2023: Defaults Fell Sharply

Entering 2023, ratings trends had turned to net positive in Asia. Improvements were mostly driven by the continued recovery after COVID restrictions were removed towards end-2022, and by a relatively higher number of defaults the year prior. Nonetheless, multiple pressures remained, such as: rising global interest rates, investor selectivity in credit markets, and geopolitical turmoil. Within the region, some geographies still saw difficulties in their property sectors, most notably China.

Most of these strains began in the years prior; the impact on default trends and rating actions on Asian financial and nonfinancial corporates had mostly already happened in 2021 and 2022, well ahead of the global trend. The survival bias in our portfolio following the defaults or debt restructurings of many Chinese developers tilted our rated universe toward investment grade, which now makes up three-quarters of corporate ratings in Asia-Pacific, and 86% in China (see "Asia-Pacific Corporate Credit in 2024: Taking The Slow Road," Jan. 30, 2024).

As such, the number of defaults in Asia fell to one in 2023, down from 2022's historical high of 18. In contrast, global corporate defaults in 2023 surpassed the 2022 total by 80% (153 in 2023 vs. 85 in 2022).

Asia's speculative-grade default rate dropped to 0.7% in 2023, from 6.4% in 2022. Globally, the 2023 speculative-grade default rate was 3.7%, up from 1.9% in 2022. The default rate in the U.S. in 2023 increased to 4.5% from 1.7% the prior year; in Europe to 3.5% from 2.2%; whereas emerging and frontier markets (see Appendix I for details on the countries included) fell to 2.1% from 2.4% (see chart 1).

The number of rated issuers in Asia decreased to 831 by end-2023, from 857 as of end-2022, with 5.29% of the former seeing ratings withdrawn. There were 25 newly rated entities over the year, down from 47 in 2022. 32.0% of newly rated Asian companies in 2023 were speculative-grade (rated 'BB+' or lower). The 68.0% share of newly rated investment-grade issuers was up, from 53.2% in 2022.

For the purposes of this study, Asia consists of Bangladesh, Bhutan, British Indian Ocean Territories, Brunei Darussalam, Cambodia, China, Fiji, Hong Kong Special Administrative Region (SAR) of China, India, Indonesia, Japan, Republic of Korea, Macao SAR of China, Malaysia, Marshall Islands, Mongolia, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam. The statistics in this report refer only to corporate ratings and include financial and nonfinancial entities.

Regional Default Trends

There was one default in the region in 2023, versus the global total of 153. Since 1993, the regional average number of annual defaults is 4.3, compared with a global average (since 1981) of 79.3. Note that these default counts for Asia, and all the related default rates, charts and tables, will differ from similar counts and exhibits in our Greater China default study. This report shows issuer information based on the country of the issuer's incorporation, which may produce slightly different results than in our Greater China study (see Appendix in "2023 Annual Greater China Corporate Default And Rating Transition Study," June 11, 2024).

In Asia, 88.0% of ratings were unchanged within 2023, demonstrating the relative stability of most credit ratings in the region. Most of the defaults and negative rating actions had happened in the previous years, in response to rising risks mentioned above. Moreover, 4.8% of rated entities from Asia were upgraded during the year, and only 1.8% were downgraded (excluding defaults), providing for a downgrade-to-upgrade ratio of 0.38--the lowest since 2010 (see table 4).

Related to having seen an earlier increase in downgrades and defaults than elsewhere, Asia's relative ratings stability is also partially due to its high proportion of investment-grade issuers—at 85.1% as of year-end 2023 (see chart 2). Investment-grade issuers have markedly lower transition and default risk than their speculative-grade counterparts.

The spike in defaults in the previous year had tilted the distribution of ratings further towards investment grade. By comparison, only 51.8% of rated issuers globally were investment-grade at the end of 2023. Moreover, most of the region's total debt is held in the form of bank loans instead of bonds, especially for less well-known entities.

Gini ratios

Like our global corporate default and transition study, this study illustrates that ratings are effective indicators of relative credit risk. S&P Global Ratings Credit Research & Insights has found a clear negative relationship between ratings and defaults: The higher the issuer rating, the lower the observed default frequency.

We use Gini coefficients to measure the correspondence between ratings and defaults. Gini coefficients measure the rank-ordering power of ratings over a given time horizon and compare the ratio of actual rank-ordering performance with theoretically perfect rank ordering.

If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the Gini coefficient would be 100%. The one-year weighted average (1993-2023) Gini coefficient for rated Asian corporate issuers is 90.2%. This metric is based on ratings one year prior to default rather than those immediately preceding default (see Appendix II for details).

The weighted averages in this report use the issuer counts at the beginning of the year as the weights. Unless otherwise noted, the statistics in this study refer to S&P Global Market Intelligence's Credit Pro corporate local currency global-scale ratings universe. They include financial and nonfinancial Asian companies but exclude sovereigns, public finance, and project finance issuers. (For more details and definitions of the terms used, see Appendix I.)

Sovereign Ratings Backdrop

Most sovereign ratings in Asia-Pacific are investment grade (see "Asia-Pacific Sovereign Rating Trends 2024: Geopolitics Continue To Cloud Outlook," Dec. 14, 2023). The average sovereign rating in the region, lying between 'BBB' and 'BBB+', has been moving closer to 'BBB' since 2022 on account of our downgrades of Pakistan and Sri Lanka, as well as our revision to the outlook on Bangladesh. Nineteen of the 21 sovereign ratings in Asia-Pacific had stable outlooks as of Dec. 1, 2023.

Table 1

2023 Asia sovereign rating and outlook changes
Sovereign	Date	Rating/outlook (from)	Rating/outlook (to)	Reason	Article with Link
Bangladesh	7/24/2023	BB-/Stable	BB-/Negative	We revised the long-term rating outlook on Bangladesh to negative from stable to reflect the risk that its external liquidity position could deteriorate further over the next 12 months. We also affirmed our 'BB-' long-term and 'B' short-term sovereign credit ratings on Bangladesh.	https://www.capitaliq.com/CIQDotNet/CreditResearch/SPResearch.aspx?DocumentId=55523376&From=SNP_CRS&srcPgId=1755
Sri Lanka	7/21/2023	CCC-/Negative	CC/Negative	S&P Global Ratings lowered its long-term local currency sovereign credit rating on Sri Lanka to 'CC' from 'CCC-'. At the same time, we affirmed the other ratings on Sri Lanka, including the 'SD' long-term foreign currency rating. The outlook on the 'CC' long-term local currency rating is negative, indicating our expectation that the restructuring exercise will constitute a default event once confirmed.	https://www.capitaliq.com/CIQDotNet/CreditResearch/SPResearch.aspx?DocumentId=55479011&From=SNP_CRS&srcPgId=1755
	9/19/2023	CC/Negative	SD/SD	S&P Global Ratings lowered its long- and short-term local currency sovereign credit ratings on Sri Lanka to 'SD' from 'CC/C'. At the same time, we affirmed the other ratings on Sri Lanka, including the 'SD' long-term foreign currency rating. In addition, we lowered to 'D' our issue rating on Sri Lanka's local currency bond maturing October 2023. Sri Lanka has confirmed a restructuring exercise on some of its local-currency-denominated government bonds, and we classify that exercise as a distressed exchange. The exercise is part of efforts to restore the sustainability of the government's finances.	https://www.capitaliq.com/CIQDotNet/CreditResearch/SPResearch.aspx?DocumentId=56059664&From=SNP_CRS&srcPgId=1755
	9/25/2023	SD/SD	CCC+/Stable	S&P Global Ratings raised its long- and short-term local currency sovereign credit ratings on Sri Lanka to 'CCC+/C' from 'SD/SD' . At the same time, we affirmed our 'SD/SD' long- and short-term foreign currency ratings. The outlook on the 'CCC+' long-term local currency rating is stable. We also raised the issue rating on Sri Lanka's local currency bond maturing in October 2023 to 'CCC+' from 'D'. The stable outlook on the long-term local currency rating reflects the balance of improvements to the government's debt profile achieved through its domestic restructuring exercises against the continued risk to the government's fiscal sustainability posed by Sri Lanka's ongoing economic, external, and fiscal pressures.	https://www.capitaliq.com/CIQDotNet/CreditResearch/SPResearch.aspx?DocumentId=56102500&From=SNP_CRS&srcPgId=1755
Source: S&P Global Ratings.

Ratings Performance For Asia

We reached the following key conclusions regarding Asia's corporate ratings performance in 2023:

• The average time to default from initial rating for defaulters in Asia through 2023 was 3.6 years, lower than the global average of 5.9 years (from 1981-2023). 88.7% of the original ratings for Asian defaulters were speculative grade, similar to the global proportion.
• The average time to default from initial ratings for defaulting issuers with investment grade initial ratings was nearly half that of their global counterparts, at 6.3 years compared with 11.8 years globally. While for speculative grade, it is 3.3 years versus 5.1 years globally.
• In 2023, all 'AAA' and 'AA' rated issuers in Asia retained their respective rating categories, and 97.2% of 'A' rated issuers retained that rating. Only 74.4% of the region's 'B' rated issuers and 60.0% of 'CCC' and below retained their respective ratings (see table 11).
• The 2023 Asia default rate in the 'CCC'/'C' rating category (encompassing all ratings of 'CCC+' and below, excluding defaults) was 20.0%, less than the 30.8% rate globally. This reflects both the aforementioned earlier rise in defaults for the region compared with the rest of the world, as well as the low number of total issuers in Asia which creates volatility in the average statistics (see table 11).
• At the end of 2023, over four-fifths of the total ratings in Asia were investment grade (see chart 2). Only 51.8% of all global ratings were investment grade.

Table 2

Asia corporate default summary
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)	Total debt defaulting (Bil. $) §
1993	0	0	0	0.00	0.00	N/A	0.0
1994	0	0	0	0.00	0.00	0.00	0.0
1995	0	0	0	0.00	0.00	0.00	0.0
1996	0	0	0	0.00	0.00	0.00	0.0
1997	1	1	0	0.75	0.89	0.00	2.8
1998	10	2	8	5.13	1.54	12.31	8.4
1999	7	0	5	2.38	0.00	5.75	5.1
2000	5	0	3	1.15	0.00	2.73	2.0
2001	7	0	5	1.58	0.00	4.07	4.4
2002	2	0	0	0.00	0.00	0.00	1.2
2003	2	0	2	0.47	0.00	1.20	0.4
2004	3	0	2	0.37	0.00	1.09	0.0
2005	2	0	1	0.16	0.00	0.51	0.3
2006	1	0	1	0.15	0.00	0.52	0.0
2007	1	0	1	0.15	0.00	0.60	0.0
2008	7	0	6	1.03	0.00	4.03	1.3
2009	15	2	10	2.07	0.44	7.81	10.0
2010	3	0	3	0.60	0.00	3.06	1.6
2011	0	0	0	0.00	0.00	0.00	0.0
2012	5	0	2	0.39	0.00	1.83	2.9
2013	3	0	2	0.38	0.00	1.83	0.0
2014	3	0	1	0.17	0.00	0.78	1.0
2015	4	0	4	0.63	0.00	2.88	2.7
2016	3	0	2	0.29	0.00	1.42	1.1
2017	2	0	2	0.26	0.00	1.16	1.6
2018	3	0	1	0.12	0.00	0.49	0.4
2019	10	0	6	0.66	0.00	2.54	0.8
2020	9	0	9	1.02	0.00	4.39	5.9
2021	6	0	6	0.69	0.00	3.19	0.5
2022	18	0	11	1.28	0.00	6.43	1.5
2023	1	0	1	0.12	0.00	0.73	0.0
Average	4	0	3	0.71	0.09	2.38	1.80
Median	3	0	2	0.38	0.00	1.31	1.00
Std. dev.	4	1	3	1.02	0.32	2.79	2.48
Min	0	0	0	0.00	0.00	0.00	0.00
Max	18	2	11	5.13	1.54	12.31	10.00
*This column includes companies that were no longer rated at the time of default. §This column includes the volume of publicly rated debt that defaulted during the year. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 3

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 defaulting (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 no longer rated at the time of default. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Globally, the 153 corporate defaults in 2023 affected rated debt worth $222.4 billion, up from $107.0 billion in 2022 (for 85 defaults). In Asia, the one default in 2023 was confidential (not a publicly rated issuer), and hence we could not disclose the affected volume of rated debt. In 2022, the 18 defaults in Asia affected rated debt worth $1.5 billion.

The total number of downgrades in the region for 2023 decreased to 15 from 31 in 2022. Meanwhile, upgrades in the region eased to 40, from 41 in 2022.

Table 4

Summary of Asia net annual rating activity (%)*
Year	Issuers as of Jan. 1	Upgrades (%)	Downgrades§ (%)	Defaults (%)	Withdrawn ratings (%)	Changed ratings (%)	Unchanged ratings (%)	Downgrade/ upgrade ratio
1993	58	0.00	25.86	0.00	1.72	27.59	72.41	N/A
1994	67	0.00	22.39	0.00	0.00	22.39	77.61	N/A
1995	85	4.71	17.65	0.00	1.18	23.53	76.47	3.75
1996	97	4.12	6.19	0.00	3.09	13.40	86.60	1.50
1997	133	3.01	21.80	0.75	3.01	28.57	71.43	7.25
1998	195	3.08	51.28	5.13	7.18	66.67	33.33	16.67
1999	210	2.86	18.57	2.38	9.05	32.86	67.14	6.50
2000	262	9.16	4.20	1.15	6.11	20.61	79.39	0.46
2001	316	6.01	10.76	1.58	5.06	23.42	76.58	1.79
2002	345	8.70	15.36	0.00	6.67	30.72	69.28	1.77
2003	422	5.69	4.50	0.47	5.92	16.59	83.41	0.79
2004	544	21.14	2.39	0.37	3.31	27.21	72.79	0.11
2005	635	28.82	2.36	0.16	5.51	36.85	63.15	0.08
2006	660	10.76	2.58	0.15	12.27	25.76	74.24	0.24
2007	657	20.55	3.65	0.15	21.92	46.27	53.73	0.18
2008	584	7.19	6.68	1.03	9.93	24.83	75.17	0.93
2009	579	2.94	10.88	2.07	17.44	33.33	66.67	3.71
2010	496	12.30	2.42	0.60	6.65	21.98	78.02	0.20
2011	501	9.98	10.58	0.00	7.98	28.54	71.46	1.06
2012	516	6.01	8.33	0.39	7.36	22.09	77.91	1.39
2013	530	7.92	5.47	0.38	5.28	19.06	80.94	0.69
2014	576	7.47	6.25	0.17	5.38	19.27	80.73	0.84
2015	632	5.70	11.23	0.63	6.65	24.21	75.79	1.97
2016	692	7.23	9.25	0.29	7.08	23.84	76.16	1.28
2017	771	5.84	8.17	0.26	7.26	21.53	78.47	1.40
2018	831	6.62	6.02	0.12	6.74	19.49	80.51	0.91
2019	908	5.18	5.95	0.66	10.79	22.58	77.42	1.15
2020	886	1.35	10.16	1.02	9.03	21.56	78.44	7.50
2021	865	7.28	4.16	0.69	7.75	19.88	80.12	0.57
2022	857	4.78	3.62	1.28	6.42	16.10	83.90	0.76
2023	831	4.81	1.81	0.12	5.29	12.03	87.97	0.38
Weighted average		8.26	7.33	0.63	8.11	24.33	75.67	0.89
Average		7.46	10.34	0.71	7.07	25.57	74.43	1.39
Median		6.01	6.68	0.38	6.65	23.42	76.58	1.11
Std. dev.		6.17	9.97	1.02	4.34	10.29	10.29	1.62
Min		0.00	1.81	0.00	0.00	12.03	33.33	0.08
Max		28.82	51.28	5.13	21.92	66.67	87.97	1.78
*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. N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 5

Rating classification of new corporate issuers* in Asia
	First rating
Year	'AAA'	'AA'	'A'	'BBB'	'BB'	'B'	'CCC'/'C'	Total	% investment grade	% speculative grade
1993		3	1	2	2	1		9	66.7	33.3
1994		1	8	4	2	1	1	17	76.5	23.5
1995		2	7	3	1			13	92.3	7.7
1996		1	11	12	11	4		39	61.5	38.5
1997	1	3	11	22	14	16		67	55.2	44.8
1998	1	5	7	10	10	5		38	60.5	39.5
1999	1	6	9	18	21	22		77	44.2	55.8
2000	2	10	14	19	16	9	1	71	63.4	36.6
2001		9	11	19	3	7	1	50	78.0	22.0
2002		3	11	27	26	39	1	107	38.3	61.7
2003	1	3	39	58	22	19	5	147	68.7	31.3
2004	1	6	27	38	25	8	2	107	67.3	32.7
2005		2	9	16	19	12	1	59	45.8	54.2
2006		4	15	18	20	25		82	45.1	54.9
2007		2	15	21	11	20	1	70	54.3	45.7
2008		2	21	20	13	5		61	70.5	29.5
2009	1		8	8	3	5	5	30	56.7	43.3
2010		4	4	15	4	11	1	39	59.0	41.0
2011		2	6	12	17	18		55	36.4	63.6
2012		1	12	12	6	19		50	50.0	50.0
2013		2	12	28	19	13		74	56.8	43.2
2014			25	27	13	17	2	84	61.9	38.1
2015		5	26	34	16	14	1	96	67.7	32.3
2016			18	47	38	11		114	57.0	43.0
2017		4	17	20	28	43	2	114	36.0	64.0
2018		1	18	41	30	45	3	138	43.5	56.5
2019			14	28	27	14	3	86	48.8	51.2
2020		1	6	26	13	11	6	63	52.4	47.6
2021		1	13	21	12	12	3	62	56.5	43.5
2022		2	3	20	3	9	10	47	53.2	46.8
2023			8	9	5	3		25	68.0	32.0
Total	8	85	406	655	450	438	49	2091	55.2	44.8
*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®.

S&P Global Ratings assigned ratings to 25 new issuers in Asia in 2023, a decrease from 47 in 2022. Of the 25 new issuers, eight were rated in the 'A' category, nine were rated in the 'BBB' category, followed by the 'BB' and 'B' category with five and three issuers, respectively. (see table 5).

The total ratings pool in Asia remains heavily weighted toward investment grade. The proportion of speculative-grade ratings for Asia remains low, at just 14.9% at the end of 2023 (see chart 2).

For comparison, when including Australia and New Zealand in the calculation, the proportion of speculative-grade issuers for Asia-Pacific was similar at 14.8% in 2023. Conversely, emerging and frontier markets overall have a greater concentration of speculative-grade ratings, with 48.5% of all issuers rated 'BB+' or lower. For all global issuers, the proportion of speculative-grade ratings is about 48.2%, with the U.S. accounting for the bulk of them.

Higher Ratings Are Consistent With Fewer Defaults

During 1993-2023, there were 133 corporate defaults in Asia, a small fraction of the 3,410 recorded globally from 1981-2023. This small sample size introduces some challenges in the analysis.

The time to default (between the initial rating date and the default date) for the one Asian defaulter in 2023 was 226 days. This was well below the average for the entire long-term pool of Asian defaults at 3.6, and 5.9 years for long-term global defaults.

By and large, higher-rated entities take a longer time to default (see table 6 and chart 5). For example, Asian issuers rated 'B' took an average of 3.4 years to default--less than the 4.3 years for 'BB' rated issuers and 14.4 years for 'AA'.

The average time to default from the original rating for Asian issuers is shorter across all rating categories than it is for the global pool. This is true regardless of whether the time to default is calculated from the original rating (see table 6) or from subsequent ratings (see table 7).

This discrepancy in the average timing (and the associated standard deviation) results partly from the significantly smaller volume of defaults in every rating category in Asia. For example, of the global pool of issuers in the 'BBB' category, 234 defaulted during 1981-2023, whereas the comparable number for Asia (from 1993-2023) was only 12. Also, the 1997-1998 Asian financial crisis accelerated the average time to default in the region compared with global norms, but many policies have been put in place since then to mitigate the risks of a recurrence.

Table 6

Time to default from original rating among corporate defaulters (Asia versus global)
Asia (1993-2023)	Original rating	Defaults	Average years from original rating	Median years from original rating	St. dv. of years from original rating
	'AAA'	N/A	N/A	N/A	N/A
	'AA'	1	14.4	14.4	N/A
	'A'	2	11.7	11.7	1.2
	'BBB'	12	4.7	3.9	3.8
	'BB'	35	4.3	4.5	2.4
	'B'	63	3.4	2.7	2.9
	'CCC'/'C'	20	1.0	0.6	1.2
	Total	133	3.6	2.7	3.1
Global (1981-2023)	Original rating	Defaults	Average years from original rating	Median years from original rating	St. dv. 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 applicable. St. dv.--Standard deviation. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 7

Time to default from ratings after the original rating for Asia corporate defaulters
Asia (1993-2023)	Rating Path to Default	Average years from rating category	Median years from rating category	St. Dev. of tears from rating category
	'AAA'	N/A	N/A	N/A
	'AA'	N/A	N/A	N/A
	'A'	6.0	6.1	1.5
	'BBB'	3.4	2.9	1.9
	'BB'	3.1	2.5	2.2
	'B'	1.9	1.4	1.8
	'CCC'/'C'	0.5	0.2	0.7
	Total	1.6	0.8	2.0
Global (1981-2023)	Rating Path to Default	Average years from rating category	Median years from rating category	Median 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	3.4	1.3	5.0
N/A--Not applicable. St. dv.--Standard deviation. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

The breakout of default rates by modifier shows that, historically, lower rating categories experience higher default rates on average, though variability is possible in any given year (see table 8). Nevertheless, the data from past default cycles indicate that most defaults stemmed from the lowest rungs of the ratings ladder.

Table 8

Asia corporate default rates by rating modifier (%)
	'AAA'	'AA+'	'AA'	'AA-'	'A+'	'A'	'A-'	'BBB+'	'BBB'	'BBB-'	'BB+'	'BB'	'BB-'	'B+'	B'	'B-'	'CCC'/'C'
1993	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1994	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	0.00	N/A	0.00	N/A	N/A	N/A
1995	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	0.00	0.00	0.00	N/A	N/A	0.00
1996	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	N/A	N/A	N/A	0.00
1997	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	11.11	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A
1998	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	8.70	7.14	13.33	0.00	13.33	10.00	40.00	N/A
1999	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	16.67	0.00	25.00
2000	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	9.52	0.00	0.00	9.09
2001	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	12.50	57.14
2002	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
2003	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	3.45	0.00	12.50
2004	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	2.94	0.00	0.00	9.09
2005	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	10.00
2006	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.56	0.00	0.00	0.00	0.00
2007	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	50.00
2008	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.00	4.00	0.00	15.00	12.50	0.00
2009	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.39	0.00	0.00	0.00	15.00	22.22	22.22	100.00
2010	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	37.50
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	0.00	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	0.00	3.70	0.00	16.67	0.00
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	0.00	3.45	0.00	25.00	N/A
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	0.00	0.00	0.00	100.00
2015	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	5.56	6.25	0.00	100.00
2016	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.35	0.00	4.35	0.00	0.00
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	0.00	7.14	25.00
2018	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	20.00
2019	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	4.88	2.27	4.55	22.22
2020	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	3.23	13.33	54.55
2021	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	5.88	0.00	0.00	26.67
2022	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	4.00	7.69	15.38	58.33
2023	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	20.00
Average	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.36	0.42	0.26	0.58	0.38	2.35	3.38	6.51	28.35
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	0.00	0.00	0.00	0.00	20.00
Std. dev.	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.00	1.71	1.35	2.52	1.16	4.11	5.99	10.38	32.45
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	0.00	0.00	0.00	0.00	11.11	8.70	7.14	13.33	4.35	15.00	22.22	40.00	100.00
N/A--Not applicable. St. dv.--Standard deviation. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Defaults By Industry

Among nonfinancial industries, the 2023 aggregate one-year default rate was 0.23%, which is below the 1993-2023 long-term average of 1.10% (see table 9). One issuer in the Asian nonfinancial sector defaulted in 2023. Among financial industries, the 2023 aggregate one-year default rate was 0.00%, compared with the 1993-2023 long-term average of 0.24%.

More specifically, the one defaulted Asian issuer in 2023 was from the real estate sector. This leads to all sectors outside of this sector having zero default rates, while the real estate sector's 2.33% was slightly over double that of its long-term weighted average (weighted by the number of issuers).

Table 9

Cumulative Asia corporate default rates by sector (%)
	All financials			All nonfinancials
Year	One-year	Three-year	10-year	One-year	Three-year	10-year
1993	0.00	N/A	N/A	0.00	N/A	N/A
1994	0.00	N/A	N/A	0.00	N/A	N/A
1995	0.00	0.00	N/A	0.00	0.00	N/A
1996	0.00	0.00	N/A	0.00	0.00	N/A
1997	1.41	0.00	N/A	0.00	0.00	N/A
1998	2.22	4.00	N/A	7.62	0.00	N/A
1999	0.00	5.63	N/A	4.59	8.06	N/A
2000	0.71	3.33	N/A	1.64	12.38	N/A
2001	0.00	1.98	N/A	2.99	10.09	N/A
2002	0.00	0.71	3.13	0.00	4.92	0.00
2003	0.50	0.67	5.71	0.45	2.99	6.25
2004	0.00	0.60	7.14	0.60	1.13	9.30
2005	0.00	0.50	6.00	0.25	0.90	8.51
2006	0.00	0.00	8.45	0.24	0.60	9.68
2007	0.00	0.00	5.56	0.22	0.49	17.14
2008	0.00	0.00	3.96	1.70	0.72	10.09
2009	1.57	1.43	2.14	2.46	2.24	5.74
2010	0.41	1.29	1.34	0.79	4.55	3.59
2011	0.00	1.57	1.79	0.00	3.08	1.69
2012	0.00	0.41	2.01	0.72	1.57	1.79
2013	0.00	0.00	0.94	0.72	1.54	2.11
2014	0.00	0.00	1.30	0.32	1.45	2.47
2015	0.00	0.00	1.66	1.18	2.52	3.10
2016	0.00	0.00	1.43	0.53	1.94	3.58
2017	0.00	0.00	1.29	0.48	2.36	5.97
2018	0.00	0.00	1.57	0.21	1.33	5.23
2019	0.00	0.00	0.41	1.13	0.96	3.15
2020	0.00	0.00	0.00	1.76	2.54	3.46
2021	0.00	0.00	0.00	1.24	3.01	3.62
2022	0.51	0.27	0.00	1.93	3.52	3.96
2023	0.00	0.26	0.00	0.23	2.70	4.84
Average	0.24	0.78	2.54	1.10	2.67	5.24
Median	0.00	0.00	1.62	0.53	1.94	3.79
Std. dev.	0.54	1.38	2.50	1.60	2.96	3.81
Min	0.00	0.00	0.00	0.00	0.00	0.00
Max	2.22	5.63	8.45	7.62	12.38	17.14
"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®.

Table 10

Annual Asia 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	Telecommunications	Transportation	Utility
1993	0.00	0.00	N/A	0.00	N/A	N/A	0.00	0.00	N/A	0.00	0.00	0.00	0.00
1994	0.00	0.00	0.00	0.00	0.00	N/A	0.00	0.00	N/A	0.00	0.00	0.00	0.00
1995	0.00	0.00	0.00	0.00	0.00	N/A	0.00	0.00	N/A	0.00	0.00	0.00	0.00
1996	0.00	0.00	0.00	0.00	0.00	N/A	0.00	0.00	N/A	0.00	0.00	0.00	0.00
1997	0.00	0.00	0.00	1.72	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5.56	9.09	0.00	2.70	11.11	22.22	0.00	0.00	25.00	10.00	0.00	11.11	0.00
1999	10.00	8.33	0.00	0.00	14.29	14.29	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2000	0.00	7.14	0.00	0.00	0.00	20.00	0.00	3.45	0.00	0.00	0.00	0.00	0.00
2001	0.00	4.55	0.00	0.00	42.86	0.00	0.00	0.00	0.00	0.00	12.50	0.00	0.00
2002	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
2003	0.00	0.00	0.00	0.66	0.00	0.00	4.35	0.00	0.00	0.00	0.00	0.00	0.00
2004	2.63	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	1.04	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	1.01	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	0.96	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	4.76	6.67	0.00	0.00	0.00	3.33	0.00	0.00	0.00	3.45	0.00	0.00
2009	7.55	2.86	3.23	2.31	0.00	0.00	0.00	0.00	0.00	0.00	4.35	2.50	0.00
2010	2.94	0.00	0.00	0.61	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.00	0.00
2011	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
2012	0.00	0.00	0.00	0.00	0.00	6.25	0.00	0.00	0.00	0.00	0.00	4.00	0.00
2013	0.00	0.00	0.00	0.00	0.00	6.25	0.00	0.00	0.00	0.00	5.00	0.00	0.00
2014	0.00	0.00	2.27	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2015	0.00	3.23	2.38	0.00	10.00	0.00	3.85	0.00	0.00	0.00	0.00	0.00	0.00
2016	0.00	0.00	0.00	0.00	0.00	0.00	4.00	0.00	0.00	0.00	0.00	2.27	0.00
2017	0.00	0.00	2.22	0.00	0.00	0.00	3.85	0.00	0.00	0.00	0.00	0.00	0.00
2018	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	11.11	0.00	0.00	0.00	0.00
2019	2.20	0.00	0.00	0.00	7.14	2.63	0.00	0.00	0.00	0.00	3.70	0.00	0.00
2020	0.00	2.17	5.71	0.00	0.00	0.00	2.94	0.00	0.00	4.76	0.00	0.00	0.00
2021	0.00	4.26	1.59	0.00	5.88	3.33	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2022	0.00	4.65	1.59	0.71	4.17	0.00	0.00	0.00	0.00	9.80	0.00	0.00	0.00
2023	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.33	0.00	0.00	0.00
Weighted average	0.96	1.35	1.33	0.22	3.23	1.47	0.83	0.05	0.80	1.03	0.95	0.54	0.00
Average	1.09	1.65	0.86	0.28	3.18	2.78	0.72	0.11	1.34	0.87	0.94	0.77	0.00
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	0.00
Std. dev.	2.41	2.74	1.73	0.69	8.44	6.16	1.51	0.62	5.19	2.59	2.57	2.22	0.00
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	10.00	9.09	6.67	2.70	42.86	22.22	4.35	3.45	25.00	10.00	12.50	11.11	0.00
N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Transition Tables And Cumulative Default Rates

An analysis of rating transitions in 2023 suggests that ratings behavior in Asia remains consistent with global trends, which have shown a negative correspondence between credit rating and default probability. Investment-grade issuers in Asia tend to have more credit stability (as measured by the frequency of rating transitions) than their speculative-grade counterparts (see tables 11 and 12).

For instance, of the Asian issuers rated 'AAA' and 'AA' as of Jan. 1, 2023, all retained our respective ratings as of Dec. 31, 2023. 97.2% of those rated 'A' as of Jan. 1, 2023 were still rated 'A' by the end of the year.

In contrast, the comparable share for issuers that maintained the same rating by year-end was 80.6% for 'BB', 74.4% for 'B', and 60% for 'CCC/C' (see table 11). This pattern is similar to the long-term (1981-2023) ratings trend among global issuers. This study--in line with previous default studies--confirms that higher-rated companies are generally more stable than lower-rated companies.

In 2023, 20.0% of Asian issuers within the 'CCC'/'C' rating category transitioned to 'D', compared with 30.8% for global issuers (see table 11).

When comparing transition rates between Asia and globally, it is important to take into account the smaller sample size in the former, especially for the speculative-grade space. Due to this, issuer-specific factors as well as a few withdrawn ratings may influence the transition rates more than they do on a global scale. Also, the 1997-1998 Asian financial crisis did result in long-term volatility (standard deviations) of rating transitions for several rating categories exceeding the global averages (see table 12).

Table 11

2023 corporate transition rates: Asia versus global
Asia	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	100.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	'A'	0.00	0.00	97.20	0.00	0.00	0.00	0.00	0.00	2.80
	'BBB'	0.00	0.00	0.93	94.70	0.31	0.00	0.00	0.00	4.05
	'BB'	0.00	0.00	0.00	3.23	80.65	3.23	0.00	0.00	12.90
	'B'	0.00	0.00	0.00	0.00	2.56	74.36	0.00	0.00	23.08
	'CCC'/'C'	0.00	0.00	0.00	0.00	0.00	0.00	60.00	20.00	20.00
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
NR--not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 12

Average one-year corporate transition rates (%)
Asia (1993-2023)	From/To	'AAA'	'AA'	'A'	'BBB'	'BB'	'B'	'CCC'/'C'	'D'	NR
	'AAA'	83.44	14.72	0.61	0.00	0.00	0.00	0.00	0.00	1.23
		(21.56)	(21.94)	(1.96)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.42)
	'AA'	0.34	89.88	6.74	0.00	0.00	0.07	0.00	0.00	2.96
		(1.72)	(6.71)	(6.54)	(0.00)	(0.00)	(0.35)	(0.00)	(0.00)	(3.60)
	'A'	0.00	1.20	92.66	2.36	0.04	0.09	0.00	0.00	3.65
		(0.00)	(1.29)	(5.91)	(4.01)	(0.39)	(0.57)	(0.00)	(0.00)	(4.12)
	'BBB'	0.00	0.00	3.72	87.26	2.02	0.17	0.02	0.11	6.70
		(0.00)	(0.00)	(4.56)	(9.22)	(4.09)	(1.20)	(0.22)	(0.56)	(6.05)
	'BB'	0.00	0.00	0.00	5.09	74.64	4.11	0.54	0.31	15.31
		(0.00)	(0.00)	(0.00)	(5.11)	(10.24)	(3.38)	(3.26)	(1.19)	(7.83)
	'B'	0.00	0.00	0.00	0.07	6.28	64.71	3.07	3.14	22.73
		(0.00)	(0.00)	(0.00)	(0.31)	(7.21)	(9.20)	(3.36)	(4.23)	(8.90)
	'CCC'/'C'	0.00	0.00	0.00	0.00	1.28	11.54	38.46	26.28	22.44
		(0.00)	(0.00)	(0.00)	(0.00)	(4.28)	(13.95)	(26.76)	(21.69)	(19.95)
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)
Numbers in parentheses are standard deviations, weighted by the issuer base. NR--not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Notwithstanding the slightly higher ratings volatility, this study confirms that our ratings on Asian issuers are generally consistent with global patterns. Based on the transition analysis for a time horizon of two years rather than one year, lower ratings also tend to display less stability than higher ratings do (see table 13).

Transitions at the rating modifier level also display the same relationship by and large, though differences in sample size occasionally create slight variations between adjacent rating categories (see table 14).

Table 13

Average two-year corporate transition rates (%)
Asia (1993-2023)	From/To	'AAA'	'AA'	'A'	'BBB'	'BB'	'B'	'CCC'/'C'	'D'	NR
	'AAA'	69.14	27.78	1.85	0.00	0.00	0.00	0.00	0.00	1.23
		(26.92)	(25.99)	(4.75)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.08)
	'AA'	0.71	80.54	12.76	0.00	0.00	0.14	0.00	0.00	5.84
		(2.33)	(8.89)	(8.86)	(0.00)	(0.00)	(0.49)	(0.00)	(0.00)	(5.87)
	'A'	0.00	2.16	85.40	4.53	0.19	0.15	0.00	0.00	7.56
		(0.00)	(1.63)	(8.36)	(5.76)	(1.59)	(0.78)	(0.00)	(0.00)	(5.92)
	'BBB'	0.00	0.00	7.53	76.09	3.22	0.27	0.09	0.20	12.60
		(0.00)	(0.00)	(7.55)	(12.64)	(4.27)	(1.34)	(0.62)	(1.00)	(8.89)
	'BB'	0.00	0.00	0.05	9.64	57.38	5.22	0.93	0.93	25.85
		(0.00)	(0.00)	(0.25)	(7.00)	(11.41)	(3.67)	(3.28)	(2.10)	(9.62)
	'B'	0.00	0.00	0.00	0.42	9.40	44.18	3.23	6.52	36.26
		(0.00)	(0.00)	(0.00)	(1.02)	(8.00)	(11.03)	(2.94)	(6.20)	(10.47)
	'CCC'/'C'	0.00	0.00	0.00	0.00	1.99	14.57	15.23	32.45	35.76
		(0.00)	(0.00)	(0.00)	(0.00)	(4.78)	(17.20)	(13.79)	(21.86)	(24.84)
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)
Numbers in parentheses are standard deviations, weighted by the issuer base. NR--not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 14

Average one-year transition rates for Asia corporates by rating modifier, 1993 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'	83.44	11.04	3.68	0.00	0.00	0.61	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
	(21.56)	(20.60)	(9.33)	(0.00)	(0.00)	(1.96)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.42)
'AA+'	4.13	76.03	13.22	4.13	0.83	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	1.65
	(20.33)	(32.59)	(20.89)	(12.42)	(3.17)	(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)	(7.86)
'AA'	0.00	2.14	79.52	12.86	1.90	0.00	0.24	0.00	0.00	0.00	0.00	0.00	0.00	0.24	0.00	0.00	0.00	0.00	3.10
	(0.00)	(4.85)	(20.80)	(18.01)	(3.98)	(0.00)	(1.41)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(1.01)	(0.00)	(0.00)	(0.00)	(0.00)	(5.21)
'AA-'	0.00	0.00	5.37	81.91	8.88	0.66	0.11	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.07
	(0.00)	(0.00)	(11.44)	(13.44)	(8.78)	(2.53)	(0.54)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.37)
'A+'	0.00	0.00	0.07	4.20	84.93	6.26	1.31	0.14	0.00	0.00	0.00	0.00	0.00	0.07	0.00	0.00	0.00	0.00	3.03
	(0.00)	(0.00)	(0.35)	(4.36)	(11.03)	(6.10)	(4.05)	(0.74)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.64)	(0.00)	(0.00)	(0.00)	(0.00)	(3.54)
'A'	0.00	0.00	0.00	0.21	5.54	84.84	4.71	0.67	0.16	0.10	0.00	0.05	0.00	0.05	0.00	0.00	0.00	0.00	3.67
	(0.00)	(0.00)	(0.00)	(0.87)	(5.18)	(9.89)	(5.21)	(2.70)	(0.83)	(0.80)	(0.00)	(0.58)	(0.00)	(0.56)	(0.00)	(0.00)	(0.00)	(0.00)	(4.33)
'A-'	0.00	0.00	0.00	0.00	0.14	6.84	83.58	4.25	0.66	0.28	0.05	0.00	0.00	0.14	0.00	0.00	0.00	0.00	4.06
	(0.00)	(0.00)	(0.00)	(0.00)	(0.50)	(5.96)	(10.80)	(4.97)	(2.29)	(2.26)	(0.52)	(0.00)	(0.00)	(0.62)	(0.00)	(0.00)	(0.00)	(0.00)	(5.22)
'BBB+'	0.00	0.00	0.00	0.00	0.06	0.46	8.60	79.72	5.07	0.51	0.11	0.00	0.00	0.06	0.11	0.00	0.00	0.00	5.30
	(0.00)	(0.00)	(0.00)	(0.00)	(0.27)	(1.01)	(9.47)	(12.53)	(3.95)	(2.12)	(1.42)	(0.00)	(0.00)	(0.99)	(1.98)	(0.00)	(0.00)	(0.00)	(6.41)
'BBB'	0.00	0.00	0.00	0.00	0.00	0.00	0.97	10.26	76.95	4.07	0.58	0.26	0.06	0.13	0.00	0.00	0.06	0.06	6.58
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(2.01)	(8.87)	(13.05)	(3.61)	(2.04)	(0.95)	(0.59)	(0.71)	(0.00)	(0.00)	(0.59)	(0.86)	(6.83)
'BBB-'	0.00	0.00	0.00	0.00	0.00	0.00	0.14	1.10	8.32	75.93	4.26	0.96	0.28	0.21	0.00	0.00	0.00	0.28	8.53
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.72)	(2.09)	(7.83)	(13.02)	(3.53)	(4.11)	(0.96)	(1.66)	(0.00)	(0.00)	(0.00)	(1.28)	(6.87)
'BB+'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.22	1.10	9.39	70.50	4.31	1.66	0.33	0.11	0.11	0.55	0.11	11.60
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.74)	(3.22)	(8.28)	(15.19)	(4.25)	(2.05)	(0.88)	(0.58)	(0.62)	(4.49)	(0.90)	(10.31)
'BB'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.14	0.14	1.87	10.19	62.55	6.31	1.29	0.29	0.29	0.43	0.43	16.07
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.90)	(0.58)	(2.63)	(10.48)	(15.76)	(5.72)	(2.19)	(1.25)	(1.11)	(2.95)	(2.09)	(10.57)
'BB-'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.16	0.16	1.41	9.25	56.58	9.09	2.51	0.00	0.63	0.47	19.75
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.71)	(0.86)	(3.10)	(8.26)	(15.44)	(7.14)	(5.38)	(0.00)	(2.20)	(1.24)	(12.32)
'B+'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.15	0.44	2.61	8.13	56.02	7.69	1.74	1.31	2.47	19.45
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.65)	(1.49)	(6.45)	(7.03)	(11.98)	(6.60)	(2.61)	(2.56)	(3.79)	(9.34)
'B'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.39	2.13	8.14	52.91	6.59	3.10	2.91	23.84
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(1.65)	(5.08)	(5.42)	(15.04)	(7.40)	(6.29)	(5.39)	(11.67)
'B-'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.38	0.38	1.92	8.85	46.15	7.69	5.38	29.23
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(1.71)	(1.71)	(4.41)	(10.27)	(21.44)	(9.14)	(8.60)	(18.71)
'CCC'/'C'	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.64	0.64	1.92	1.28	8.33	38.46	26.28	22.44
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.59)	(2.50)	(7.49)	(4.60)	(11.75)	(26.76)	(21.69)	(19.95)
Numbers in parentheses are standard deviations, weighted by the issuer base. NR--not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

The previous exhibits also show that higher ratings correspond with a lower frequency of default--and vice versa. This remains true over time, as illustrated by the cumulative average default rates in tables 15 and 16 and in chart 6.

On average, from 1993-2023, 'BBB' rated issuers in Asia had a less than a 0.11% default rate in the first year after they were rated and an only marginally higher default rate in the second year and beyond. Issuers rated 'B' had an average default rate of 3.1% in the first year and 6.4% in the second year (see table 15).

Again, our findings are qualified by the relatively smaller number of issuers in the pool and the short period of the study. Although the study period for Asia is 1993-2023, 87.6% of the total issuer ratings were assigned since 2000. Therefore, a significant portion of the pool is not as seasoned as its global counterparts.

Table 15

Comparison of corporate cumulative average default rates (%)
Asia (1993-2023)	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	0.02	0.07	0.12	0.21	0.27	0.33	0.41
	'BBB'	0.11	0.20	0.32	0.45	0.56	0.62	0.69	0.76	0.80	0.80
	'BB'	0.31	0.92	1.65	2.53	3.41	3.94	4.31	4.65	4.79	4.79
	'B'	3.14	6.44	8.77	10.38	11.53	12.51	13.38	14.11	14.55	14.79
	'CCC'/'C'	26.28	32.26	35.05	36.60	37.42	37.42	37.42	37.42	37.42	37.42
	Investment grade	0.04	0.08	0.13	0.19	0.25	0.30	0.36	0.42	0.46	0.50
	Speculative grade	2.43	4.29	5.72	6.91	7.89	8.57	9.12	9.59	9.84	9.92
	All rated	0.63	1.12	1.52	1.87	2.17	2.38	2.57	2.73	2.83	2.88
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
Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 16

Asia corporate cumulative average default rates by rating modifier, 1993 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+'	0.00	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	0.07	0.22	0.39	0.48	0.58	0.69
'A-'	0.00	0.00	0.00	0.06	0.12	0.12	0.19	0.27	0.36	0.45
'BBB+'	0.00	0.00	0.13	0.27	0.27	0.36	0.36	0.36	0.36	0.36
'BBB'	0.06	0.13	0.21	0.37	0.72	0.82	0.92	1.14	1.26	1.26
'BBB-'	0.28	0.50	0.66	0.74	0.74	0.74	0.85	0.85	0.85	0.85
'BB+'	0.11	0.23	0.60	0.86	1.29	1.44	1.44	1.44	1.44	1.44
'BB'	0.43	0.88	1.98	3.31	4.36	5.29	5.89	6.10	6.55	6.55
'BB-'	0.47	1.92	2.76	3.97	5.25	5.84	6.49	7.40	7.40	7.40
'B+'	2.47	5.59	8.38	10.18	11.22	12.33	13.11	13.72	14.15	14.39
'B'	2.91	5.89	8.33	10.46	12.29	13.56	14.69	15.30	15.62	15.62
'B-'	5.38	9.79	10.64	10.64	10.64	10.64	11.26	12.63	13.36	14.16
'CCC'/'C'	26.28	32.26	35.05	36.60	37.42	37.42	37.42	37.42	37.42	37.42
Investment grade	0.04	0.08	0.13	0.19	0.25	0.30	0.36	0.42	0.46	0.50
Speculative grade	2.43	4.29	5.72	6.91	7.89	8.57	9.12	9.59	9.84	9.92
All Rated	0.63	1.12	1.52	1.87	2.17	2.38	2.57	2.73	2.83	2.88
Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Gini Ratios And Lorenz Curves

A quantitative measure of ratings performance indicates that the relative rank ordering of ratings in Asia is consistent across time horizons. To measure ratings performance, or ratings accuracy, the cumulative share of issuers by rating is plotted against the cumulative share of defaulters in a Lorenz curve to render the accuracy of their rank ordering visually (see charts 7-9).

We also summarize the Lorenz curves using the Gini coefficient. If corporate ratings only randomly approximated default risk, the Gini coefficient would be zero. On the other hand, if corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the Lorenz curve would capture all of the area on the graph above the diagonal, and the Gini coefficient would be 1. For more, see Appendix II.

Our calculations indicate that the one-year weighted average (1993-2023) Gini coefficient for Asia was 90.2%, the three-year Gini was 85.1%, and the five-year was 79.9% (see table 17). By contrast, the global one-year weighted average Gini coefficient was 82.6%, the three-year was 75.2%, and the five-year was 71.7%.

As we expected, the Gini coefficients decline as the time horizon lengthens because longer time horizons allow for more credit degradation among higher-rated issuers (see table 17). In the one-year Asia Lorenz curve, for example, 94.9% of defaults occurred in the speculative-grade category, while speculative-grade ratings constituted only 24.5% of all Asian corporate issuers (see chart 7). In the three-year Lorenz curve, 93.5% of defaults occurred in the speculative-grade category, which was only 25.3% of all Asian corporate issuers (see chart 8). The five-year Lorenz curve shows that speculative-grade issuers constituted 90.2% of defaulters and 25.7% of the entire sample (see chart 9).

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
Asia	90.24	85.05	79.85	76.05
Asia figures are for the period 1993-2023. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Appendix I: Data Approach 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 have an issuer credit rating.

While an 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 their lower priority in bankruptcy and ultimate recovery expectations.

Alternatively, secured debt may be rated higher than 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.

S&P Global Ratings Research's 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 Jan. 1, 1993. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.

Issuers included in this study

For purposes of this study, Asia consists of Bangladesh, Bhutan, British Indian Ocean Territories, Brunei Darussalam, Cambodia, China, Fiji, Hong Kong Special Administrative Region of China, India, Indonesia, Japan, Republic of Korea, Macao Special Administrative Region of China, Malaysia, Marshall Islands, Mongolia, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, and Vietnam.

This study analyzes the rating histories of 2,091 Asian companies that S&P Global Ratings rated from Jan. 1, 1993 to 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.

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.

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 a merger or acquisition. 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 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' when an issuer files for bankruptcy or takes a similar action that jeopardizes its payments on a financial obligation.

A 'D' rating is assigned when S&P Global Ratings believes 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 assigns an 'SD' rating when it believes that 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 another or pay some obligations and not others. Preferred stock is not considered a financial obligation, and thus a missed preferred stock dividend is not normally equated with default.

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 for 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, separate from its experience leading up to its earlier default.

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

Regional definitions

Within this study, tables and charts are often presented using specific geographic regions. Some countries or markets can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country or market. The regions covered in this study are:

Emerging and frontier markets:

Bangladesh, Bhutan, British Indian Ocean Territories, China, Fiji, Hong Kong Special Administrative Region of China, India, Indonesia, Macao Special Administrative Region of China, Malaysia, Mongolia, Pakistan, Papua New Guinea, Philippines, Sri Lanka, Taiwan, Thailand, Vietnam, Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia and Herzegovina, Bulgaria, 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, Republic of Moldova, Romania, Russia, Saudi Arabia, Slovakia, South Africa, Tunisia, Turkey, Ukraine, United Arab Emirates, Uzbekistan, Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay, Cambodia, Marshall Islands, Liberia, Syrian Arab Republic, Togo, Aruba, Bahamas, Curacao, Netherlands Antilles, Turks and Caicos Islands, and Venezuela.

Calculations

Static pools.  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 back to all of the static pools to which the issuer belonged.

We use static pools to avoid certain pitfalls in estimating default rates. This is to ensure that default rates account for rating migration and to allow for default rates to 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, which might yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.

Membership in static pools remains constant. Each static pool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by every new update and because 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 new update revises results back to the starting date so as to avoid continuity problems.

Issuers 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 issuers with active ratings as of their beginning date, 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 2001 static pool consists of all companies rated as of 12:01 a.m. on Jan. 1, 2001. Companies first rated in 2001 and surviving members of the 2001 static pool form the 2002 static pool. All rating changes that took place are reflected in the newly formed 2002 static pool through these issuer ratings as of 12:01 a.m. on Jan. 1, 2002.

Consider the following example: An issuer is originally rated 'BB' in mid-2000, and S&P Global Ratings downgrades the company to 'B' in 2002. This is followed by a rating withdrawal in 2003 and a default in 2004. We would include this hypothetical company in the 2001 and 2002 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Likewise, we would include it in the 2003 pool with the 'B' rating. It would not be part of the 2004 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 2004 because S&P Global Ratings had withdrawn its rating on the company by then. Yet each of the three pools in which this company was included (2001-2003) would record its 2004 default at the appropriate time horizon.

Default rates.  We calculated annual default rates for each static pool, first in units and later as percentages with respect to the number of issuers in each rating category. We combined these percentages to obtain cumulative default rates for the 43 years (globally) the study covers (31 years in Asia).

Issuer-weighted default rates.  All default rates that appear in this study are 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.

Average cumulative 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 nondefaulters), and accumulating the average conditional marginal default rates. We calculated 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. Weights are based on the number of issuers in each static pool. Cumulative default rates are one minus the product of the proportion of survivors (nondefaulters).

Transition analysis.  Transition rates compare issuer ratings at the beginning of a period with 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. An issuer that remained rated for more than one year was counted as many times as the number of years it was rated.

For instance, an issuer continually rated from the middle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transition matrices from 1985-1991. If the rating on the issuer was withdrawn in the middle of 1991, it would be included in the column representing transitions to "NR" in the 1991 transition matrix. Similarly, if it defaulted in the middle of 1991, it would be included in the column representing transitions to 'D' in the 1991 one-year transition matrix.

All 1981 static pool members still rated on Jan. 1, 2023, had 43 one-year transitions, while companies first rated on Jan. 1, 2023, had only one. Each one-year transition matrix displays all rating movements between letter categories 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 only ratings considered in these calculations are those on issuers 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 and the rating was lowered to 'BBB' in the middle of the year and later raised to 'A' (with no other subsequent rating changes), this entity would be included only in the percentage of issuers that began the year as 'A' and 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 the issuer would be considered rated 'D' or not rated on Dec. 31.

Multiyear transitions.  Multiyear transitions were also calculated for periods of two 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, three-year transition matrices were the result of comparing ratings at the beginning of the years 1993-2021 with the ratings at the end of the years 1995-2023. Otherwise, our approach 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. Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.

Rating modifiers.  We use rating modifiers (plus and minus signs) to calculate upgrade and downgrade percentages, as well as the magnitude of rating changes, throughout this study. However, some transition tables may use full rating categories for practical reasons. In other words, the use of a rating category suggests that transitions to, for example, 'AA-' from 'AA' or to 'BBB-' from 'BBB+' are not considered to be rating transitions because the rating remained within the rating category.

Standard deviations.  Many of the tables and charts 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 within default rates and transitions can vary greatly depending on many circumstances specific to particular timeframes, industries, and geographic regions. As a supplement to many of the averages and time series presented in this study, standard deviations are also shown to provide a gauge of the dispersion of data behind these averages.

For the transition matrices, the standard deviation for each cell in a given matrix is a weighted standard deviation, calculated using the data from each of the underlying cohort years that contribute to the averages, weighted by that cohort year's issuer base for each rating level. For example, in the average one-year transition matrix, each cell's weighted standard deviation is calculated from the series of that particular cell in each of the 31 cohorts beginning with the 1993 cohort and ending with the 2023 cohort.

The squared difference between each cohort's transition rate and the weighted average--which is the data point in each cell--is multiplied by each cohort's weight. These weights are based on the contribution of each cohort's rating level to the 31-year total issuer base for each rating level. We then divide this by the ratio of the total number of nonzero weights minus one and the total number of nonzero weights.

The standard deviations of Gini ratios are derived from the time series for all of their constituent annual cohorts. As an example, the standard deviation applied to the seven-year weighted average global Gini ratio was calculated from the time series of all available seven-year Gini ratios by cohort. In this case, these are the seven-year Gini ratios beginning with the 1993 cohort through the 2017 seven-year cohort. We calculated standard deviations for Gini ratios in this study as the standard deviations of a sample, not those of a population.

Time sample.  This update limits the reporting of default rates to the 10-year time horizon. However, the Asia data were gathered for 31 years, and all calculations are based on the rating experience of that period. In addition, average default statistics become less reliable at longer time horizons as the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.

Additional Tables

Table 18

Static pool cumulative corporate default rates among all Asia ratings, 1993 to 2023
Rating: all rated
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1993	58	0.00	0.00	0.00	0.00	0.00	0.00	1.72	1.72	1.72	1.72
1994	67	0.00	0.00	0.00	0.00	1.49	4.48	4.48	5.97	5.97	5.97
1995	85	0.00	0.00	0.00	2.35	7.06	7.06	8.24	8.24	8.24	8.24
1996	97	0.00	0.00	2.06	6.19	6.19	7.22	7.22	7.22	7.22	7.22
1997	133	0.75	3.76	6.77	7.52	8.27	8.27	9.02	9.02	9.02	9.02
1998	195	5.13	7.69	8.21	10.26	11.28	11.79	11.79	11.79	11.79	11.79
1999	210	2.38	4.29	6.19	6.67	7.14	7.14	7.14	7.14	7.14	7.14
2000	262	1.15	2.67	2.67	3.05	3.05	3.05	3.05	3.44	3.44	3.82
2001	316	1.58	1.58	1.90	1.90	1.90	1.90	2.22	2.22	2.53	2.53
2002	345	0.00	0.58	0.87	0.87	0.87	1.16	1.16	1.74	1.74	1.74
2003	422	0.47	0.71	0.71	0.71	0.95	1.18	1.90	1.90	1.90	1.90
2004	544	0.37	0.37	0.37	0.55	0.55	1.29	1.47	1.47	1.47	1.65
2005	635	0.16	0.16	0.31	0.47	1.42	1.57	1.57	1.89	2.05	2.05
2006	660	0.15	0.30	0.45	1.82	1.97	1.97	2.27	2.42	2.42	2.58
2007	657	0.15	0.46	1.98	2.28	2.28	2.44	2.59	2.59	2.89	2.89
2008	584	1.03	2.91	3.25	3.25	3.77	3.77	3.77	4.11	4.11	4.11
2009	579	2.07	2.42	2.42	2.94	2.94	2.94	3.28	3.45	3.63	3.63
2010	496	0.60	0.60	1.01	1.01	1.21	1.61	1.61	1.81	1.81	1.81
2011	501	0.00	0.60	0.80	1.00	1.60	1.60	1.80	1.80	1.80	1.80
2012	516	0.39	0.58	0.78	1.55	1.55	1.94	1.94	1.94	1.94	1.94
2013	530	0.38	0.57	1.32	1.32	1.70	1.70	1.70	1.89	1.89	2.08
2014	576	0.17	0.87	1.04	1.39	1.56	1.56	1.91	1.91	2.60	2.60
2015	632	0.63	0.95	1.27	1.42	1.58	2.06	2.06	2.69	2.69	N/A
2016	692	0.29	0.58	0.72	0.72	1.16	1.16	1.73	1.73	N/A	N/A
2017	771	0.26	0.39	0.52	0.91	0.91	1.56	1.56	N/A	N/A	N/A
2018	831	0.12	0.60	1.44	1.44	2.17	2.17	N/A	N/A	N/A	N/A
2019	908	0.66	1.54	1.76	2.42	2.42	N/A	N/A	N/A	N/A	N/A
2020	886	1.02	1.35	2.14	2.14	N/A	N/A	N/A	N/A	N/A	N/A
2021	865	0.69	1.62	1.62	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	857	1.28	1.28	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	831	0.12	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		0.63	0.49	0.40	0.35	0.31	0.22	0.19	0.17	0.10	0.05
Cumulative average		0.63	1.12	1.52	1.87	2.17	2.38	2.57	2.73	2.83	2.88
Standard deviation		1.02	1.63	2.01	2.44	2.73	2.81	2.86	2.87	2.87	2.90
Median		0.38	0.60	1.27	1.50	1.70	1.95	2.06	2.32	2.60	2.59
Min		0.00	0.00	0.00	0.00	0.00	0.00	1.16	1.47	1.47	1.65
Max		5.13	7.69	8.21	10.26	11.28	11.79	11.79	11.79	11.79	11.79
N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 19

Static pool cumulative corporate default rates among investment-grade Asia ratings, 1993 to 2023
Rating: investment-grade
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1993	58	0.00	0.00	0.00	0.00	0.00	0.00	1.72	1.72	1.72	1.72
1994	64	0.00	0.00	0.00	0.00	1.56	3.13	3.13	3.13	3.13	3.13
1995	78	0.00	0.00	0.00	2.56	3.85	3.85	3.85	3.85	3.85	3.85
1996	90	0.00	0.00	2.22	3.33	3.33	3.33	3.33	3.33	3.33	3.33
1997	112	0.89	2.68	3.57	3.57	3.57	3.57	3.57	3.57	3.57	3.57
1998	130	1.54	1.54	1.54	1.54	2.31	2.31	2.31	2.31	2.31	2.31
1999	123	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2000	152	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.66
2001	193	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.52	0.52
2002	223	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.90	0.90	0.90
2003	256	0.00	0.00	0.00	0.00	0.00	0.00	0.78	0.78	0.78	0.78
2004	360	0.00	0.00	0.00	0.00	0.00	0.56	0.56	0.56	0.56	0.56
2005	437	0.00	0.00	0.00	0.00	0.46	0.46	0.46	0.46	0.46	0.46
2006	469	0.00	0.00	0.00	0.43	0.43	0.43	0.43	0.43	0.43	0.64
2007	490	0.00	0.00	0.41	0.41	0.41	0.41	0.41	0.41	0.61	0.61
2008	435	0.00	0.46	0.46	0.46	0.46	0.46	0.46	0.69	0.69	0.69
2009	451	0.44	0.44	0.44	0.44	0.44	0.44	0.67	0.67	0.67	0.67
2010	398	0.00	0.00	0.00	0.00	0.00	0.25	0.25	0.25	0.25	0.25
2011	407	0.00	0.00	0.00	0.00	0.25	0.25	0.25	0.25	0.25	0.25
2012	407	0.00	0.00	0.00	0.25	0.25	0.25	0.25	0.25	0.25	0.25
2013	421	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2014	448	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.22	0.22
2015	493	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.20	0.20	N/A
2016	551	0.00	0.00	0.00	0.00	0.00	0.00	0.18	0.18	N/A	N/A
2017	598	0.00	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A
2018	626	0.00	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A
2019	672	0.00	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A
2020	681	0.00	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A
2021	677	0.00	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	686	0.00	0.00	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	694	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		0.04	0.04	0.05	0.06	0.07	0.05	0.06	0.06	0.05	0.03
Cumulative average		0.04	0.08	0.13	0.19	0.25	0.30	0.36	0.42	0.46	0.50
Standard deviation		0.32	0.56	0.80	1.01	1.18	1.27	1.27	1.26	1.25	1.24
Median		0.00	0.00	0.00	0.00	0.00	0.25	0.41	0.44	0.56	0.65
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max		1.54	2.68	3.57	3.57	3.85	3.85	3.85	3.85	3.85	3.85
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 speculative-grade Asia ratings, 1993 to 2023
Rating: speculative-grade
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1993	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1994	3	0.00	0.00	0.00	0.00	0.00	33.33	33.33	66.67	66.67	66.67
1995	7	0.00	0.00	0.00	0.00	42.86	42.86	57.14	57.14	57.14	57.14
1996	7	0.00	0.00	0.00	42.86	42.86	57.14	57.14	57.14	57.14	57.14
1997	21	0.00	9.52	23.81	28.57	33.33	33.33	38.10	38.10	38.10	38.10
1998	65	12.31	20.00	21.54	27.69	29.23	30.77	30.77	30.77	30.77	30.77
1999	87	5.75	10.34	14.94	16.09	17.24	17.24	17.24	17.24	17.24	17.24
2000	110	2.73	6.36	6.36	7.27	7.27	7.27	7.27	8.18	8.18	8.18
2001	123	4.07	4.07	4.88	4.88	4.88	4.88	5.69	5.69	5.69	5.69
2002	122	0.00	1.64	2.46	2.46	2.46	3.28	3.28	3.28	3.28	3.28
2003	166	1.20	1.81	1.81	1.81	2.41	3.01	3.61	3.61	3.61	3.61
2004	184	1.09	1.09	1.09	1.63	1.63	2.72	3.26	3.26	3.26	3.80
2005	198	0.51	0.51	1.01	1.52	3.54	4.04	4.04	5.05	5.56	5.56
2006	191	0.52	1.05	1.57	5.24	5.76	5.76	6.81	7.33	7.33	7.33
2007	167	0.60	1.80	6.59	7.78	7.78	8.38	8.98	8.98	9.58	9.58
2008	149	4.03	10.07	11.41	11.41	13.42	13.42	13.42	14.09	14.09	14.09
2009	128	7.81	9.38	9.38	11.72	11.72	11.72	12.50	13.28	14.06	14.06
2010	98	3.06	3.06	5.10	5.10	6.12	7.14	7.14	8.16	8.16	8.16
2011	94	0.00	3.19	4.26	5.32	7.45	7.45	8.51	8.51	8.51	8.51
2012	109	1.83	2.75	3.67	6.42	6.42	8.26	8.26	8.26	8.26	8.26
2013	109	1.83	2.75	6.42	6.42	8.26	8.26	8.26	9.17	9.17	10.09
2014	128	0.78	3.91	4.69	6.25	7.03	7.03	8.59	8.59	10.94	10.94
2015	139	2.88	4.32	5.76	6.47	7.19	9.35	9.35	11.51	11.51	N/A
2016	141	1.42	2.84	3.55	3.55	5.67	5.67	7.80	7.80	N/A	N/A
2017	173	1.16	1.73	2.31	4.05	4.05	6.94	6.94	N/A	N/A	N/A
2018	205	0.49	2.44	5.85	5.85	8.78	8.78	N/A	N/A	N/A	N/A
2019	236	2.54	5.93	6.78	9.32	9.32	N/A	N/A	N/A	N/A	N/A
2020	205	4.39	5.85	9.27	9.27	N/A	N/A	N/A	N/A	N/A	N/A
2021	188	3.19	7.45	7.45	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2022	171	6.43	6.43	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2023	137	0.73	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		2.43	1.90	1.50	1.26	1.05	0.74	0.60	0.52	0.28	0.10
Cumulative average		2.43	4.29	5.72	6.91	7.89	8.57	9.12	9.59	9.84	9.92
Standard deviation		2.79	4.32	5.87	9.74	11.97	14.14	15.94	18.92	19.16	19.54
Median		1.31	3.06	4.99	6.25	7.23	8.26	8.38	8.59	9.38	9.58
Min		0.00	0.00	0.00	0.00	0.00	2.72	3.26	3.26	3.26	3.28
Max		12.31	20.00	23.81	42.86	42.86	57.14	57.14	66.67	66.67	66.67
N/A--Not applicable. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 21

Average multi-year (two-year) Asia corporate transition matrices, 1993-2023
From/to	'AAA'	'AA'	'A'	'BBB'	'BB'	'B'	'CCC'/'C'	'D'	NR
'AAA'	69.14	27.78	1.85	0.00	0.00	0.00	0.00	0.00	1.23
	(26.92)	(25.99)	(4.75)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.08)
'AA'	0.71	80.54	12.76	0.00	0.00	0.14	0.00	0.00	5.84
	(2.33)	(8.89)	(8.86)	(0.00)	(0.00)	(0.49)	(0.00)	(0.00)	(5.87)
'A'	0.00	2.16	85.40	4.53	0.19	0.15	0.00	0.00	7.56
	(0.00)	(1.63)	(8.36)	(5.76)	(1.59)	(0.78)	(0.00)	(0.00)	(5.92)
'BBB'	0.00	0.00	7.53	76.09	3.22	0.27	0.09	0.20	12.60
	(0.00)	(0.00)	(7.55)	(12.64)	(4.27)	(1.34)	(0.62)	(1.00)	(8.89)
'BB'	0.00	0.00	0.05	9.64	57.38	5.22	0.93	0.93	25.85
	(0.00)	(0.00)	(0.25)	(7.00)	(11.41)	(3.67)	(3.28)	(2.10)	(9.62)
'B'	0.00	0.00	0.00	0.42	9.40	44.18	3.23	6.52	36.26
	(0.00)	(0.00)	(0.00)	(1.02)	(8.00)	(11.03)	(2.94)	(6.20)	(10.47)
'CCC'/'C'	0.00	0.00	0.00	0.00	1.99	14.57	15.23	32.45	35.76
	(0.00)	(0.00)	(0.00)	(0.00)	(4.78)	(17.20)	(13.79)	(21.86)	(24.84)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 22

Average multi-year (three-year) Asia corporate transition matrices, 1993-2023
From/To	'AAA'	'AA'	'A'	'BBB'	'BB'	'B'	'CCC'/'C'	'D'	NR
'AAA'	59.38	36.25	3.13	0.00	0.00	0.00	0.00	0.00	1.25
	(27.70)	(26.27)	(5.67)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.55)
'AA'	1.03	72.69	17.42	0.07	0.00	0.22	0.00	0.00	8.56
	(2.64)	(9.35)	(9.77)	(0.38)	(0.00)	(0.58)	(0.00)	(0.00)	(7.67)
'A'	0.00	2.95	78.88	6.12	0.29	0.23	0.00	0.00	11.54
	(0.00)	(1.84)	(10.38)	(7.21)	(1.80)	(1.18)	(0.00)	(0.00)	(8.22)
'BBB'	0.00	0.00	10.51	66.33	4.04	0.31	0.15	0.34	18.32
	(0.00)	(0.00)	(9.50)	(15.63)	(4.44)	(1.12)	(0.67)	(1.51)	(11.20)
'BB'	0.00	0.00	0.29	12.65	44.19	5.30	1.03	1.72	34.82
	(0.00)	(0.00)	(0.65)	(8.31)	(11.69)	(3.63)	(3.92)	(2.95)	(10.77)
'B'	0.00	0.00	0.00	0.95	10.69	31.85	2.47	8.80	45.24
	(0.00)	(0.00)	(0.00)	(1.80)	(8.62)	(10.50)	(2.35)	(6.47)	(11.07)
'CCC'/'C'	0.00	0.00	0.00	0.00	3.60	15.83	5.04	33.09	42.45
	(0.00)	(0.00)	(0.00)	(0.00)	(6.63)	(14.61)	(7.38)	(21.14)	(25.23)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 23

Average multi-year (five-year) Asia corporate transition matrices, 1993-2023
From/to	'AAA'	'AA'	'A'	'BBB'	'BB'	'B'	'CCC'/'C'	'D'	NR
'AAA'	41.03	50.00	5.77	0.00	0.00	0.00	0.00	0.00	3.21
	(25.77)	(23.23)	(8.09)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(7.06)
'AA'	1.75	58.49	24.86	1.35	0.08	0.32	0.00	0.00	13.15
	(3.14)	(8.30)	(12.60)	(2.50)	(0.38)	(0.65)	(0.00)	(0.00)	(9.96)
'A'	0.00	4.50	68.80	7.73	0.55	0.17	0.00	0.07	18.18
	(0.00)	(2.43)	(12.16)	(9.27)	(2.12)	(0.73)	(0.00)	(0.29)	(9.41)
'BBB'	0.00	0.03	14.65	52.14	4.17	0.40	0.09	0.65	27.88
	(0.00)	(0.19)	(10.30)	(18.11)	(4.44)	(1.64)	(0.35)	(2.35)	(13.78)
'BB'	0.00	0.00	1.31	15.27	27.75	4.87	0.71	3.45	46.63
	(0.00)	(0.00)	(2.17)	(8.08)	(11.25)	(3.93)	(4.62)	(5.08)	(12.80)
'B'	0.00	0.00	0.08	2.05	9.67	18.20	1.31	11.48	57.21
	(0.00)	(0.00)	(0.53)	(3.63)	(7.22)	(9.58)	(2.13)	(8.09)	(10.13)
'CCC'/'C'	0.00	0.00	0.00	0.00	6.19	15.04	0.88	32.74	45.13
	(0.00)	(0.00)	(0.00)	(0.00)	(7.24)	(11.83)	(4.21)	(23.85)	(26.40)
Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 24

Initial-to-last transition rates by rating modifier for nonfinancials, 1981-2023 (%)
		Rating
From/to	Issuers	'AAA'	'AA+'	'AA'	'AA-'	'A+'	'A'	'A-'	'BBB+'	'BBB'	'BBB-'	'BB+'	'BB'	'BB-'	'B+'	'B'	'B-'	'CCC'/'C'	'D'	NR
'AAA'	12	8.33	25.00	0.00	0.00	8.33	25.00	8.33	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00
'AA+'	8	0.00	25.00	0.00	0.00	25.00	12.50	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	37.50
'AA'	15	0.00	6.67	13.33	13.33	6.67	6.67	6.67	13.33	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	33.33
'AA-'	35	0.00	8.57	0.00	2.86	20.00	11.43	5.71	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	51.43
'A+'	40	0.00	5.00	5.00	2.50	25.00	5.00	12.50	2.50	2.50	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	40.00
'A'	78	0.00	0.00	3.85	0.00	6.41	28.21	1.28	1.28	2.56	0.00	1.28	0.00	0.00	1.28	0.00	0.00	0.00	1.28	52.56
'A-'	100	0.00	0.00	3.00	1.00	1.00	8.00	33.00	5.00	2.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	47.00
'BBB+'	89	0.00	0.00	2.25	0.00	1.12	2.25	8.99	26.97	8.99	1.12	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	48.31
'BBB'	121	0.00	0.00	0.83	0.00	0.00	1.65	4.13	6.61	20.66	7.44	0.83	0.00	0.00	0.00	0.00	0.00	0.00	0.83	57.02
'BBB-'	181	0.00	0.00	0.00	0.00	0.00	0.00	1.10	3.87	8.29	22.65	3.31	1.10	0.00	0.55	0.00	0.00	0.00	2.21	56.91
'BB+'	109	0.00	0.00	0.00	0.00	0.00	0.92	0.92	2.75	0.92	5.50	21.10	1.83	1.83	0.00	0.00	0.00	0.00	2.75	61.47
'BB'	118	0.00	0.00	0.00	0.00	0.00	0.00	1.69	0.85	0.85	1.69	2.54	6.78	0.85	1.69	0.00	0.00	0.00	10.17	72.88
'BB-'	124	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.81	0.00	0.81	1.61	3.23	0.81	2.42	0.00	0.00	0.81	12.10	77.42
B+'	160	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.63	0.63	0.00	0.63	1.25	0.63	3.13	0.00	0.00	0.00	18.75	74.38
B'	127	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.57	0.79	0.00	0.79	3.15	0.00	0.00	16.54	77.17
B-'	71	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.41	0.00	0.00	1.41	5.63	4.23	1.41	12.68	73.24
'CCC'/'C'	42	0.00	0.00	0.00	0.00	2.38	0.00	0.00	0.00	0.00	2.38	2.38	0.00	0.00	2.38	0.00	0.00	2.38	42.86	45.24
NR--not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Table 25

Initial-to-last transition rates by rating modifier for financials, 1981-2023 (%)
		Rating
From/To	Issuers	'AAA'	'AA+'	'AA'	'AA-'	'A+'	'A'	'A-'	'BBB+'	'BBB'	'BBB-'	'BB+'	'BB'	'BB-'	'B+'	'B'	'B-'	'CCC'/'C'	'D'	NR
'AAA'	17	0.00	0.00	0.00	0.00	11.76	17.65	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	70.59
'AA+'	4	0.00	0.00	0.00	0.00	50.00	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	50.00
'AA'	12	0.00	0.00	8.33	0.00	8.33	8.33	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	75.00
'AA-'	31	0.00	3.23	3.23	16.13	35.48	6.45	9.68	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.23	22.58
'A+'	51	0.00	0.00	1.96	7.84	23.53	21.57	5.88	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	39.22
'A'	81	0.00	0.00	0.00	6.17	19.75	41.98	1.23	2.47	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	28.40
'A-'	74	0.00	0.00	0.00	1.35	6.76	16.22	29.73	5.41	4.05	1.35	0.00	0.00	0.00	1.35	0.00	0.00	0.00	1.35	32.43
'BBB+'	80	0.00	0.00	0.00	2.50	2.50	10.00	16.25	27.50	6.25	1.25	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	33.75
'BBB'	95	0.00	0.00	0.00	0.00	1.05	5.26	6.32	15.79	30.53	3.16	1.05	0.00	0.00	0.00	0.00	0.00	0.00	4.21	32.63
'BBB-'	90	0.00	0.00	0.00	0.00	0.00	3.33	3.33	7.78	12.22	28.89	2.22	0.00	0.00	0.00	0.00	0.00	0.00	3.33	38.89
'BB+'	38	0.00	0.00	0.00	0.00	0.00	2.63	5.26	0.00	2.63	10.53	10.53	2.63	0.00	0.00	0.00	0.00	0.00	5.26	60.53
'BB'	37	0.00	0.00	0.00	0.00	2.70	0.00	0.00	5.41	2.70	2.70	2.70	8.11	0.00	0.00	0.00	0.00	0.00	5.41	70.27
'BB-'	24	0.00	0.00	0.00	0.00	0.00	0.00	4.17	0.00	0.00	4.17	0.00	0.00	8.33	0.00	4.17	0.00	0.00	4.17	75.00
B+'	30	0.00	0.00	0.00	0.00	6.67	0.00	0.00	0.00	0.00	3.33	3.33	3.33	0.00	10.00	3.33	0.00	0.00	3.33	66.67
B'	39	0.00	0.00	0.00	0.00	0.00	0.00	0.00	5.13	5.13	0.00	0.00	2.56	0.00	2.56	5.13	0.00	0.00	5.13	74.36
B-'	11	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	9.09	0.00	0.00	0.00	0.00	0.00	9.09	0.00	0.00	81.82
'CCC'/'C'	7	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	28.57	71.43
NR--not rated. Sources: S&P Global Ratings Credit Research & Insights, S&P Global Market Intelligence's CreditPro®.

Appendix II: Calculating Gini Coefficients

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. The Lorenz curve was developed by Max O. Lorenz as a graphical representation of the proportionality of a distribution. To build the Lorenz curve, the observations are ordered 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. Their Gini coefficient--which is a summary statistic of the Lorenz curve--would therefore be zero. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated issuers, the curve would capture all the area above the diagonal on the graph, and the Gini coefficient would be 1 (see chart 10).

The procedure for calculating Gini coefficients is shown in chart 10 and is accomplished 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.

Related Research

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• Asia-Pacific Corporate Credit in 2024: Taking The Slow Road, Jan. 30, 2024
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Credit Markets Research:	Vincent R Conti, Singapore + 65 6216 1188; vincent.conti@spglobal.com
	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
Research Assistant:	Nivritti Mishra, Mumbai