00	0.00	0.00	0.47	0.62	0.68	0.74	0.78	0.93	1.14
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.37	0.37	0.37
Max		1.71	10.56	11.90	12.70	13.68	14.53	14.53	14.53	14.53	14.53
*Default rates conditional on survival. N/A--Not applicable. Sources:S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 21

Static pool cumulative corporate default rates among investment-grade frontier market issuers, 1997 to 2023
Rating: Investment-grade
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1998	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1999	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2000	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2001	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2002	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2009	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2010	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2011	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2012	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2013	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2014	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2015	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A
2016	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A
2017	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A
2018	4	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A
2019	4	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A
2020	4	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A
2021	4	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	4	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	4	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Cumulative average		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Standard deviation		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Median		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
*Default rates conditional on survival. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 22

Static pool cumulative corporate default rates among speculative-grade emerging market issuers, 1997 to 2023
Rating: Speculative-grade
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	47	0.00	6.38	19.15	19.15	27.66	34.04	38.30	38.30	38.30	38.30
1998	142	9.15	15.49	16.90	23.94	32.39	36.62	36.62	36.62	36.62	36.62
1999	197	6.60	9.64	16.75	28.43	32.49	32.49	32.49	32.49	32.49	32.99
2000	237	2.11	9.28	20.68	24.47	24.47	24.47	24.47	24.89	25.32	26.16
2001	271	6.64	18.45	22.14	22.14	22.14	22.14	22.51	22.51	23.62	23.99
2002	303	17.49	21.45	21.78	21.78	21.78	22.11	22.11	23.10	23.43	23.43
2003	335	3.88	4.78	5.07	5.07	5.37	5.37	6.27	6.87	6.87	6.87
2004	357	0.84	1.12	1.12	1.40	1.40	2.24	3.08	3.08	3.36	3.92
2005	416	0.24	0.24	0.48	0.48	1.92	2.88	2.88	3.61	4.09	4.33
2006	458	0.44	0.66	0.87	3.06	3.93	3.93	5.24	5.90	6.11	6.55
2007	494	0.20	0.81	4.45	5.67	5.87	7.09	8.10	8.30	8.91	9.51
2008	542	2.21	7.38	8.67	8.86	10.52	11.44	11.62	12.55	12.92	13.10
2009	531	6.03	7.34	7.53	9.23	10.36	10.73	11.68	12.24	12.43	13.18
2010	509	1.57	1.77	3.73	4.91	5.70	6.68	7.27	7.47	8.25	9.23
2011	510	0.39	3.14	4.71	5.88	7.25	8.24	8.43	9.22	10.20	11.37
2012	541	2.40	4.25	5.36	7.21	8.13	8.50	9.43	10.35	11.46	11.65
2013	598	1.67	2.68	5.02	6.86	7.36	8.03	8.86	10.20	10.70	11.20
2014	678	1.33	4.28	6.34	6.78	7.52	8.41	10.18	10.77	11.65	12.39
2015	687	3.20	6.26	6.84	7.71	8.73	10.48	11.21	12.23	12.95	N/A
2016	720	3.33	3.89	4.86	5.69	7.50	8.19	9.17	10.00	N/A	N/A
2017	745	0.54	1.48	2.55	4.43	5.10	6.31	7.38	N/A	N/A	N/A
2018	780	1.15	2.82	5.13	6.03	7.69	8.85	N/A	N/A	N/A	N/A
2019	786	1.91	4.58	5.60	7.00	8.27	N/A	N/A	N/A	N/A	N/A
2020	756	3.17	4.63	6.22	7.54	N/A	N/A	N/A	N/A	N/A	N/A
2021	735	1.90	3.81	5.31	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	743	2.29	3.77	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	658	2.13	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		2.55	2.15	1.77	1.46	1.23	0.95	0.86	0.73	0.64	0.59
Cumulative average		2.55	4.64	6.33	7.70	8.84	9.70	10.47	11.13	11.70	12.22
Standard deviation		3.66	5.35	6.83	8.15	9.61	10.46	10.79	10.76	10.85	11.03
Median		2.11	4.26	5.36	6.93	7.69	8.45	9.43	10.56	11.65	12.02
Min		0.00	0.24	0.48	0.48	1.40	2.24	2.88	3.08	3.36	3.92
Max		17.49	21.45	22.14	28.43	32.49	36.62	38.30	38.30	38.30	38.30
*Default rates conditional on survival. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 23

Static pool cumulative corporate default rates among speculative-grade frontier market issuers, 1997 to 2023
Rating: Speculative-grade
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5	0.00	20.00	20.00	20.00	20.00	40.00	40.00	40.00	40.00	40.00
1999	8	25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
2000	5	0.00	0.00	0.00	20.00	20.00	20.00	20.00	20.00	20.00	20.00
2001	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	20.00
2005	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	16.67
2006	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	16.67	16.67
2007	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67
2008	8	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00	25.00
2009	8	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00	25.00	25.00
2010	9	0.00	0.00	0.00	0.00	0.00	0.00	22.22	22.22	22.22	22.22
2011	11	0.00	0.00	9.09	9.09	9.09	27.27	27.27	27.27	27.27	27.27
2012	11	0.00	9.09	9.09	9.09	27.27	36.36	36.36	36.36	36.36	36.36
2013	12	8.33	8.33	8.33	25.00	41.67	41.67	41.67	41.67	41.67	41.67
2014	14	0.00	0.00	14.29	28.57	35.71	35.71	35.71	35.71	35.71	35.71
2015	16	0.00	18.75	31.25	37.50	37.50	43.75	43.75	43.75	43.75	N/A
2016	19	15.79	26.32	31.58	31.58	36.84	36.84	36.84	36.84	N/A	N/A
2017	17	17.65	23.53	23.53	29.41	29.41	29.41	29.41	N/A	N/A	N/A
2018	19	5.26	5.26	10.53	10.53	10.53	10.53	N/A	N/A	N/A	N/A
2019	20	5.00	10.00	10.00	15.00	15.00	N/A	N/A	N/A	N/A	N/A
2020	17	5.88	5.88	11.76	11.76	N/A	N/A	N/A	N/A	N/A	N/A
2021	13	0.00	7.69	7.69	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	13	7.69	7.69	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	10	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		4.76	4.00	3.95	3.86	3.80	3.13	1.45	2.42	2.75	2.06
Cumulative average		4.76	8.57	12.18	15.57	18.79	21.32	22.46	24.34	26.42	27.94
Standard deviation		6.50	8.89	11.48	13.47	16.90	18.96	18.99	18.39	17.25	15.27
Median		0.00	0.00	7.69	9.09	9.09	5.26	20.00	21.11	22.22	21.11
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max		25.00	26.32	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
*Default rates conditional on survival. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 24

Average multi-year (three-year) emerging market corporate transition matrices, 1997 to 2023
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	54.05	40.54	0.00	0.00	0.00	0.00	0.00	0.00	5.41
	(52.86)	(52.08)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
AA	4.86	65.97	23.61	0.00	0.00	0.00	0.00	0.00	5.56
	(14.29)	(26.04)	(25.24)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(6.38)
A	0.00	2.08	77.83	10.53	0.77	0.40	0.00	0.04	8.34
	(0.00)	(2.01)	(7.18)	(5.24)	(1.38)	(0.71)	(0.00)	(0.16)	(3.01)
BBB	0.00	0.02	4.80	69.25	9.26	0.89	0.31	0.80	14.69
	(0.00)	(0.09)	(3.42)	(6.59)	(6.15)	(1.43)	(1.20)	(2.61)	(3.20)
BB	0.00	0.00	0.09	9.03	54.74	7.58	0.92	2.71	24.93
	(0.00)	(0.00)	(0.20)	(4.89)	(5.83)	(3.57)	(1.59)	(4.51)	(4.40)
B	0.00	0.00	0.00	0.47	11.53	41.04	5.12	8.78	33.05
	(0.00)	(0.00)	(0.00)	(0.76)	(7.68)	(5.71)	(3.49)	(5.57)	(4.68)
CCC/C	0.00	0.00	0.00	0.14	1.26	28.49	10.61	25.00	34.50
	(0.00)	(0.00)	(0.00)	(0.59)	(1.81)	(16.52)	(8.97)	(16.52)	(14.07)
Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 25

Average multi-year (three-year) frontier market corporate transition matrices, 1997 to 2023
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
AA	0.00	36.36	36.36	0.00	0.00	0.00	0.00	0.00	27.27
	(0.00)	(45.45)	(50.71)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(41.22)
A	0.00	13.64	59.09	13.64	0.00	0.00	0.00	0.00	13.64
	(0.00)	(27.63)	(45.52)	(31.67)	(0.00)	(0.00)	(0.00)	(0.00)	(31.67)
BBB	0.00	0.00	0.00	81.25	0.00	0.00	0.00	0.00	18.75
	(0.00)	(0.00)	(0.00)	(32.04)	(0.00)	(0.00)	(0.00)	(0.00)	(32.04)
BB	0.00	0.00	0.00	3.95	43.42	21.05	1.32	1.32	28.95
	(0.00)	(0.00)	(0.00)	(11.21)	(27.32)	(16.91)	(5.06)	(5.06)	(23.38)
B	0.00	0.00	0.00	0.00	4.58	51.63	10.46	11.11	22.22
	(0.00)	(0.00)	(0.00)	(0.00)	(6.84)	(18.30)	(12.78)	(13.56)	(21.10)
CCC/C	0.00	0.00	0.00	0.00	0.00	4.76	4.76	61.90	28.57
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(12.30)	(10.35)	(33.48)	(38.96)
Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 26

Average multi-year (five-year) emerging market corporate transition matrices, 1997 to 2023
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	27.03	67.57	0.00	0.00	0.00	0.00	0.00	0.00	5.41
	(47.10)	(49.65)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
AA	8.84	49.40	34.94	0.40	0.00	0.00	0.00	0.00	6.43
	(19.79)	(23.15)	(28.34)	(2.12)	(0.00)	(0.00)	(0.00)	(0.00)	(7.14)
A	0.00	2.97	67.79	13.57	1.66	0.17	0.00	0.04	13.79
	(0.00)	(2.06)	(6.78)	(4.95)	(2.33)	(0.27)	(0.00)	(0.18)	(3.65)
BBB	0.00	0.02	6.74	57.08	11.10	1.36	0.30	1.75	21.66
	(0.00)	(0.13)	(3.55)	(5.77)	(5.58)	(1.54)	(0.80)	(4.18)	(3.66)
BB	0.00	0.00	0.15	11.49	39.72	7.79	0.63	4.75	35.46
	(0.00)	(0.00)	(0.34)	(5.53)	(6.75)	(3.42)	(1.14)	(6.62)	(6.17)
B	0.00	0.00	0.00	1.06	11.69	26.60	3.78	12.52	44.35
	(0.00)	(0.00)	(0.00)	(1.25)	(7.39)	(5.63)	(2.91)	(6.86)	(4.61)
CCC/C	0.00	0.00	0.00	0.32	4.76	23.97	3.97	24.60	42.38
	(0.00)	(0.00)	(0.00)	(0.97)	(5.20)	(13.23)	(6.39)	(16.31)	(14.88)
Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Table 27

Average multi-year (five-year) frontier market corporate transition matrices, 1997 to 2023
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
AA	0.00	9.09	54.55	0.00	0.00	0.00	0.00	0.00	36.36
	(0.00)	(20.33)	(52.49)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(45.45)
A	0.00	25.00	35.00	15.00	0.00	0.00	0.00	0.00	25.00
	(0.00)	(38.22)	(46.38)	(33.00)	(0.00)	(0.00)	(0.00)	(0.00)	(38.22)
BBB	0.00	0.00	0.00	70.00	0.00	0.00	0.00	0.00	30.00
	(0.00)	(0.00)	(0.00)	(36.33)	(0.00)	(0.00)	(0.00)	(0.00)	(36.33)
BB	0.00	0.00	0.00	6.67	29.33	29.33	1.33	4.00	29.33
	(0.00)	(0.00)	(0.00)	(14.22)	(23.01)	(19.92)	(5.10)	(10.20)	(25.45)
B	0.00	0.00	0.00	0.00	5.56	31.75	7.14	21.43	34.13
	(0.00)	(0.00)	(0.00)	(0.00)	(7.34)	(14.97)	(12.48)	(21.79)	(22.71)
CCC/C	0.00	0.00	0.00	0.00	0.00	5.26	0.00	68.42	26.32
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(12.99)	(0.00)	(34.87)	(36.93)
Sources: S&P Global Ratings Credit Research & Insights. S&P Global Market Intelligence’s CreditPro®.

Appendix III: Gini Methodology

To measure ratings performance, or ratings accuracy, we plotted the cumulative share of issuers by rating against the cumulative share of defaulters in a Lorenz curve to visually render the accuracy of their rank ordering. Max O. Lorenz developed the Lorenz curve as a graphical representation of the proportionality of a distribution.

To build the Lorenz curve, we ordered the observations from the low end of the ratings scale ('CCC'/'C') to the high end ('AAA'). If S&P Global Ratings' corporate ratings only randomly approximated default risk, the Lorenz curve would fall along the diagonal and the Gini coefficient--which is a summary statistic of the Lorenz curve--would be zero. 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 and the Gini coefficient would be 1.0 (see chart 12).

We calculate the Gini coefficients by dividing area B by the total of area A plus area B. In other words, the Gini coefficient captures the extent to which actual ratings accuracy diverges from the random scenario and aspires to the ideal scenario.

Glossary

Greater China--China, Hong Kong, Macao Special Administrative Region of China, Taiwan.

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Ratings Performance Analytics:	Luca Rossi, Ratings Performance Analytics, Paris +33 6 2518 9258; luca.rossi@spglobal.com
	Jose M Perez-Gorozpe, Madrid +34 914233212; jose.perez-gorozpe@spglobal.com
	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
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