S&P Global Ratings' 2024 global corporate default tally finished the year with 145 defaults after the following 10 defaults in December:

• U.S.-based engineering, construction, and maintenance services provider Congruex Group LLC;
• U.S.-based flooring retailer Empire Today LLC;
• Bermuda based management software company Veritas Holdings Ltd.;
• U.S.-based provider of weight-management food plans KNS Holdco LLC.;
• U.S.-based manufacturer of window coverings for the residential and commercial markets SWF Holdings I Corp.;
• U.S.-based graphite electrode producer GrafTech International Ltd.;
• U.S.-based radio company iHeartCommunications Inc.;
• U.S.-based specialty retailer of various home storage and organization products Container Store Group Inc. (The); and
• Two confidential defaults.

U.S. And European Default Tallies Finished 2024 Above Previous Years' Totals

The number of defaults reached 145 in 2024, following an additional 10 defaults in December. This was lower than 153 defaults in 2023, but higher than the five-year average of 136. 2024 recorded the third-highest default count since 2020 and has one of the top five highest default tallies since 2009.

The U.S. led this year's tally, with 97 defaults, the highest number of defaults since 2020. Europe finished the year with 33 defaults, giving it the second-highest default count since 2008 (see chart 1).

Outside these two regions, emerging markets and other developed markets saw a decline in total default counts. With only 12 defaults, emerging markets recorded the lowest number of defaults since 2017 (eight defaults), down from 19 the previous year. All 12 defaults occurred in Latin America and were mostly due to missed interest payments or distressed exchanges.

Chart 1

2024 Saw The Highest Number Of Distressed Exchanges Since 2009

Distressed exchanges remained the primary cause of defaults in 2024 for the fourth consecutive year, accounting for 54% of defaults, or 78, up from 47% or 72 in 2023, and well above the five-year average of 60. This marked the highest number of distressed exchanges since 2009 (see chart 2). The rising percentage of distressed exchanges and the high level of repeat defaulters (issuers that have defaulted more than once) is contributing to the higher default rates overall.

This is partly due to more entities being comfortable with having high leverage in their capital structures, as well as the other value-saving benefits of distressed exchanges. In 2024, historically high interest rates also contributed to lower-rated companies' use of distressed exchanges to ease their near-term debt burdens and financing costs amid weaker cash flows. However, we have found that distressed exchanges provide only temporary relief, allowing issuers to avoid a more comprehensive and costly bankruptcy (see "The Rise of Repeat Defaulters," published April 11, 2024).

Chart 2

We Expect Default Rates To Fall In The U.S. And Europe In 2025

Default rates have been elevated in developed markets this year than historically, largely due to the increased use of distressed exchanges. Despite this, we expect that the pace of defaults will gradually slow, with the forecasted default rates likely to fall to 3.25% in the U.S. and 4.25% in Europe by September 2025, from 4.9% and 5.1% at end-November 2024, respectively.

Declining interest rates in these regions are likely to support our forecast, although we expect them to decline more slowly than they increased. Declining default rates in the U.S. and Europe, alongside a slight rise in Asia-Pacific, imply that the global corporate default rate will fall slightly to 3.5% by September 2025 from 4.0% in November 2024 (see chart 3).

Key risks to our baseline projection include stubborn inflation, with the potential for higher interest rates; any unexpected deterioration in regional demand, which is already under strain from rising delinquencies in the U.S.; and persistent inflation perceptions in Europe.

Chart 3

Defaulted Debt Reached Another Annual High

December recorded the highest monthly amount of defaulted debt, with all $16.9 billion of it originating in the U.S. The U.S. accounted for 90% of cumulative defaulted debt, or $120.9 billion, up 29% from $93.7 billion in 2023 (see chart 4).

By sector, the telecommunications sector had the highest cumulative amount of defaulted debt, totaling $28.3 billion, followed by media and entertainment and health care, with cumulative defaulted debt of $20.8 billion and $18.7 billion, respectively (see chart 5).

Most of the telecom sector's debt was due to the distressed exchange of a U.S.-based telecom company that defaulted twice, with total debt of $15.9 billion. The rest of the telecom defaults were first-time defaults. Some companies in these sectors opted for distressed exchanges, and it's likely that without them, they would have faced meaningful liquidity challenges in 2024.

Chart 4

Chart 5

Media And Entertainment Remained The Top Sector For Defaults By Number

Similar to 2023, the media and entertainment (23), consumer products (22), and health care (18) sectors remained the top three largest sectors, accounting for 43% of defaults (see chart 6). Despite declining interest rates, issuers still face higher refinancing costs on average than when they first issued near-term debt three-to-five years ago.

Many defaults in the media, entertainment, consumer products, and health care sectors resulted from the challenges that lower-rated issuers face, including unsustainable capital structures, limited liquidity, and elevated leverage ratios, against a backdrop of falling but still elevated financing costs. Sectors with high amounts of speculative-grade and floating-rate debt also constitute pockets of risk.

Consumer products, health care, and media and entertainment are among the five sectors with the highest amounts of speculative-grade debt maturing before 2028. They also all have a share of floating-rate debt of close to 70% of the total amount of maturing debt, emphasizing their vulnerability and the potential for default should interest rates remain higher for longer.

Chart 6

Table 1

Table 2

Related Research

• The Container Store Group Inc. Downgraded To 'D' On Chapter 11 Bankruptcy Filing, Dec. 2, 2024
• iHeartCommunications Inc. Rating Lowered To ‘SD’ From ‘CC’ On Debt Restructuring, Dec. 23, 2024
• GrafTech International Ltd. Downgraded To 'D' From 'CC' On Distressed Debt Exchange, Dec. 23, 2024
• SWF Holdings I Corp. Downgraded To 'SD' From 'CCC' On Distressed Debt Restructuring, Dec. 20, 2024
• Congruex Group LLC Downgraded To 'D' From 'CCC' On Debt Restructuring, Dec. 3, 2024
• Empire Today LLC Downgraded To 'SD' From 'CCC' On Distressed Debt Exchange, Dec. 11, 2024
• Veritas Holdings Ltd. Downgraded To 'SD' From 'CC' On Debt Exchange, Dec. 19, 2024
• KNS Holdco LLC Downgraded To 'D' From 'CCC' Following Distressed Debt Exchange, Dec. 20, 2024
• U.S. Media And Entertainment: Looking For The Winds Of Change In 2025, Dec. 13, 2024
• Global Speculative-Grade Corporate Default Rate To Decline To 3.5% By September 2025, Dec. 12, 2024
• European Speculative-Grade Default Rate Should Fall To 4.25% By September 2025, Nov. 18, 2024
• U.S. Speculative-Grade Corporate Default Rate To Fall Further To 3.25% By September 2025, Nov. 15, 2024
• Global Credit Outlook 2025: Promise And Peril, Dec. 4, 2024
• The Rise of Repeat Defaulters, April 11, 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
• 2023 Short-Term 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
• 2023 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

• 2023 Annual Global Sovereign Default And Rating Transition Study