Key Takeaways
- Global defaults in June decreased to nine from 14 in May.
- With 78 defaults, the global corporate default tally is well-above its five-year average, but below this point in 2023.
- The default debt amount in Europe rose to $3.2 billion, making it the highest monthly defaulted debt amount reported since August 2023.
- By sector, one-third of the June defaults came from the health care sector and distressed exchanges continue to be the primary reason for defaults (56%).
S&P Global Ratings' 2024 global corporate default tally has increased to 78 after the following defaults in June:
- U.S. based health care services provider Sound Inpatient Physicians, Inc.
- U.S. based manufacturer of packaging materials Valcour Packaging LLC
- U.S. based manufacturer of respiratory ventilation, diagnostics equipment Vyaire Medical, Inc.
- U.S. based provider of dental and oral health maintenance services Premier Dental Services Inc..
- German oxo chemicals manufacturer OQ Chemicals International Holding GmbH
- U.S. based real estate investment trust (REIT) that owns and leases office properties Office Properties Income Trust
- Luxembourg-incorporated, Berlin-headquartered residential real estate holding company Adler Group S.A.
- Italy-based manufacturer of corrugated cardboards and paper packaging materials Pro.Gest SpA
- and one confidential issuer
Monthly Defaults Dropped In All Regions In June, But Europe Remains In The Spotlight
After monthly defaults dropped to nine in June from 14 in May, the global corporate default tally climbed to 78, compared with 84 defaults for the first half of 2023 (see chart 1). Defaults declined month over month across all regions within the U.S., leading with 60% of total defaults in June. Still, Europe is elevated compared with previous years, and remains at its highest year-to-date default tally since 2008, reaching 22 entities. Persistently high market rates coupled with sluggish economic growth has made it difficult for leveraged firms with poor cash flow to stay afloat and has ultimately led to an uptick in defaults. We expect interest rates to fall—ableit unevenly across the regions--and tailwinds from stronger-than-expected economic growth and corporate earnings recently should help lower the default rate through next spring, but the decline will likely be slower than the recent ascent, reaching 3.75% by March 2025 (See "The European Speculative-Grade Default Rate Should Level Out At 3.75% By March 2025", May 22, 2024).
Chart 1
Distressed Exchanges Continue To Drive Defaults
Out of the nine defaults in June, five were from distressed exchanges, two from missed payments, and one from bankruptcy (see chart 2). Although the overall default tally is below its 2023 tally, the count of distress exchanges is 5% above its previous year-to-date tally, 36% above its five-year average. All other reasons were below their 2023 year-to-date numbers.
Chart 2
Total Defaulted Debt Of Issuers Decreased To $8.1 Billion In June From $9.4 Billion In May
Despite the overall drop, the defaulted debt amount in Europe rose by 6.4x to $3.2 billion from the previous month, making it the highest defaulted debt amount reported since August 2023. The increase was a result of the default of Adler Group, a German residential real estate holding company downgraded to 'SD' on an approved debt recapitalization plan. In reverse, the U.S. defaulted debt amount reduced by 45% to $4.9 billion from the previous month. The share of U.S. defaulted debt dropped 60% of total defaulted debt in June.
Chart 3
The Health Care Sector Led Defaults In June
As in 2023, the top three sectors by default counts are media and entertainment, health care, and consumer products, which account for 46% of year-to-date defaults. Health care led the default count in June while media and entertainment leads the year-to-date default tally. In June, defaults were concentrated in a few sectors like health care (three issuers), followed by real estate, forest products and building materials, and chemicals, packaging and environmental services, each of them adding two more entities to the default tally (see chart 4).
Health care and real estate contributed the most volume of defaulted debt in June, with $2.5 and $4.3 billion of debt, respectively. Yet, the challenge remains acute for more vulnerable speculative-grade issuers in these sectors that typically have less financial flexibility than investment-grade borrowers. This encompasses those struggling with high leverage, an inability to generate positive free cash flows, or the need to refinance over the next 12-18 months.
Chart 4
Chart 5
Table 1
Estimated The U.S. default rate is expected to fall in June | ||||||
---|---|---|---|---|---|---|
Region | 12-month trailing speculative-grade default rate (%) | Weakest links | ||||
U.S. | 4.6* | 197 | ||||
Emerging market | 2.0 | 13 | ||||
Europe | 4.9* | 47 | ||||
Other developed | 5.8 | 12 | ||||
Global | 4.1 | 269 | ||||
Note: Trailing-12-month speculative grade default rates are from May 31, 2023 to May 31, 2024. *Trailing-12-month speculative grade default rates are from June 30, 2023 to June 30, 2024, and are preliminary and subject to change. Year-to-date data as of June 30, 2024. Weakest link data is as of May 31, 2024. Other developed region includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially-rated issuers. Sources: S&P Global Ratings Credit Research and S&P Global Market Intelligence’s CreditPro®. |
Table 2
2024 Global corporate default tally reaches 78 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Date | Parent company | Country/Market | Subsector | To | From | Reason | ||||||||
1/2/2024 |
Resolute Investment Managers Inc. |
U.S. | Financial institutions | D | CC | Distressed exchange | ||||||||
1/4/2024 |
Toro Private Holdings I, Ltd. |
U.K. | Transportation | D | CC | Distressed exchange | ||||||||
1/5/2024 |
AMT TopCo, LLC |
U.S. | Health care | D | CCC | Missed Payments | ||||||||
1/10/2024 |
Ignition Topco BV |
Netherlands | Chemicals, packaging, and environmental services | D | CCC | Missed Payments | ||||||||
1/11/2024 |
Amphora Intermediate II Ltd. |
U.K. | Consumer products | SD | CCC+ | Missed Payments | ||||||||
1/11/2024 | Confidential | Confidential | Metals, mining, & steel | SD | CC | Confidential | ||||||||
1/16/2024 |
Covis Finco S.a r.l |
Switzerland | Health care | SD | CCC- | Distressed exchange | ||||||||
1/17/2024 |
TMK Hawk Parent Corp. |
U.S. | Consumer products | SD | CC | Distressed exchange | ||||||||
1/18/2024 |
KNS Holdco LLC |
U.S. | Consumer products | SD | B- | Distressed exchange | ||||||||
1/19/2024 |
System1 Inc. |
U.S. | Media & entertainment | SD | CCC | Distressed exchange | ||||||||
1/24/2024 |
New Trojan Parent Inc. |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
1/26/2024 |
Gol Linhas Aereas Inteligentes S.A. |
Brazil | Transportation | D | CCC- | Bankruptcy | ||||||||
1/31/2024 |
AMC Entertainment Holdings Inc. (A) |
U.S. | Media & entertainment | SD | CCC+ | Distressed exchange | ||||||||
1/31/2024 |
Enjoy S.A. |
Chile | Media & entertainment | D | CCC- | Bankruptcy | ||||||||
2/5/2024 |
Cano Health Inc. |
U.S. | Health care | D | CCC- | Bankruptcy | ||||||||
2/6/2024 |
Astro Intermediate Holding II Corp. |
U.S. | Consumer products | SD | CCC | Missed Payments | ||||||||
2/8/2024 |
Pluto Acquisition I Inc. |
U.S. | Health care | SD | CC | Distressed exchange | ||||||||
2/9/2024 | Confidential | Confidential | Telecommunications | D | CC | Confidential | ||||||||
2/14/2024 |
CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A. |
Argentina | Capital goods | SD | CC | Distressed exchange | ||||||||
2/14/2024 |
GoTo Group Inc. |
U.S. | High technology | SD | CCC+ | Distressed exchange | ||||||||
2/15/2024 |
AFE S.A. SICAV-RAIF |
U.K. | Financial institutions | SD | CC | Distressed exchange | ||||||||
2/16/2024 |
Enviva Inc. |
U.S. | Utility | D | CCC- | Missed Payments | ||||||||
2/16/2024 |
Range Parent Inc. |
U.S. | Capital goods | D | CCC- | Bankruptcy | ||||||||
2/20/2024 |
Vue Entertainment International Ltd. |
U.K. | Media & entertainment | SD | CC | Distressed exchange | ||||||||
2/21/2024 |
Hornblower HoldCo LLC, |
U.S. | Media & entertainment | D | CCC- | Bankruptcy | ||||||||
2/21/2024 |
Tribe Buyer LLC |
U.S. | Media & entertainment | D | CCC- | Missed Payments | ||||||||
2/23/2024 |
Avison Young (Canada) Inc. |
Canada | Financial institutions | SD | CCC | Missed Payments | ||||||||
2/26/2024 |
Apex Tool Group LLC |
U.S. | Forest products & building materials | SD | CCC+ | Distressed exchange | ||||||||
2/26/2024 |
Radiology Partners Holdings LLC, |
U.S. | Health Care | SD | CC | Distressed exchange | ||||||||
3/5/2024 |
Curo Group Holdings Corp. |
U.S. | Financial Institutions | SD | CCC- | Missed Payments | ||||||||
3/18/2024 |
Hurtigruten Group AS |
Norway | Media & Entertainment | SD | CC | Distressed exchange | ||||||||
3/19/2024 |
JOANN Inc. |
U.S. | Retail/Restaurants | D | CCC | Bankruptcy | ||||||||
3/22/2024 |
Lumen Technologies Inc. |
U.S. | Telecommunications | SD | CC | Distressed exchange | ||||||||
3/27/2024 |
Samhallsbyggnadsbolaget i Norden AB (publ) |
Sweden | Homebuilders/real estate companies | SD | CCC+ | Distressed exchange | ||||||||
3/29/2024 |
Atlas Midco, Inc. |
U.S. | High technology | D | CCC+ | Distressed exchange | ||||||||
3/29/2024 |
Aventiv Technologies LLC |
U.S. | Telecommunications | SD | CC | Distressed exchange | ||||||||
3/29/2024 |
La Financiere Atalian SAS |
France | Consumer products | D | CC | Distressed exchange | ||||||||
4/1/2024 |
Wom S.A. |
Chile | Telecommunications | D | CCC | Bankruptcy | ||||||||
4/3/2024 |
Rackspace Technology Global Inc. |
U.S. | High technology | SD | CCC- | Distressed Exchange | ||||||||
4/4/2024 |
Never Slip Topco Inc. |
U.S. | Consumer products | D | CCC- | Bankruptcy | ||||||||
4/5/2024 |
Arvos LuxCo S.a.r.l. |
Luxembourg | Capital goods | D | CC | Distressed Exchange | ||||||||
4/5/2024 |
Baffinland Iron Mines Corp. |
Canada | Metals, mining, & steel | SD | CCC | Distressed exchange | ||||||||
4/5/2024 |
Casa Systems Inc. |
U.S. | High Technology | D | CCC+ | Bankruptcy | ||||||||
4/5/2024 |
ConvergeOne Holdings Inc. |
U.S. | Media & entertainment | D | CCC+ | Bankruptcy | ||||||||
4/8/2024 |
Loparex Midco B.V. |
Netherlands | Forest products & building materials | SD | CCC+ | Distressed Exchange | ||||||||
4/9/2024 | Confidential | Confidential | Media & entertainment | D | CCC- | Confidential | ||||||||
4/10/2024 |
99 cents only stores LLC |
U.S. | Retail/restaurants | D | CCC | Bankruptcy | ||||||||
4/22/2024 |
Express Inc. |
U.S. | Consumer products | D | NR | Bankruptcy | ||||||||
4/23/2024 |
City Brewing Company LLC, (Blue Ribbon Holdings LLC) |
U.S. | Consumer products | SD | CCC | Distressed Exchange | ||||||||
4/24/2024 |
EyeCare Partners LLC |
U.S. | Health care | SD | CCC | Distressed Exchange | ||||||||
4/25/2024 | Confidential | Confidential | Homebuilders/real estate companies | SD | CCC+ | Confidential | ||||||||
4/29/2024 |
Digital Media Solutions Inc. |
U.S. | Media & entertainment | SD | CCC | Distressed Exchange | ||||||||
4/29/2024 |
Keter Group B.V. |
Netherlands | Consumer products | SD | CC | Distressed Exchange | ||||||||
4/29/2024 |
Xplore Inc. |
Canada | Telecommunications | D | CCC- | Missed Payments | ||||||||
4/29/2024 | Confidential | Confidential | Retail/restaurants | SD | CCC+ | Confidential | ||||||||
5/6/2024 |
Cumulus Media Inc. |
U.S. | Media & entertainment | SD | CC | Distressed exchange | ||||||||
5/6/2024 |
Steward Health Care System LLC |
U.S. | Health care | D | NR | Bankruptcy | ||||||||
5/10/2024 |
Farfetch Ltd. |
U.K. | Retail/restaurants | D | CC | Missed Payments | ||||||||
5/16/2024 |
Credivalores - Crediservicios SAS |
Colombia | Financial institutions | D | NR | Bankruptcy | ||||||||
5/17/2024 |
Petrofac Ltd. |
Jersey | Oil & gas | SD | CCC- | Missed payments | ||||||||
5/20/2024 |
Global Medical Response Inc. (Air Medical Holdings LLC) |
U.S. | Health care | SD | CC | Distressed exchange | ||||||||
5/21/2024 |
Compact Bidco B.V. |
Netherlands | Forest products & building materials | SD | CCC- | Missed payments | ||||||||
5/21/2024 |
Zachry Holdings Inc. |
U.S. | Capital goods | D | NR | Bankruptcy | ||||||||
5/22/2024 | Confidential | Confidential | Retail/restaurants | D | CCC | Confidential | ||||||||
5/22/2024 |
New Insight Holdings Inc. |
U.S. | Media & entertainment | D | NR | Bankruptcy | ||||||||
5/23/2024 |
Astra Acquisition Corp. |
U.S. | High technology | SD | CCC | Distressed exchange | ||||||||
5/28/2024 |
Safari Beteiligungs Gmbh |
Germany | Media & entertainment | D | CCC+ | Distressed exchange | ||||||||
5/28/2024 |
Maverick Gaming LLC |
U.S. | Media & entertainment | D | CCC | Distressed exchange | ||||||||
5/30/2024 |
AMC Entertainment Holdings Inc.(B) |
U.S. | Media & entertainment | SD | CCC+ | Distressed exchange | ||||||||
6/3/2024 |
Sound Inpatient Physicians Inc. (Sound Inpatient Physicians Holdings LLC,) |
U.S. | Health care | D | CC | Distressed Exchange | ||||||||
6/11/2024 |
Valcour Packaging LLC |
U.S. | Chemicals, packaging, and environmental services | SD | CCC- | Distressed Exchange | ||||||||
6/12/2024 |
Vyaire Medical Inc. |
U.S. | Health care | D | CCC | Bankruptcy | ||||||||
6/14/2024 | Confidential | Confidential | Forest products & building materials | D | CCC | Confidential | ||||||||
6/18/2024 |
Premier Dental Services Inc. |
U.S. | Health care | SD | CC | Distressed Exchange | ||||||||
6/19/2024 |
OQ Chemicals International Holding GmbH |
Germany | Chemicals, packaging, and environmental services | D | CCC- | Missed Payments | ||||||||
6/21/2024 |
Office Properties Income Trust |
U.S. | Homebuilders/Real estate Co. | SD | CC | Distressed Exchange | ||||||||
6/24/2024 |
Adler Group S.A. |
Luxembourg | Homebuilders/real estate Co. | SD | CCC- | Distressed Exchange | ||||||||
6/25/2024 |
Pro.Gest SpA |
Italy | Forest products & building materials | SD | CCC | Missed Payments | ||||||||
Data as of Jun. 30, 2024. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights and S&P Global Market Intelligence’s CreditPro® |
Related Research
- Pro.Gest SpA Downgraded To ‘SD’ On Missed Payment, June 25, 2024
- Adler Group Downgraded To ‘SD’ On Approved Debt Recapitalization Plan, June 24, 2024
- Office Properties Income Trust Downgraded To ‘SD’ From ‘CC’ Following Debt Exchange, June 21, 2024
- OQ Chemicals Downgraded To ‘D’ From ‘CCC-’ On Missed Interest Payment, June 19, 2024
- Premier Dental Services Inc. Rating Lowered To 'SD' From 'CC' On Distressed Exchange, June 18, 2024
- Vyaire Medical Inc. Downgraded To 'D' From 'CCC' On Chapter 11 Filing, June 13, 2024
- Valcour Packaging LLC Downgraded To 'SD' From 'CCC-' On Announced Debt Restructuring, June 11, 2024
- Sound Inpatient Physicians Inc. Downgraded To 'D' From 'CC' On Distressed Debt Exchange, June 3, 2024
- The European Speculative-Grade Default Rate Should Level Out At 3.75% By March 2025, May 22, 2024
- Resilient Growth, Resilient Yields, And Resilient Defaults To Bring The U.S. Speculative-Grade Corporate Default Rate To 4.5% By March 2025, May 16, 2024
Default Studies
More analysis and statistics are available in our annual default studies, published on RatingsDirect:
Corporate (financial and nonfinancial)
- 2023 Annual Global Financial Services Default And Rating Transition Study
- 2023 Annual Global Corporate Default And Rating Transition Study
- 2023 Annual U.S. Corporate Default And Rating Transition Study
- 2023 United Kingdom Corporate Default And Rating Transition Study
- 2023 Annual European Corporate Default And Rating Transition Study
- 2023 Annual Japanese Corporate And Public Finance Default And Rating Transition Study
- 2023 Annual Asia Corporate Default And Rating Transition Study
- 2023 Annual Taiwan Ratings Corp. Corporate Default And Rating Transition Study
- 2023 Annual Emerging And Frontier Markets Corporate Default And Rating Transition Study
- 2023 Annual Greater China Corporate Default And Rating Transition Study
Structured finance
- 2023 Annual Global Structured Finance Default And Rating Transition Study
- 2023 Annual Japanese Structured Finance Default And Rating Transition Study
- 2022 Annual European Structured Finance Default And Rating Transition Study
- 2023 Annual Taiwan Structured Finance Default And Rating Transition Study
- 2022 Annual Mexican Structured Finance Default And Rating Transition Study
- 2023 Annual Global Leveraged Loan CLO Default And Rating Transition Study
Public finance
- 2023 Annual U.S. Public Finance Default And Rating Transition Study
- 2022 Annual International Public Finance Default And Rating Transition Study
- 2022 Annual Mexican National Scale Corporate And Public Finance Default And Rating Transition Study
Sovereign and international public finance
This report does not constitute a rating action.
Credit Market Research: | Ekaterina Tolstova, Frankfurt +49 173 6591385; ekaterina.tolstova@spglobal.com |
Nicole Serino, New York + 1 (212) 438 1396; nicole.serino@spglobal.com | |
Research Contributor: | Vaishali Singh, Pune; vaishali.singh2@spglobal.com |
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