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Default, Transition, and Recovery: Consumer Products And Health Care Led Defaults In January

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S&P Global Ratings' global corporate default tally in 2025 stands at 10 after the following defaults in January:

  • U.S.-based beverage co-manufacturer City Brewing Co. LLC
  • U.S.-based beer marketer Blue Ribbon LLC
  • U.S.-based specialty retailer Joann Inc.
  • U.S.-based cleaning and sanitation services provider Packers Holdings LLC
  • U.S.-based hotel management company Aimbridge Acquisition Co. Inc.
  • Irish specialty material solutions provider Trinseo PLC
  • U.S.-based primary care service provider Physician Partners LLC
  • Nordic debt collector Intrum AB (publ)
  • Brazil-based airline Azul S.A.
  • U.S.-based health care data analytics company MultiPlan Corp.

Steady Default Tally In January

The number of defaults totaled 10 in January 2025, unchanged from December. European issuers accounted for two defaults in January, with no defaults in December 2024. Defaults in the U.S. have decreased to seven in January, down from nine in December 2024. However 70% of defaults occurred in the U.S. The consumer products and health care sectors accounted for 50% of defaults in January, with three and two defaults, respectively (see charts 1 and 2).

Chart 1

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Chart 2

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50% Of Defaults Resulted From Consumer Products and Health Care

The consumer products and health care sectors led defaults in January. Together with the media and entertainment sector, they accounted for close to 40% of defaults in 2024--a trend that has continued into 2025 (see chart 3).

Chart 3

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Many lower-rated consumer products companies are small, highly leveraged, and have weak business risk profiles. Even though some speculative-grade issuers addressed debt maturities as interest rates declined, they remain vulnerable to volatile operating performance and could struggle to restore profitability and cash flows (see "Industry Credit Outlook: Consumer Products," published Jan. 14, 2025).

The number of defaults in the U.S. health care sector has been elevated since 2022. Even if the number of health care defaults moderates in 2025, it will likely remain above historical levels because of high labor costs and many speculative-grade companies' virtually unsustainable capital structures (see "Industry Credit Outlook: Health Care," published Jan. 14, 2025).

The consumer products, health care, and media and entertainment sectors accounted for 60% of defaults in January and 39% of the weakest links (issuers rated 'B-' and below with a negative outlook). This suggests defaults in these sectors could increase further. Additionally, these sectors face significant amounts of speculative-grade debt maturing before 2028, which increases their vulnerability and the potential risk of default if interest rates remain high.

The Health Care Sector Led Defaulted Debt Volumes

Defaulted debt in January declined to $8.1 billion--the lowest level since September 2024--with U.S.-based issuers accounting for 94% (see chart 4). Health care companies represented 62% or $4.98 billion of defaulted debt, which is the highest amount in this sector since February 2024 (see chart 5). The consumer products sector followed with $1.3 billion.

Chart 4

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Chart 5

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Most of the health care sector's debt ($4.1 billion) resulted from the distressed exchange of U.S.-based company MultiPlan Corp. Its issuer subsidiary MPH Acquisition Holdings LLC completed the exchange of more than 99% of MultiPlan's debt. We view the debt restructuring as tantamount to a default because, in our view, lenders received less than originally promised and were not compensated adequately.

Distressed Exchanges Caused Most Defaults In January

Distressed exchanges remained the primary reason of defaults and accounted for 60% of defaults in January (see chart 6). The increasing prevalence of distressed exchanges across sectors is part of a trend that began in 2017. The number of distressed exchanges has risen in recent years as distressed issuers view out-of-court restructuring more favorably than other options, such as a traditional bankruptcy.

Chart 6

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Table 1

Estimated European and U.S. default rates remain elevated
Region 12-month trailing speculative-grade default rate (%) Weakest links
U.S. 5.1 164
Emerging markets 1.1 11
Europe 4.1 50
Other developed 2.3 10
Global 3.9 232
Trailing 12-month speculative-grade default rates are from Dec. 31, 2023, to Dec. 31, 2024, except for the U.S. and Europe. For these two regions, they are from Jan. 31, 2024, to Jan. 31, 2025, preliminary, and subject to change. Weakest link data as of Jan. 31, 2025. Other developed includes Australia, Canada, Japan, and New Zealand. Default counts may include confidentially rated issuers. Sources: S&P Global Ratings Credit Research, S&P Global Market Intelligence's CreditPro.

Table 2

10 companies defaulted globally year to date
Date Parent company Country Subsector To From Reason
Jan. 8, 2025

City Brewing Co. LLC

U.S. Consumer products SD B- Missed payments
Jan. 16, 2025

Blue Ribbon LLC

U.S. Consumer products SD CCC- Distressed exchange
Jan. 16, 2025

JOANN Inc.

U.S. Retail and restaurants D CCC Bankruptcy
Jan. 16, 2025

Packers Holdings LLC

U.S. Consumer products SD CCC- Distressed exchange
Jan. 17, 2025

Aimbridge Acquisition Co. Inc.

U.S. Media and entertainment D CCC Missed payments
Jan. 17, 2025

Trinseo PLC

Ireland Chemicals, packaging, and environmental services SD CC Distressed exchange
Jan. 23, 2025

Physician Partners LLC

U.S. Health care SD CCC+ Distressed exchange
Jan. 28, 2025

Intrum AB (publ)

Sweden Finance companies SD CC Missed payments
Jan. 29, 2025

Azul S.A.

Brazil Transportation SD CC Distressed exchange
Jan. 31, 2025

MultiPlan Corp.

U.S. Health care SD CC Distressed exchange
Data as of Jan. 31, 2025. NR--Not rated. SD--Selective default. Sources: S&P Global Ratings Credit Research & Insights, 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 non-financial)
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:Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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