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Default, Transition, and Recovery: Defaults Drop In June

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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

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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

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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

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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

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Chart 5

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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

Default Studies

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

Corporate (financial and nonfinancial)
Structured finance
Public finance
Sovereign and international public finance

This report does not constitute a rating action.

Credit 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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