The data included in this study is as of Jan. 1, 2025. The issuer credit ratings included in this study are classified by the geographic location in which each entity is incorporated (see regional definitions in Appendix I).

Unless noted otherwise, the statistics we present in this study refer to S&P Global Market Intelligence's CreditPro® local currency issuer credit ratings. Rated issuers include financial and nonfinancial companies in emerging and frontier markets but exclude sovereigns and public finance issuers. We calculated default and transition rates based on the number of issuers in the sample period. The weighted averages in this study use the number of issuers at the beginning of each year as the basis for each year's weight. The data we present in this study, unless labeled otherwise, refers to only public and confidential issuer credit ratings on nonfinancial and financial issuers and excludes credit estimates. For our full methodology and definitions of the terms used, as well as a full list of the emerging and frontier market countries used in this study, see Appendix I.

Default Rate Falls To Lowest Level Since 2017

In 2024, the emerging markets and frontier markets (EMFM) corporate default rate declined for the second year in a row. It fell to 0.66% from 1.10% the previous year, counting 12 defaults, down from 19 in 2023. This rate is below the median default rate of 1.08% (1997-2024; see table 1). The same trend holds true focusing solely on emerging market (EM) speculative grade corporate defaults, which dropped to 1.24% in 2024 from 2.29% in 2023 (chart 2) against the median value of 2.02%.

Table 1

Emerging and frontier markets corporate default summary
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)
1997	1	1	0	0.83	1.37	0.00
1998	16	2	13	5.75	1.74	8.90
1999	16	0	15	4.67	0.00	7.35
2000	6	0	5	1.37	0.00	2.07
2001	29	0	18	4.35	0.00	6.57
2002	60	0	53	11.83	0.00	17.26
2003	15	0	13	2.63	0.00	3.83
2004	3	0	3	0.55	0.00	0.83
2005	2	0	1	0.16	0.00	0.24
2006	2	0	2	0.27	0.00	0.43
2007	1	0	1	0.13	0.00	0.20
2008	16	1	12	1.41	0.27	2.19
2009	36	3	32	3.65	0.71	5.95
2010	9	0	8	0.87	0.00	1.55
2011	2	0	2	0.21	0.00	0.38
2012	19	0	13	1.29	0.00	2.36
2013	13	0	11	1.00	0.00	1.81
2014	15	0	9	0.73	0.00	1.30
2015	24	0	22	1.67	0.00	3.13
2016	30	1	27	2.07	0.16	3.65
2017	7	0	7	0.50	0.00	0.92
2018	16	0	10	0.69	0.00	1.26
2019	22	0	16	1.06	0.00	1.99
2020	26	0	25	1.68	0.00	3.25
2021	14	0	14	0.97	0.00	1.88
2022	26	0	18	1.23	0.00	2.39
2023	19	0	15	1.10	0.00	2.26
2024	12	1	8	0.66	0.14	1.23
Average	16	0	13	1.90	0.16	3.04
Median	16	0	13	1.08	0.00	2.03
Std. dev.	13	1	11	2.41	0.42	3.57
Min	1	0	0	0.13	0.00	0.00
Max	60	3	53	11.83	1.74	17.26
*This column includes companies that were not rated as of the beginning of the year. Investment-grade (speculative-grade) defaults refer to defaulting entities within the year that were rated investment-grade (speculative-grade) in the beginning of the period. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 2

Global corporate default summary
Year	Total defaults*	Investment-grade defaults	Speculative-grade defaults	Default rate (%)	Investment-grade default rate (%)	Speculative-grade default rate (%)
1981	2	0	2	0.15	0.00	0.63
1982	18	2	15	1.22	0.19	4.46
1983	12	1	10	0.77	0.09	2.96
1984	14	2	12	0.93	0.17	3.29
1985	19	0	18	1.12	0.00	4.34
1986	34	2	30	1.73	0.15	5.73
1987	19	0	19	0.94	0.00	2.82
1988	32	0	29	1.38	0.00	3.88
1989	44	3	35	1.77	0.21	4.70
1990	70	2	56	2.71	0.14	8.10
1991	93	2	65	3.22	0.13	11.02
1992	39	0	32	1.48	0.00	6.10
1993	26	0	14	0.60	0.00	2.50
1994	21	1	15	0.62	0.05	2.12
1995	35	1	29	1.05	0.05	3.54
1996	20	0	16	0.51	0.00	1.81
1997	23	2	20	0.63	0.08	2.01
1998	57	4	49	1.30	0.14	3.75
1999	110	5	93	2.16	0.17	5.63
2000	136	7	109	2.46	0.24	6.21
2001	230	7	172	3.70	0.23	9.70
2002	226	13	159	3.52	0.41	9.35
2003	120	3	89	1.88	0.10	4.97
2004	56	1	38	0.77	0.03	2.02
2005	40	1	31	0.60	0.03	1.50
2006	30	0	26	0.47	0.00	1.18
2007	24	0	21	0.37	0.00	0.91
2008	127	14	89	1.79	0.42	3.71
2009	268	11	223	4.15	0.33	9.89
2010	83	0	64	1.20	0.00	3.02
2011	53	1	44	0.80	0.03	1.85
2012	84	0	66	1.13	0.00	2.59
2013	81	0	62	1.02	0.00	2.23
2014	60	0	45	0.69	0.00	1.44
2015	113	0	94	1.36	0.00	2.77
2016	163	1	143	2.08	0.03	4.23
2017	95	0	83	1.21	0.00	2.47
2018	82	0	71	1.02	0.00	2.08
2019	118	2	92	1.31	0.06	2.55
2020	225	0	198	2.76	0.00	5.54
2021	72	0	60	0.85	0.00	1.69
2022	85	0	71	0.99	0.00	1.94
2023	153	2	128	1.86	0.06	3.71
2024	145	1	129	1.91	0.03	3.94
Average	81	2	65	1.46	0.08	3.88
Median	65	1	53	1.20	0.03	3.15
Std. dev.	66	3	53	0.93	0.11	2.52
Min	2	0	2	0.15	0.00	0.63
Max	268	14	223	4.15	0.42	11.02
*This column includes companies that were not rated as of the beginning of the year. Investment-grade (speculative-grade) defaults refer to defaulting entities within the year that were rated investment-grade (speculative-grade) in the beginning of the period. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

All Defaults Occurred In Latin America

Latin America (LatAm) remained the hotspot for defaults in EMFM. After leading with 16 defaults (84.21% of all EMFM's defaults) in 2023, it is the sole region in which issuers defaulted in 2024.

We rated four of the 12 EMFM defaults confidentially (see table 3 that lists the publicly rated entities), of which one was rated investment-grade at the beginning of 2024. Defaulters were based in Argentina, Brazil, Chile, and Mexico. For context, while this report looks at local currency ratings only, the default amount reached $3.6 billion on a foreign currency basis. Five of the 12 defaults concerned re-defaulters--companies that had already defaulted in the previous four years (see "Emerging Market Re-Defaulters' Business Overhaul Plans May Be Falling Short," published July 18, 2024).

Table 3

Itemized 2024 emerging & frontier markets corporate defaults*
Company name	Reason for default	Country	EM / FM	Industry	Default date	Next to last rating	Date of next to last rating	Rating one year prior to default	Rating three years prior to default	First rating	Date of first rating	EM sub region
Gol Linhas Aereas Inteligentes S.A.	Chapter 11	Brazil	EM	Transportation	1/26/2024	CCC-	12/5/2023	-	-	CCC+	3/15/2023	Latin America
Enjoy S.A.	Foreign bankruptcy	Chile	EM	Leisure Time/media	1/31/2024	CCC-	6/23/2023	CCC+	-	CCC+	5/3/2021	Latin America
CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.	Distressed exchange	Argentina	EM	Aerospace/automotive/capital goods/metal	2/14/2024	CC	1/12/2024	CCC	-	CCC	8/18/2021	Latin America
Wom S.A.	Chapter 11	Chile	EM	Telecommunications	4/1/2024	CCC	3/13/2024	B+	B+	B+	12/4/2019	Latin America
Credivalores - Crediservicios SAS	Chapter 7	Colombia	EM	Financial institutions	5/16/2024	NR	9/28/2023	CCC+	B	B+	11/14/2014	Latin America
Grupo Idesa S.A. de C.V.	Distressed exchange	Mexico	EM	Health care/chemicals	8/6/2024	CC	7/26/2024	B-		B-	5/22/2023	Latin America
CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.	Missed payment	Argentina	EM	Aerospace/automotive/capital goods/metal	8/27/2024	CC	7/29/2024	-	-	CCC-	2/16/2024	Latin America
Operadora de Servicios Mega S.A. de C.V. SOFOM E.R.	Missed payment	Mexico	EM	Financial institutions	9/11/2024	CC	8/13/2024	B	BB-	BB	1/29/2020	Latin America
*Excludes confidential issuers. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

While corporate issuers benefited from high but stable interest rates and tightening spreads in 2024, this financing environment eroded returns for the nonbanking financial institution (NBFI) sector in LatAm, resulting in two defaults.

Furthermore, Argentina's macroeconomic challenges (CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A. defaulted twice due to a distressed exchange and a missed payment) and idiosyncratic market challenges drove defaults for individual issuers. These challenges included sluggish demand in the petrochemical industry in Mexico, structurally lower margins due to inflation and higher costs (in the leisure sector), limited access to refinancing amid a liquidity squeeze (telecom sector) in Chile, and pressure on operating cash flows through, among other things, high lease payments (aerospace sector) in Brazil.

As in the last few years, corporations opted for more distressed exchanges to manage looming maturities. They represented 50% (53% in 2023) of defaults, while missed interest/principal payments made up 16.67%. The remaining defaults were bankruptcy related.

No Specific Industry Concentration In Defaults

The one-year cumulative EMFM default rate fell both for financial and nonfinancial corporates to 0.16% (median over 1997-2024: 0.42%) and 1.09% (median: 1.77%) respectively, in 2024 (see table 5). Despite the regional concentration in 2024, there was no clear country or sector trend in EMFM defaults (see table 4).

Table 4

Annual emerging & frontier markets 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	Telecom	Transportation	Utility
1997	0.00	0.00	0.00	2.56	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	4.76	3.85	0.00	8.75	5.26	25.00	0.00	0.00	5.88	11.11	0.00	6.67	0.00
1999	20.00	7.89	0.00	1.19	4.76	12.50	0.00	0.00	13.04	0.00	0.00	5.88	0.00
2000	0.00	2.70	7.14	0.00	0.00	14.29	0.00	0.00	0.00	0.00	3.03	6.25	0.00
2001	18.52	2.27	0.00	4.14	16.67	0.00	33.33	0.00	0.00	0.00	5.88	0.00	0.00
2002	8.00	6.52	18.18	2.48	13.33	18.18	0.00	0.00	50.00	12.50	15.00	0.00	28.57
2003	0.00	0.00	0.00	0.00	6.25	0.00	9.09	0.00	10.00	0.00	13.33	5.26	5.45
2004	0.00	0.00	3.45	0.44	6.25	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	0.00	0.00	2.70	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	2.27	1.75	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	2.04	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	0.00	4.94	4.05	0.60	2.78	0.00	0.00	0.00	4.76	0.00	3.33	0.00	0.00
2009	13.21	9.38	2.78	2.73	5.41	10.00	0.00	0.00	10.53	0.00	3.33	2.94	1.06
2010	2.27	0.00	3.08	0.82	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.03	1.04
2011	0.00	0.00	0.00	0.28	0.00	0.00	0.00	0.00	0.00	3.57	0.00	0.00	0.00
2012	4.17	0.00	2.67	0.52	2.94	3.03	0.00	0.00	0.00	0.00	0.00	2.44	3.81
2013	0.00	1.27	2.50	0.24	5.56	2.50	0.00	0.00	0.00	0.00	5.77	2.08	0.00
2014	1.85	2.02	3.13	0.43	0.00	0.00	0.00	0.00	4.76	0.00	0.00	0.00	0.00
2015	5.00	5.32	3.23	1.43	4.65	0.00	0.00	0.00	0.00	0.00	0.00	2.67	0.00
2016	4.76	5.43	4.65	1.18	0.00	0.00	8.33	0.69	0.00	1.54	3.51	5.95	0.00
2017	0.00	1.09	2.17	0.38	0.00	0.00	0.00	0.00	0.00	0.00	1.89	0.00	0.81
2018	2.33	2.04	0.00	0.58	0.00	0.00	0.00	0.00	5.56	0.00	0.00	1.96	0.00
2019	3.06	0.96	0.00	0.76	3.64	1.61	0.00	0.00	0.00	0.00	5.36	2.04	0.00
2020	0.00	1.83	2.44	0.38	0.00	1.67	8.70	0.69	27.78	7.14	2.00	3.09	0.00
2021	1.33	0.89	1.79	0.38	3.23	1.89	0.00	0.00	0.00	0.00	2.04	3.26	0.79
2022	0.00	4.80	0.88	0.77	1.72	0.00	0.00	0.00	7.69	8.93	0.00	0.00	0.00
2023	0.00	0.80	0.00	0.41	2.27	4.00	0.00	0.00	8.33	2.08	1.92	4.60	1.71
2024	1.41	0.80	1.04	0.21	0.00	1.89	0.00	0.00	15.38	0.00	1.89	1.18	0.00
Weighted Average	2.73	2.32	1.99	0.76	2.40	1.86	1.39	0.08	6.33	1.54	2.36	2.09	1.30
Average	3.39	2.38	2.35	1.13	3.03	3.45	2.12	0.05	5.85	1.67	2.44	2.12	1.54
Median	1.63	1.51	1.98	0.48	2.00	0.00	0.00	0.00	0.00	0.00	0.94	2.00	0.00
Std. Dev.	5.39	2.64	3.60	1.79	4.12	6.46	6.70	0.18	10.84	3.61	3.83	2.29	5.44
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	20.00	9.38	18.18	8.75	16.67	25.00	33.33	0.69	50.00	12.50	15.00	6.67	28.57
Includes investment-grade and speculative-grade rated entities. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 5

Cumulative emerging & frontier markets corporate default rates by sector (%)
	--All financials--			--All nonfinancials--
Year	One-year	Three-year	10-year	One-year	Three-year	10-year
1997	2.50	N/A	N/A	0.00	N/A	N/A
1998	8.33	N/A	N/A	4.52	N/A	N/A
1999	1.12	5.00	N/A	6.03	11.11	N/A
2000	0.00	9.52	N/A	2.15	10.73	N/A
2001	3.92	7.87	N/A	4.60	12.93	N/A
2002	2.35	5.30	N/A	17.63	24.46	N/A
2003	0.00	4.58	N/A	4.66	26.05	N/A
2004	0.40	2.35	N/A	0.67	22.30	N/A
2005	0.00	0.46	N/A	0.28	5.73	N/A
2006	0.00	0.40	15.00	0.51	1.01	25.93
2007	0.00	0.00	16.67	0.23	0.57	32.20
2008	0.49	0.00	11.24	2.16	1.26	32.33
2009	2.16	2.25	5.30	5.04	3.63	30.90
2010	0.65	3.16	5.88	1.09	7.45	27.97
2011	0.22	3.02	3.53	0.21	6.05	24.10
2012	0.40	1.09	1.39	2.14	3.06	7.53
2013	0.18	1.09	1.19	1.81	4.11	4.38
2014	0.34	1.01	1.37	1.08	4.87	4.55
2015	1.12	1.10	1.80	2.18	4.53	6.57
2016	1.07	1.89	4.79	3.01	5.71	7.94
2017	0.30	2.39	4.85	0.68	5.68	11.76
2018	0.45	1.84	4.97	0.89	4.45	11.29
2019	0.60	1.19	3.48	1.44	2.03	7.66
2020	0.44	1.50	3.70	2.70	4.07	9.45
2021	0.29	1.35	3.43	1.56	4.43	10.53
2022	0.59	1.19	3.85	1.77	5.03	9.96
2023	0.32	1.03	4.47	1.76	4.42	10.49
2024	0.16	1.19	4.94	1.09	3.67	10.33
Average	1.01	2.38	5.36	2.57	7.28	15.05
Median	0.42	1.42	4.47	1.77	4.70	10.49
Std. Dev.	1.71	2.34	4.31	3.37	6.92	10.04
Min	0.00	0.00	1.19	0.00	0.57	4.38
Max	8.33	9.52	16.67	17.63	26.05	32.33
N/A--Not applicable. Note: All financials refers to financial institutions and insurance combined. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

However, the broad sector cumulative default rates (for one-year and three-year) are now more than 0.24 percentage points below their historical medians (over 1997-2024). In our view, this indicates the resilience of our rated EMFM portfolio, but also highlights the potential for upward correction in the default rate, especially if economic or credit conditions deteriorate.

EMFM Default Rate Decoupling From Global Rate: A Twofold Explanation

While the default rate for EMFM fell to a multiyear low, global defaults slightly increased to 1.91% (1.86% in 2023) with speculative-grade corporate default rates rising to 3.94% (3.71%). Global defaults were heavily influenced by defaults in the consumer/service sector in the U.S. and Europe ("2024 Annual Global Corporate Default and Rating Transition Study," published March 27, 2025).

In our opinion, there are two explanations for the different default rates in EMFM compared to developed economies.

First, credit stress stemming from inflation and liquidity strain surged sooner in emerging markets than in advanced economies, especially because emerging market central banks started interest-rate hikes earlier than the Federal Reserve, the European Central Bank, the Bank of England, and other central banks. The impact of tightening monetary policy on the credit profile of corporations domiciled in advanced economies accelerated the pace of defaults only in 2023, while credit stress had already started in 2022 in EMFMs. This was true particularly in Greater China, where the government tightened regulations on developers' leverage and the escrow rule compliance requirements.

Stronger relative rating distribution of our EM portfolio compared to our global market portfolio also contributed to the divergence in default rates. Issuers rated at the bottom of the rating scale (i.e. 'B+' and below) make up a smaller overall share in EMs. For example, U.S. issuers with these ratings make up 35.93% of the total (38.25% in 2023) compared to only 19.82% (20.96% in 2023) of EM issuers (see chart 3). Default rates tend to reflect this difference in the underlying rating distributions. In our 28 years of analysis, the EM speculative-grade corporate default rate has only been above the global one six times.

Additionally, we observe that EMs had a higher proportion of issuers in the 'BBB' category than the U.S. in 2024 (chart 3). EMs are concentrated in the low investment-grade to high speculative-grade categories rather than being dispersed over the whole rating spectrum. In our opinion, the main reasons for the lower share of EMs in the highest rating categories are lower sovereign credit ratings and the high share of government-related entities in EM.

Although sovereign ratings don't act as a ceiling on issuer credit ratings, a corporate issuer rated above the sovereign must be able to withstand a hypothetical sovereign default scenario. For example, government-related entities are typically subjected more to country and sovereign intervention risks than private-sector entities since they usually have direct links to governments. Some of the issuers have explicit or implicit links to the respective sovereign or have an eligible guarantee from a parent or sovereign. In all cases, the issuer credit rating is subject to any sovereign-related considerations.

This rating distribution difference continued during 2024. Of the 97 new additions (81 in 2023) to our rated EMFM portfolio, we rated 53% (52 entities) above 'B+' (see table 7), while only 37% of new ratings are above this level in our global portfolio. The total share of EMFM speculative-grade issuers (rated 'BB+' and below) was 47% (of 1,311 actively rated issuers). Globally, the number of active speculative-grade ratings at the end of 2024 was 3,062, or 47% of all rated entities.

Table 6

Rating classification of new corporate issuers* in emerging & frontier markets
	--First rating--
Year	AAA	AA	A	BBB	BB	B	CCC/C	Total	% IG	% SG
1997	0	2	2	43	55	46	0	148	32%	68%
1998	0	1	6	20	30	31	0	88	31%	69%
1999	0	1	2	13	41	24	3	84	19%	81%
2000	0	0	4	13	23	29	4	73	23%	77%
2001	0	3	3	20	27	32	11	96	27%	73%
2002	0	2	4	23	43	55	13	140	21%	79%
2003	0	0	5	24	31	37	19	116	25%	75%
2004	0	0	9	24	50	29	12	124	27%	73%
2005	0	0	10	27	38	56	5	136	27%	73%
2006	0	1	12	31	51	74	12	181	24%	76%
2007	1	0	27	36	51	79	8	202	32%	68%
2008	0	1	21	35	40	34	9	140	41%	59%
2009	0	0	8	18	34	30	13	103	25%	75%
2010	0	2	5	28	24	54	9	122	29%	71%
2011	0	2	9	36	42	60	7	156	30%	70%
2012	0	1	11	30	59	74	10	185	23%	77%
2013	0	2	16	49	69	78	8	222	30%	70%
2014	0	2	23	65	46	46	8	190	47%	53%
2015	0	5	24	56	43	34	9	171	50%	50%
2016	0	0	18	67	57	38	9	189	45%	55%
2017	0	5	16	29	52	77	5	184	27%	73%
2018	0	0	13	44	57	67	10	191	30%	70%
2019	0	1	13	31	49	56	6	156	29%	71%
2020	0	2	5	28	31	29	14	109	32%	68%
2021	0	0	13	25	34	60	7	139	27%	73%
2022	0	1	4	29	24	38	10	106	32%	68%
2023	0	2	6	9	19	38	7	81	21%	79%
2024	0	1	4	19	28	34	11	97	25%	75%
Total	1	37	293	872	1148	1339	239	3929	31%	69%
* Includes issuers that are assigned a new rating after default as well as those companies that receive a rating for the first time. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Brazilian corporates accounted for the largest portion of new ratings

Compared to the year prior, 2024 recorded a slightly higher amount of new corporate ratings in emerging and frontier markets. We rated 97 new corporate issuers (81 in 2023), which is still below the yearly long-term average of about 140 (1997-2024). All came from EMs besides one in FMs. Brazil accounted for 31% of the new additions to the tally.

Frontier market issuer credit ratings on corporations are mostly in the 'BB' and 'B' category (73.33%), with the caveat of a small sample size. We now rate 14 issuers in frontier markets as of the end of 2024, compared with 1,311 in total EMFMs and 6,835 globally.

Historical Stress Periods for EMFMs

From 1997 until the end of 2024, there were five historical periods with relatively high EMFM default rates.

The first one resulted from shocks that stemmed from the Asian financial crisis of the late 1990s. In 1998, defaults were mostly among Indonesian nonfinancial companies and Russian financial companies. The defaults in Indonesia came amid the political unrest that ensued from the crisis, and those in Russia amid the collapse of its banking system. The following year, defaults in Asia-Pacific continued, but as the financial crisis spilled into other regions, the majority of defaults were in Latin America.

Then, in 2002, the EM corporate default rate spiked to its all-time high (11.75%) when recession in Argentina, which began in 1998, deepened into a financial crisis, with nearly three-quarters of EM defaults that year occurring among Argentine issuers.

EMFM corporate default rates climbed during the 2008-2009 financial crisis, as they did globally, with a rate of 1.41% in 2008 and 3.64% in 2009 (lower than global levels).

In 2015-2016, most EM corporate defaults occurred among Brazilian nonfinancial issuers amid the deepening recession, and among Russian financial issuers during the financial crisis, which in part stemmed from sanctions imposed on the country following its 2014 invasion of Ukraine.

In 2020, the credit quality of corporate issuers in EMFMs sharply deteriorated as the COVID-19 pandemic pushed the world into recession.

A Solid Year For Credit Quality

EMFM ratings were largely stable in 2024, with the proportion of unchanged ratings increasing to 79.26% in 2024 from 77.21% in 2023 (median value 68.61%, table 6). The upgrade rate (10.85% versus 11.69% in 2023) outpaced the downgrade rate (3.62% versus 4.93% in 2023) for the fourth year in a row after the peak of the COVID-19 pandemic. EMFM ratings also performed better than those on global corporates, with an upgrade rate of 9.6% and a downgrade rate of 5.8%.

Market conditions were also broadly stable over 2024, due to supportive domestic demand developments and stable global trade and financing conditions. Relatively stable financing conditions, despite still high borrowing costs, supported nonfinancial corporate issuers amid tightening spreads and a stronger-than-expected global economy. The downgrade-to-upgrade ratio was the lowest since 2010, at 0.33x (see table 6).

We think the stability of the ratings suggests stronger underlying credit fundamentals of EMFM issuers. This is reflected in the falling share of EMFM annual corporate defaults in global defaults. Their share was 8.28% in 2024 (12.42% in 2023), which is lower than the 1997-2024 average of 14.14%.

Table 7

Summary of emerging & frontier markets net annual rating activity (%)*
Year	Issuers	Upgrades (%)	Downgrades§ (%)	Defaults (%)	Withdrawn ratings (%)	Changed ratings (%)	Unchanged ratings (%)	Downgrade/upgrade ratio
1997	121	5.79	13.22	0.83	5.79	25.62	74.38	2.29
1998	261	2.68	27.20	5.75	4.98	40.61	59.39	10.14
1999	321	1.25	15.58	4.67	8.10	29.60	70.40	12.50
2000	365	10.41	9.86	1.37	5.48	27.12	72.88	0.95
2001	414	8.45	17.63	4.35	8.45	38.89	61.11	2.09
2002	448	8.71	15.18	11.83	6.92	42.63	57.37	1.74
2003	495	14.34	5.05	2.63	9.29	31.31	68.69	0.35
2004	550	16.55	1.82	0.55	5.82	24.73	75.27	0.11
2005	644	25.16	2.48	0.16	8.54	36.34	63.66	0.10
2006	729	20.99	2.61	0.27	14.81	38.68	61.32	0.12
2007	796	21.98	3.89	0.13	9.55	35.55	64.45	0.18
2008	922	11.17	9.76	1.41	9.54	31.89	68.11	0.87
2009	959	4.90	18.56	3.65	11.26	38.37	61.63	3.79
2010	917	16.58	5.34	0.87	9.16	31.95	68.05	0.32
2011	946	18.50	8.35	0.21	9.94	37.00	63.00	0.45
2012	1009	9.12	10.90	1.29	8.13	29.44	70.56	1.20
2013	1097	14.49	10.21	1.00	7.47	33.18	66.82	0.70
2014	1230	6.10	13.82	0.73	8.21	28.86	71.14	2.27
2015	1314	5.94	17.12	1.67	9.21	33.94	66.06	2.88
2016	1350	6.74	18.44	2.07	8.59	35.85	64.15	2.74
2017	1414	7.78	12.59	0.50	9.83	30.69	69.31	1.62
2018	1454	9.22	12.17	0.69	8.67	30.74	69.26	1.32
2019	1504	6.98	6.38	1.06	10.24	24.67	75.33	0.91
2020	1490	2.01	18.79	1.68	8.99	31.48	68.52	9.33
2021	1447	9.47	4.98	0.97	7.74	23.15	76.85	0.53
2022	1465	7.24	5.39	1.23	13.38	27.24	72.76	0.75
2023	1360	11.69	4.93	1.10	5.07	22.79	77.21	0.42
2024	1355	10.85	3.62	0.66	5.61	20.74	79.26	0.33
Weighted average		10.17	10.14	1.45	8.84	30.59	69.41	1.00
Average		10.54	10.57	1.90	8.53	31.54	68.46	2.18
Median		9.17	10.04	1.08	8.57	31.39	68.61	0.93
Std. dev.		6.07	6.39	2.41	2.30	5.77	5.77	3.17
Min		1.25	1.82	0.13	4.98	20.74	57.37	0.10
Max		25.16	27.20	11.83	14.81	42.63	79.26	12.50
*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. Excludes confidential ratings. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Ratings Performance Was Generally Consistent With Global Trends

The sample sizes for emerging and frontier markets present a challenge to our analysis. Global defaults totaled 3,059 by 23,910 issuers between 1997 and 2024, while for the same period, corporate defaults in EMFMs totaled just 440 and 17, respectively. This makes up about 14.93% of all defaults. Additionally, our EMFM data pool is more influenced by trends in recent years, given that we assigned ratings to about two-thirds of EMFM issuers after 2005.

Average time to default and default rates by rating modifier

The average time to default was relatively stable at 4.4 years and 4.9 years for EMs and FMs, respectively (1997-2024, table 8). Both times were below the global average of 5.9 years (1981-2024). We think the shorter time to default may be attributable to more volatile economic and financial conditions, EMs' smaller data pool, and their rating distribution that's less centered towards the higher end of the rating scale ('A' and above) with respect to developed markets.

For the global pool data and EM rating categories with the largest sample sizes, the higher the rating, the longer the time to default. This means for EM corporate issuers:

• 'CCC' rated entities took 2.5 years to default on average,
• 'B' rated entities 3.9 years, and
• 'BB' rated entities 5.8 years.

The average time to default shortens when considering the post-original rating, namely the unique rating each entity received in its path to default excluding the original rating (see table 9).

Table 8

Time to default from original rating among corporate defaulters
Emerging market (1997-2024)	Original rating	Defaults	Average years from original rating	Median years from original rating	St. dev. of years from original rating
	AAA	N/A	N/A	N/A	N/A
	AA	N/A	N/A	N/A	N/A
	A	1	1.6	1.6	N/A
	BBB	39	6.0	4.8	5.7
	BB	128	5.8	4.7	4.6
	B	199	3.9	2.7	3.7
	CCC/C	73	2.5	1.2	3.3
	Total	440	4.4	3.1	4.3
Frontier market (1997-2024)	Original rating	Defaults	Average years from original rating	Median years from original rating	St. dev. of years from original rating
	AAA	N/A	N/A	N/A	N/A
	AA	N/A	N/A	N/A	N/A
	A	N/A	N/A	N/A	N/A
	BBB	N/A	N/A	N/A	N/A
	BB	6	8.9	8.1	5.4
	B	8	3.5	3.8	1.7
	CCC/C	3	0.6	0.5	0.4
	Total	17	4.9	4.2	4.6
Global (1981-2024)	Original rating	Defaults	Average years from original rating	Median years from original rating	St. dev. of years from original rating
	AAA	8	18.0	18.5	11.4
	AA	33	17.2	19.3	10.5
	A	102	14.7	11.5	9.9
	BBB	239	9.7	7.7	7.1
	BB	701	7.3	5.5	6.0
	B	1971	5.2	3.9	4.4
	CCC/C	503	2.0	1.2	2.5
	Total	3557	5.9	4.0	5.8
N/A--Not available. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 9

Time to default from post-original ratings among corporate defaulters
Emerging market (1997-2024)	Rating path to default	Average years from rating category	Median years from rating category	St. dev. of years from rating category
	AAA	N/A	N/A	N/A
	AA	N/A	N/A	N/A
	A	0.7	0.7	N/A
	BBB	7.9	5.1	6.7
	BB	3.7	2.5	4.2
	B	3.0	1.2	4.2
	CCC/C	0.8	0.2	1.9
	Total	2.2	0.7	3.7
Frontier market (1997-2024)	Rating path to default	Average years from rating category	Median years from rating category	St. dev. of years from rating category
	AAA	N/A	N/A	N/A
	AA	N/A	N/A	N/A
	A	N/A	N/A	N/A
	BBB	N/A	N/A	N/A
	BB	10.9	10.9	N/A
	B	3.0	2.3	2.6
	CCC/C	1.0	0.5	1.1
	Total	2.2	1.4	2.6
Global (1981-2024)	Rating path to default	Average years from rating category	Median years from rating category	St. dev. of years from rating category
	AAA	27.4	27.7	10.0
	AA	14.9	15.8	9.4
	A	11.9	10.0	8.7
	BBB	8.8	6.9	7.3
	BB	6.3	4.4	6.0
	B	3.4	2.0	4.1
	CCC/C	0.9	0.4	1.7
	Total	3.3	1.2	5.0
N/A—Not available. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Looking at default rates by modifier shows that lower rating categories experience higher default rates on average historically, although occasional exceptions occur due to outliers within smaller sample sizes or rare default events. For example, 2009 had a higher default rate for 'B+' rated companies than for 'B' rated companies (see table 10).

Table 10

Emerging & frontier markets corporate default rates by rating modifier (%)
	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC/C
1997	N/A	0.00	N/A	0.00	0.00	0.00	0.00	0.00	6.67	0.00	0.00	0.00	0.00	0.00	0.00	0.00	n/a
1998	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	4.17	3.85	3.33	0.00	16.67	21.05	22.22	n/a
1999	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.38	12.50	20.00	5.56	23.81
2000	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.44	5.26	5.56	10.00
2001	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.61	15.09	7.27	3.45	5.00	15.00
2002	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.03	3.23	10.00	2.22	19.05	16.67	58.18
2003	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	3.17	5.41	2.56	18.18
2004	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.49	1.64	0.00	0.00	2.56
2005	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.67	0.00	0.00
2006	N/A	N/A	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.03	0.00	0.00	0.00	4.55
2007	N/A	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	4.17
2008	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.04	0.00	1.14	0.75	2.91	3.49	4.00	10.00
2009	0.00	0.00	0.00	0.00	2.78	0.00	0.00	1.35	0.00	0.94	0.00	1.01	1.39	10.00	8.22	9.68	41.67
2010	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.27	0.00	1.59	0.00	0.00	0.00	15.15
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	2.70	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	2.20	2.25	0.00	7.69	17.39
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	0.94	1.25	1.98	4.35	13.64
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	1.12	0.83	2.56	9.62
2015	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.76	0.00	5.61	5.56	1.61	14.55
2016	0.00	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.81	0.00	0.56	0.00	1.71	1.92	3.66	12.79	19.51
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	1.23	1.06	16.13
2018	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	2.63	3.37	19.05
2019	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	2.54	1.44	6.94	20.69
2020	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.81	0.00	1.02	0.00	3.42	7.87	44.00
2021	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	1.79	0.00	2.67	15.87
2022	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.52	2.54	2.04	5.45	16.07
2023	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.22	1.12	0.00	2.35	3.57	16.00
2024	N/A	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.63	0.00	0.00	0.00	0.00	1.25	1.82	12.50
Average	0.00	0.00	0.00	0.00	0.10	0.00	0.00	0.05	0.27	0.24	0.34	0.44	1.47	2.78	4.07	4.85	16.86
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	0.26	1.71	2.01	3.47	15.51
Std. dev.	0.00	0.00	0.00	0.00	0.52	0.00	0.00	0.26	1.26	0.82	0.93	0.92	3.29	4.14	6.01	5.27	13.29
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	2.78	0.00	0.00	1.35	6.67	4.17	3.85	3.33	15.09	16.67	21.05	22.22	58.18
N/A--Not applicable. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Transition And Cumulative Default Rate Tables

Rating transitions in 2024 EMFMs showed a clear correlation between low ratings and the probability of default, which is consistent with global trends.

Investment-grade issuers in EMs tend to have greater ratings stability (as measured by the rate of transitions) than their speculative-grade counterparts (see table 11). For instance, about 97.38% of emerging market issuers in the 'A' rating category as of Jan. 1, 2024, were still rated in that category at the end of 2024 (versus 95.08% for global corporates). The comparable metric for issuers rated in the 'B' category was 78.35% (versus 79.31%).

In 2024, EM ratings were more stable compared to global trends. The main difference was in the 'CCC/C' rating category--77.08% of emerging market 'CCC/C' rated entities remained within that category after a year, with very few upgrades to 'B'.

The 48 EM issuers composing the 'CCC/C' pool in 2024 have remained in the category, on average, for 3.2 years. Forty-one percent were financial institutions and 46% were in Argentina. On the other hand, less than half of global risky credits remained in the 'CCC/C' rating category in 2024, with a higher upgrade rate (10.85% to the 'B' rating category globally versus 4.17% in EM). EM ratings' transition to defaults from the 'CCC/C' rating category also differed from global trends. While 28.45% of the 'CCC/C' global rated companies defaulted in 2024, only 12.50% did in EMs.

Table 11

One-year 2024 corporate transition rates
Emerging market	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	AA	0.00	96.43	0.00	0.00	0.00	0.00	0.00	0.00	3.57
	A	0.00	0.00	97.38	0.44	0.00	0.00	0.00	0.00	2.18
	BBB	0.00	0.00	2.95	90.93	1.13	0.45	0.00	0.23	4.31
	BB	0.00	0.00	0.00	1.92	90.66	0.82	0.00	0.00	6.59
	B	0.00	0.00	0.00	0.43	8.23	78.35	1.73	0.87	10.39
	CCC/C	0.00	0.00	0.00	0.00	0.00	4.17	77.08	12.50	6.25
Frontier market	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	AA	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
	A	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00	0.00
	BBB	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00	0.00
	BB	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00	0.00
	B	0.00	0.00	0.00	0.00	0.00	100.00	0.00	0.00	0.00
	CCC/C	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
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	93.68	3.16	0.00	0.00	0.00	0.00	0.00	3.16
	A	0.00	0.86	95.08	2.43	0.00	0.00	0.00	0.00	1.64
	BBB	0.00	0.00	2.49	92.53	1.30	0.11	0.05	0.05	3.46
	BB	0.00	0.00	0.08	3.62	87.30	2.44	0.25	0.17	6.14
	B	0.00	0.00	0.00	0.06	4.54	79.31	3.39	1.72	10.98
	CCC/C	0.00	0.00	0.00	0.00	0.00	10.85	46.63	28.45	14.08
N/A--Not applicable. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Over a longer timeframe, EM corporate rating transitions remain aligned to global corporate transitions. Of EM issuers in the 'A' rating category over 1997-2024, 92.27% were still rated in that category after one year, whereas 71.84% of issuers rated in the 'B' rating category remained at that rating (see table 12). Rating transition rates among EM corporates are also generally consistent with global patterns in periods greater than one year (see table 13).

Considering averages in the 1997-2024 period over a one- and two-year interval, we note that upward transitions from the 'CCC/C' category are more frequent for EM corporates than for their global peers, while at the same time, the transition rates to default are lower. The higher rating withdrawal ratio in EMs also contributes to this effect.

Looking at rating transitions by rating modifier (see table 14), EMFM rating transitions generally continue to follow global patterns, but there is some variation between adjacent rating categories; this in part reflects the sample sizes for each rating.

Table 12

Average one-year corporate transition rates (%)
Emerging market (1997-2024)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	83.78	13.51	0.00	0.00	0.00	0.00	0.00	0.00	2.70
		(39.10)	(36.26)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(17.20)
	AA	1.36	88.01	8.45	0.00	0.00	0.00	0.00	0.00	2.18
		(7.89)	(16.33)	(14.24)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(3.68)
	A	0.00	0.86	92.27	3.90	0.21	0.18	0.00	0.03	2.57
		(0.00)	(1.43)	(4.63)	(3.68)	(0.70)	(0.48)	(0.00)	(0.15)	(1.25)
	BBB	0.00	0.01	1.82	88.05	4.01	0.32	0.13	0.10	5.56
		(0.00)	(0.08)	(1.73)	(5.30)	(4.02)	(0.99)	(0.89)	(0.32)	(2.30)
	BB	0.00	0.00	0.01	3.59	81.12	4.33	0.54	0.54	9.86
		(0.00)	(0.00)	(0.10)	(2.47)	(4.72)	(2.50)	(1.77)	(1.10)	(3.42)
	B	0.00	0.00	0.00	0.12	6.06	71.84	3.95	3.00	15.02
		(0.00)	(0.00)	(0.00)	(0.28)	(3.84)	(5.06)	(3.65)	(3.16)	(3.73)
	CCC/C	0.00	0.00	0.00	0.00	0.35	15.55	50.23	17.05	16.82
		(0.00)	(0.00)	(0.00)	(0.00)	(0.88)	(13.76)	(17.52)	(14.13)	(9.91)
Frontier market (1997-2024)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
	AA	0.00	72.73	18.18	0.00	0.00	0.00	0.00	0.00	9.09
		(0.00)	(41.22)	(40.66)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(20.33)
	A	0.00	4.00	88.00	4.00	0.00	0.00	0.00	0.00	4.00
		(0.00)	(13.88)	(26.22)	(20.06)	(0.00)	(0.00)	(0.00)	(0.00)	(13.88)
	BBB	0.00	0.00	0.00	92.00	0.00	0.00	0.00	0.00	8.00
		(0.00)	(0.00)	(0.00)	(24.28)	(0.00)	(0.00)	(0.00)	(0.00)	(24.28)
	BB	0.00	0.00	0.00	1.14	79.55	9.09	0.00	0.00	10.23
		(0.00)	(0.00)	(0.00)	(7.59)	(24.09)	(16.97)	(0.00)	(0.00)	(19.67)
	B	0.00	0.00	0.00	0.00	2.33	81.98	6.40	2.33	6.98
		(0.00)	(0.00)	(0.00)	(0.00)	(5.36)	(16.17)	(9.61)	(7.40)	(12.09)
	CCC/C	0.00	0.00	0.00	0.00	0.00	4.35	39.13	39.13	17.39
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(11.77)	(36.67)	(31.40)	(31.35)
Global (1981-2024)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	87.28	8.92	0.51	0.03	0.10	0.03	0.05	0.00	3.08
		(7.37)	(7.16)	(0.81)	(0.13)	(0.26)	(0.17)	(0.34)	(0.00)	(2.45)
	AA	0.45	87.73	7.50	0.44	0.05	0.06	0.02	0.02	3.73
		(0.52)	(5.17)	(4.19)	(0.65)	(0.18)	(0.19)	(0.06)	(0.07)	(1.69)
	A	0.02	1.48	89.42	4.64	0.23	0.10	0.01	0.05	4.04
		(0.08)	(1.04)	(4.07)	(2.21)	(0.36)	(0.22)	(0.06)	(0.10)	(1.71)
	BBB	0.00	0.07	3.05	87.33	3.21	0.40	0.09	0.14	5.71
		(0.03)	(0.14)	(1.58)	(4.09)	(1.67)	(0.62)	(0.19)	(0.23)	(1.52)
	BB	0.01	0.02	0.10	4.44	78.88	6.25	0.51	0.56	9.23
		(0.05)	(0.08)	(0.22)	(1.88)	(4.81)	(3.14)	(0.65)	(0.76)	(2.21)
	B	0.00	0.02	0.06	0.14	4.47	75.17	4.79	2.93	12.42
		(0.00)	(0.07)	(0.17)	(0.19)	(1.98)	(3.81)	(2.59)	(2.87)	(2.27)
	CCC/C	0.00	0.00	0.07	0.13	0.40	13.18	45.06	26.13	15.03
		(0.00)	(0.00)	(0.34)	(0.53)	(0.79)	(7.18)	(8.17)	(11.29)	(4.37)
Note: The Emerging Market and Frontier Market figures are for the time period from 1997-2024. Numbers in parentheses are weighted standard deviations. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 13

Average two-year corporate transition rates (%)
Emerging market (1997-2024)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	67.57	27.03	0.00	0.00	0.00	0.00	0.00	0.00	5.41
		(49.65)	(47.10)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
	AA	2.95	77.88	15.63	0.00	0.00	0.00	0.00	0.00	3.54
		(11.41)	(23.35)	(21.58)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(4.36)
	A	0.00	1.52	84.90	7.41	0.44	0.35	0.00	0.03	5.35
		(0.00)	(1.83)	(6.55)	(4.89)	(1.16)	(0.77)	(0.00)	(0.15)	(1.96)
	BBB	0.00	0.01	3.52	78.18	6.74	0.66	0.23	0.40	10.25
		(0.00)	(0.09)	(2.64)	(6.64)	(5.53)	(1.35)	(1.15)	(1.74)	(2.82)
	BB	0.00	0.00	0.05	6.52	66.56	6.48	0.76	1.55	18.08
		(0.00)	(0.00)	(0.16)	(3.79)	(5.77)	(3.08)	(1.78)	(3.02)	(3.84)
	B	0.00	0.00	0.00	0.24	9.90	53.67	4.99	6.19	25.01
		(0.00)	(0.00)	(0.00)	(0.45)	(6.08)	(5.67)	(3.76)	(4.86)	(4.72)
	CCC/C	0.00	0.00	0.00	0.12	0.49	24.15	26.10	22.32	26.83
		(0.00)	(0.00)	(0.00)	(0.56)	(1.44)	(15.76)	(16.97)	(15.14)	(12.42)
Frontier market (1997-2024)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
	AA	0.00	54.55	27.27	0.00	0.00	0.00	0.00	0.00	18.18
		(0.00)	(47.43)	(46.95)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(33.88)
	A	0.00	8.33	75.00	8.33	0.00	0.00	0.00	0.00	8.33
		(0.00)	(19.09)	(36.23)	(28.32)	(0.00)	(0.00)	(0.00)	(0.00)	(24.15)
	BBB	0.00	0.00	0.00	86.36	0.00	0.00	0.00	0.00	13.64
		(0.00)	(0.00)	(0.00)	(28.35)	(0.00)	(0.00)	(0.00)	(0.00)	(28.35)
	BB	0.00	0.00	0.00	2.38	61.90	14.29	1.19	1.19	19.05
		(0.00)	(0.00)	(0.00)	(9.86)	(29.81)	(15.35)	(4.83)	(4.83)	(24.64)
	B	0.00	0.00	0.00	0.00	3.61	66.87	9.64	6.02	13.86
		(0.00)	(0.00)	(0.00)	(0.00)	(6.23)	(18.85)	(13.00)	(9.93)	(16.00)
	CCC/C	0.00	0.00	0.00	0.00	0.00	4.35	13.04	52.17	30.43
		(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(11.77)	(15.85)	(33.92)	(37.58)
Global (1981-2024)	From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
	AAA	76.09	15.95	1.41	0.08	0.21	0.05	0.10	0.03	6.09
		(10.45)	(10.50)	(1.44)	(0.24)	(0.41)	(0.23)	(0.40)	(0.17)	(4.21)
	AA	0.78	77.17	13.31	1.14	0.16	0.12	0.02	0.05	7.24
		(0.71)	(8.19)	(5.95)	(1.09)	(0.32)	(0.27)	(0.06)	(0.11)	(2.70)
	A	0.04	2.64	80.18	8.14	0.59	0.21	0.03	0.12	8.06
		(0.07)	(1.72)	(6.65)	(3.07)	(0.75)	(0.38)	(0.10)	(0.18)	(2.81)
	BBB	0.01	0.14	5.61	76.75	5.17	0.88	0.17	0.38	10.89
		(0.07)	(0.22)	(2.49)	(6.59)	(2.14)	(1.00)	(0.27)	(0.58)	(2.45)
	BB	0.01	0.03	0.24	7.82	62.60	9.45	0.93	1.77	17.16
		(0.05)	(0.09)	(0.44)	(2.94)	(6.92)	(2.95)	(0.82)	(1.99)	(2.99)
	B	0.00	0.02	0.10	0.33	7.40	56.64	5.77	6.98	22.75
		(0.00)	(0.09)	(0.26)	(0.39)	(3.09)	(4.75)	(2.31)	(5.19)	(3.63)
	CCC/C	0.00	0.00	0.10	0.33	0.80	16.95	22.18	35.79	23.84
		(0.00)	(0.00)	(0.39)	(0.98)	(1.02)	(7.01)	(7.53)	(12.54)	(5.99)
Note: The Emerging Market and Frontier Market figures are for the time period from 1997-2024. Numbers in parentheses are weighted standard deviations. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 14

Average one-year transition rates for emerging & frontier markets corporate issuers by rating modifier, 1997 to 2024 (%)
	--Rating--
From/To	AAA	AA+	AA	AA-	A+	A	A-	BBB+	BBB	BBB-	BB+	BB	BB-	B+	B	B-	CCC	D	NR
AAA	83.78	13.51	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	2.70
	(39.10)	(36.26)	(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)	(17.20)
AA+	9.62	86.54	1.92	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	1.92
	(31.07)	(33.28)	(14.48)	(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)	(4.75)
AA	0.00	13.46	73.08	9.62	0.00	0.00	1.92	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	1.92
	(0.00)	(28.62)	(35.71)	(25.69)	(0.00)	(0.00)	(14.07)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(7.96)
AA-	0.00	0.00	4.01	81.75	11.31	0.36	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	2.55
	(0.00)	(0.00)	(13.40)	(18.51)	(15.90)	(1.60)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(6.33)
A+	0.00	0.00	0.15	4.09	84.09	7.45	0.73	0.29	0.29	0.00	0.29	0.00	0.00	0.29	0.00	0.00	0.00	0.15	2.19
	(0.00)	(0.00)	(0.63)	(6.05)	(11.14)	(9.84)	(2.45)	(1.56)	(0.88)	(0.00)	(1.26)	(0.00)	(0.00)	(1.26)	(0.00)	(0.00)	(0.00)	(0.63)	(2.37)
A	0.00	0.00	0.00	0.09	3.91	85.99	5.46	1.00	0.36	0.09	0.00	0.00	0.00	0.09	0.00	0.00	0.00	0.00	3.00
	(0.00)	(0.00)	(0.00)	(0.48)	(5.64)	(9.81)	(6.61)	(3.03)	(1.83)	(1.16)	(0.00)	(0.00)	(0.00)	(0.48)	(0.00)	(0.00)	(0.00)	(0.00)	(2.93)
A-	0.00	0.00	0.00	0.00	0.12	5.10	84.90	5.83	0.74	0.37	0.06	0.25	0.00	0.06	0.12	0.00	0.00	0.00	2.46
	(0.00)	(0.00)	(0.00)	(0.00)	(0.69)	(5.10)	(8.17)	(4.88)	(1.56)	(1.40)	(0.32)	(1.28)	(0.00)	(0.30)	(0.39)	(0.00)	(0.00)	(0.00)	(2.04)
BBB+	0.00	0.00	0.00	0.00	0.04	0.13	5.56	81.44	7.78	0.78	0.04	0.09	0.09	0.09	0.00	0.00	0.00	0.04	3.91
	(0.00)	(0.00)	(0.00)	(0.00)	(0.28)	(0.44)	(4.84)	(7.53)	(6.71)	(1.21)	(0.18)	(0.47)	(0.35)	(0.29)	(0.00)	(0.00)	(0.00)	(0.24)	(2.38)
BBB	0.00	0.00	0.00	0.04	0.04	0.00	0.19	7.58	78.80	6.74	1.07	0.34	0.11	0.15	0.04	0.04	0.04	0.08	4.75
	(0.00)	(0.00)	(0.00)	(0.23)	(0.20)	(0.00)	(0.45)	(6.86)	(8.38)	(5.90)	(2.10)	(1.27)	(0.46)	(0.55)	(0.15)	(0.31)	(0.37)	(0.54)	(3.20)
BBB-	0.00	0.00	0.00	0.00	0.00	0.03	0.13	0.54	6.51	75.05	7.35	1.42	0.34	0.20	0.24	0.13	0.30	0.17	7.59
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.25)	(0.53)	(1.03)	(4.46)	(10.21)	(7.79)	(2.34)	(0.63)	(0.67)	(1.07)	(0.75)	(1.99)	(0.59)	(4.51)
BB+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.13	0.56	10.18	68.42	8.86	1.63	0.47	0.21	0.17	0.34	0.21	8.81
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.51)	(1.69)	(7.87)	(9.79)	(8.77)	(2.26)	(0.75)	(1.09)	(0.51)	(2.17)	(0.61)	(4.28)
BB	0.00	0.00	0.00	0.00	0.00	0.00	0.04	0.08	0.08	0.69	10.55	65.90	9.37	1.60	0.57	0.23	0.65	0.30	9.94
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.25)	(0.30)	(0.30)	(0.94)	(6.36)	(9.86)	(8.41)	(1.61)	(0.84)	(0.70)	(2.43)	(0.72)	(4.43)
BB-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.10	0.17	0.73	11.33	66.64	6.62	1.85	0.36	0.60	0.99	10.60
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.59)	(1.12)	(1.22)	(9.10)	(8.13)	(4.50)	(1.69)	(0.53)	(1.28)	(2.32)	(3.83)
B+	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.04	0.13	0.27	1.43	11.51	57.68	8.64	2.78	1.39	2.15	13.97
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.21)	(0.38)	(0.86)	(1.78)	(6.03)	(9.26)	(5.39)	(2.43)	(2.48)	(3.15)	(5.26)
B	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.10	0.10	0.30	1.74	11.03	56.14	10.33	3.18	2.83	14.26
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.35)	(0.40)	(0.85)	(2.94)	(6.59)	(8.90)	(7.48)	(3.21)	(4.07)	(5.46)
B-	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.06	0.00	0.26	0.19	2.71	12.44	54.42	8.90	4.38	16.63
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.37)	(0.00)	(0.62)	(0.78)	(4.70)	(6.65)	(8.19)	(9.52)	(4.13)	(5.75)
CCC/C	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.34	0.67	1.80	12.79	49.94	17.62	16.84
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.86)	(1.96)	(2.09)	(11.43)	(17.56)	(13.88)	(9.68)
Note: Numbers in parentheses are weighted standard deviations. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Lower ratings and higher defaults in EMFMs remain correlated over longer time horizons

In EMFMs, no issuers defaulted from the 'AAA' or 'AA' rating categories. Our records show that there was just one default from an issuer with an original rating in the 'A' category between 1997-2024 (see charts 4 and 5 and tables 15 and 16).

As we expected, the default rates increase among issuers with lower ratings. For instance, EM issuers in the 'BB' rating category had a cumulative average default rate of 0.54% after one year and 6.58% after 10 years, while those in the 'B' rating category had a cumulative average default rate of 3.00% after one year and 16.22% after 10 years (see chart 4).

EM defaults are less dispersed than global defaults

Charts 4 and 5 show the nonlinearity of the rating scale: the point-in-time distance between the 'CCC/C' and 'B' curve is higher than the 'B' and 'BB' one. When comparing cumulative average corporate default rates (table 15), EM defaults are less dispersed than global defaults. The difference between the cumulative default rate after 10 years and the cumulative default rate after the first year is lower for EMs than the global sample.

For example, on average after three years, the EM 'CCC/C' rated category defaults in 24.93% of the cases. For global ratings, it is 41.35%. After 10 years, the same percentage is closer to the three-year average for EMs (29.86%) versus the global sample (50.45%). Therefore, historical data suggests that for a given rating category, default rates will increase by a lower percentage over time in EMs than for the global pool.

Table 15

Comparison of corporate cumulative average default rates (%)
Emerging market (1997-2024)	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	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03	0.03
	BBB	0.10	0.41	0.76	1.16	1.52	1.74	1.81	1.90	1.97	2.00
	BB	0.54	1.53	2.58	3.56	4.38	4.96	5.48	5.88	6.26	6.58
	B	3.00	6.10	8.41	10.32	11.75	12.87	13.87	14.74	15.47	16.22
	CCC/C	17.05	22.07	24.93	25.35	26.42	27.34	28.15	28.97	29.49	29.86
	Investment-grade	0.08	0.29	0.52	0.79	1.04	1.19	1.24	1.30	1.35	1.37
	Speculative-grade	2.50	4.56	6.21	7.52	8.60	9.42	10.14	10.76	11.29	11.80
	All rated	1.42	2.65	3.68	4.54	5.26	5.79	6.23	6.62	6.95	7.25
Frontier market (1997-2024)	From/To	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
	AAA
	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
	BBB	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	BB	0.00	1.19	1.19	2.51	3.83	6.50	6.50	9.25	12.08	13.57
	B	2.33	5.94	10.33	14.29	18.61	21.08	23.05	24.27	25.73	27.45
	CCC/C	39.13	52.17	60.87	65.76	65.76	65.76	65.76	65.76	65.76	65.76
	Investment-grade	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Speculative-grade	4.59	8.26	11.70	14.93	17.92	20.24	21.27	23.01	24.91	26.33
	All rated	3.78	6.81	9.68	12.37	14.89	16.84	17.71	19.17	20.78	21.99
Global (1981-2024)	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	0.67
	AA	0.02	0.05	0.11	0.19	0.28	0.37	0.45	0.52	0.59	0.65
	A	0.05	0.11	0.19	0.29	0.39	0.51	0.65	0.78	0.90	1.03
	BBB	0.14	0.38	0.67	1.01	1.36	1.71	2.01	2.30	2.58	2.86
	BB	0.56	1.76	3.13	4.48	5.75	6.93	7.94	8.86	9.68	10.44
	B	2.93	6.93	10.46	13.31	15.60	17.45	18.90	20.06	21.08	22.02
	CCC/C	26.13	35.93	41.35	44.37	46.55	47.60	48.64	49.31	49.91	50.45
	Investment-grade	0.08	0.21	0.37	0.57	0.77	0.98	1.17	1.34	1.52	1.69
	Speculative-grade	3.54	6.78	9.55	11.80	13.65	15.16	16.39	17.42	18.32	19.15
	All rated	1.50	2.91	4.13	5.15	6.00	6.72	7.31	7.81	8.26	8.67
Note: The Emerging Market And Frontier Market figures are for the time period from 1997-2024. Default rates conditional on survival. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 16

Emerging & frontier markets corporate cumulative average default rates by rating modifier, 1997 to 2024 (%)
	--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+	0.15	0.15	0.15	0.15	0.15	0.15	0.15	0.15	0.15	0.15
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	0.00	0.00	0.00	0.00	0.00	0.00
BBB+	0.04	0.09	0.09	0.09	0.15	0.21	0.21	0.21	0.21	0.21
BBB	0.08	0.12	0.25	0.58	0.84	1.01	1.01	1.07	1.15	1.15
BBB-	0.17	0.92	1.71	2.47	3.16	3.53	3.73	3.89	4.01	4.07
BB+	0.21	0.80	1.46	2.02	2.45	2.57	2.82	2.82	2.89	3.24
BB	0.30	1.39	2.47	3.29	4.11	4.59	5.11	5.56	6.19	6.61
BB-	0.99	2.20	3.49	4.96	6.11	7.24	7.96	8.75	9.23	9.49
B+	2.15	4.87	6.89	8.41	9.69	10.82	11.72	12.40	12.77	13.09
B	2.83	5.89	8.43	10.61	12.19	13.30	14.46	15.48	16.48	17.83
B-	4.38	8.13	10.78	13.10	14.87	16.11	17.16	18.11	19.06	19.74
CCC/C	17.62	22.86	25.90	26.44	27.48	28.38	29.16	29.96	30.47	30.83
Investment-grade	0.08	0.29	0.52	0.79	1.04	1.18	1.24	1.30	1.35	1.36
Speculative-grade	2.54	4.63	6.31	7.67	8.79	9.63	10.36	11.00	11.56	12.08
All rated	1.45	2.71	3.76	4.65	5.39	5.94	6.39	6.78	7.13	7.44
Default rates conditional on survival. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Gini ratios and Lorenz curves

As in our global default study, the default data in EMFM indicates that issuer credit ratings are effective indicators of relative credit risk over time. We measure this relationship with movements in Gini ratios.

Gini ratios measure the rank-ordering power of ratings over a given time horizon and show the ratio of actual rank-ordering performance to theoretically perfect rank ordering. If corporate ratings only randomly approximated default risk, the Gini coefficient would be zero. If corporate ratings were perfectly rank ordered, so that all defaults occurred only among the lowest-rated issuers, the Gini ratio would be 100%. A quantitative measure of ratings performance indicates that the relative rank ordering of ratings in EMFMs is consistent across various time periods. Our calculations indicate that the one-year transition to default in EMFMs shows an average one-year Gini coefficient of 76.80%, a three-year of 64.12%, and a five-year of 57.72% (see table 17).

Gini coefficients decline as the time period lengthens because the latter allows for more credit degradation among higher-rated issuers. In the one-year EM Lorenz curve, for example, 97.56% of defaults occurred in the speculative-grade category, while such ratings accounted for 55.26% of all EM corporate issuer ratings (see chart 6). The five-year Lorenz curve shows that speculative-grade issuers made up 91.21% of defaulters and 56.76% of the entire sample (see chart 10). If the rank ordering of ratings had little predictive value, the cumulative share of defaulting corporate issuers and the cumulative share of all issuers would be nearly the same.

Growth in the number of EMFM corporate issuers rated by S&P Global Ratings will continue to make weighted average Gini ratios more meaningful, as well as lower the likelihood of data distortion by outliers, which affects long-term averages. (For definitions and more information on the Gini methodology, see Appendix III).

Table 17

Corporate Gini coefficients by region (%)
	--Time horizon--
Region	One-year	Three-year	Five-year	Seven-year
Global	82.86	75.12	71.73	69.22
U.S.	80.72	72.25	68.83	66.25
Europe	90.25	84.81	82.53	79.94
Frontier Market	81.01	67.08	61.69	60.80
Emerging Market	76.80	64.12	57.72	55.01
Emerging Market and Frontier Market figures are for the period 1997-2024. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Appendix I: Default Methodology 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 be assigned an issuer credit rating.

While the 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 the lower priority in bankruptcy and ultimate recovery expectations. Alternatively, secured debt may receive a rating that is above 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.

The 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 Dec. 31, 1996. Therefore, each annual default study is self-contained and effectively supersedes all previous versions.

Issuers included in this study

Emerging markets in this study consist of the following subregions and respective countries:

• Asia-Pacific: Bangladesh, Bhutan, British Indian Ocean Territory, China, Fiji, Hong Kong, India, Indonesia, Macao Special Administrative Region of China, Malaysia, Mongolia, Pakistan, Papua New Guinea, the Philippines, Sri Lanka, Taiwan, Thailand, and Vietnam.
• EMEA: Angola, Armenia, Azerbaijan, Bahrain, Belarus, Bosnia and Herzegovina, Bulgaria, Benin, 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, the Republic of Moldova, Romania, Russia, Saudi Arabia, Serbia, Slovakia, South Africa, Tunisia, Turkiye, Ukraine, the United Arab Emirates, and Uzbekistan.
• Latin America and the Caribbean: Argentina, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Grenada, Guatemala, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru, Trinidad and Tobago, and Uruguay.

Frontier markets in this study consist of the following subregions and respective countries:

• Asia-Pacific: Cambodia and Marshall Islands.
• EMEA: Iraq, Liberia, the Syrian Arab Republic, and Togo.
• Latin America and the Caribbean: Aruba, Bahamas, Curacao, Netherlands Antilles*, Turks and Caicos Islands, and Venezuela.

*The Netherlands Antilles was dissolved in 2010.

This study analyzes the rating histories of 3,940 emerging and frontier market corporate issuers with credit ratings from S&P Global Ratings between Jan. 1, 1997, and Dec. 31, 2024. 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 or government entity. 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.

In this study, the insurance industry includes life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, and title insurance. This study also groups insurance service providers (such as insurance brokers and third-party administrators that are rated according to corporate criteria) with the insurance industry.

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 mergers and acquisitions. 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 that's 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' upon an issuer's filing for bankruptcy or taking a similar action that jeopardizes payments on a financial obligation.

A 'D' rating is assigned when S&P Global Ratings believes that 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 Ratings assigns an 'SD' rating when it believes 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 others or pay some obligations and not others. Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. On July 5, 2019, we removed 'R' from all rating scales. That said, several historical defaults within the data set possessed 'R' ratings, so for the purposes of this study, we have maintained these as default events.

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 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 as entirely separate from its experience leading up to its earlier default.

Calculations

Static pool methodology.  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 to all of the static pools to which the issuer belonged.

We use the static pool methodology to avoid certain pitfalls in estimating default rates, such as by ensuring that default rates account for rating migration and can 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; these methods might yield comparatively low default rates during periods of high rating activity because they ignore prior years' default activity.

The pools are static in the sense that their membership remains constant over time. Each static pool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by every new update and 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 update revises results to the same starting date of Dec. 31, 1996, to avoid continuity problems.

Entities 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 entities with active ratings as of the beginning date of a given pool, 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 1998 static pool consists of all companies rated as of 12:01 a.m. on Jan. 1, 1998, while the 1999 static pool consists of those companies first rated in 1998 and the surviving members of the 1998 static pool. All rating changes that took place in 1998 are reflected in the newly formed 1999 static pool. We used this same method to form static pools for each year in the study.

Consider the following example: S&P Global Ratings downgraded an issuer that was originally rated 'BB' in mid-1998 to 'B' in 2000 and then withdrew the rating (NR) in 2002; the company subsequently defaulted ('D') in 2005. This hypothetical company would be included in the 1999 and 2000 pools with the 'BB' rating, which was the rating at the beginning of those years. Likewise, the company would be included in the 2001 and 2002 pools with the 'B' rating. The company would not be part of the 1998 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 2002 because S&P Global Ratings had withdrawn the rating by then. Yet each of the four pools in which this company was included (1999-2002) would record its 2005 default at the appropriate time horizon.

Default rates.  We calculated annual default rates for each static pool, first in units and then as percentages with respect to the number of issuers in each rating category. Finally, we combined these percentages to obtain cumulative default rates for the 28 years the study covers.

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

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

Cumulative average 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 calculate 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. The weights are based on the number of issuers in each static pool. The cumulative default rate is one minus the product of the proportion of survivors (nondefaulters).

Standard deviations.  Many of the exhibits 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 in default rates and transitions can vary greatly depending on many circumstances specific to particular time frames, industries, and geographic regions. Standard deviations are also shown to provide a gauge of the dispersion of the ranges of data behind these averages.

For the transition matrices in tables 12-14 and 24-27, the standard deviation for each cell in a given matrix is calculated using the data from each of the underlying cohort years that contribute to the averages. For example, in the average one-year emerging market transition matrix in table 12, each cell's standard deviation is calculated from the series of that particular cell in each of the 28 cohorts beginning with the 1997 cohort and ending with the 2024 cohort.

Time sample.  This study limits the reporting of default rates in the emerging markets to the 28-year time horizon, and we based all calculations on the rating experience of that period. Global data is based on a 44-year time horizon. The maturities of most obligations are much shorter than 28 years. In addition, average default statistics become less reliable at longer time horizons because the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages.

Default patterns share broad similarities across all static pools, suggesting that S&P Global Ratings' standards have been consistent over time. Adverse business conditions tend to coincide with default upswings for all pools. Speculative-grade issuers have been hit the hardest by these upswings, but investment-grade default rates also increase in stressful periods.

Transition analysis

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

For instance, an issuer continuously rated from mid-1999 to mid-2006 would appear in the six consecutive one-year transition matrices from 2000 to 2005. If the rating on the issuer was withdrawn in the middle of 2006, it would be included in the column representing transitions to NR in the 2006 transition matrix. Similarly, if it defaulted in the middle of 2006, it would be included in the column representing transitions to 'D' in the 2006 one-year transition matrix.

All 1997 static pool members still rated on Dec. 31, 2024, had 28 one-year transitions, while companies first rated on Jan. 1, 2024, had only one. Each one-year transition matrix displays all rating movements 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 ratios 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 reference period (see tables 12 and 13).

The only ratings considered in these calculations are those on entities 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, 2024, downgraded to 'BBB' in the middle of the year, and then upgraded to 'A' later in the year (with no other subsequent rating changes), this entity would only be included in the percentage of issuers that began the year as 'A' that 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 it would be considered either rated 'D' or not rated as of Dec. 31 of that particular year.

Multiyear transitions

We also calculated multiyear transitions for periods of two years 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, we could calculate two-year transition matrices by comparing the ratings at the beginning of the years 1997-2022 with the ratings at the beginning of the years 1999-2024 (see table 13). Otherwise, the methodology 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 (see tables 13 and 24-27). Transition matrices that present averages over multiple time horizons are also calculated as issuer-weighted averages.

Comparing transition rates with default rates

Rating transition rates may be compared with the marginal and cumulative default rates. For example, the one-year default rate column of table 15 is equivalent to column 'D' of the average one-year transition matrix in table 12; the year one investment grade cumulative average default rate in table 15 is equivalent to the cumulative average in the summary statistics of the year one column in table 20.

However, the two-year default rate column in table 15 is not the same as column 'D' of the average two-year transition matrix in table 13. This difference results from the different methods of calculating default rates. The default rates in table 13 are calculated as not conditional on survival, while those in table 15 are average default rates conditional on survival. The two-year default rates in table 15 are calculated in the same way as those in the cumulative average section for the year two column in table 20, while those in the 'D' column of table 13 are equivalent to the sum of all the defaults behind the year two column's annual default rates in table 20 divided by the sum of all the issuers in table 20.

Tables 18-23 best illustrate the links between transition matrices and average cumulative default rates. The default rates in the columns of these tables, associated with each static pool year, are calculated in the same way as they would be for each individual year's transition matrices. Tables 18-23 are broken out by the broadest rating classifications (all rated, investment-grade, and speculative-grade). These tables can also be constructed for each rating category.

As an example, the year two column of table 20 shows the two-year default rates (not conditional on survival) for each static pool. These are calculated in the same way as the default column in table 11, though table 11 shows the one-year default rates for each rating category for 2024 exclusively. In the summary section at the bottom of tables 18-23, the first row shows the issuer-weighted averages of the marginal default rates. These marginal averages are then used to calculate the cumulative average default rates in the row directly beneath them. These default rates are the same that appear in table 15 and are average cumulative default rates conditional on survival.

Appendix II: Additional Tables

Table 18

Static pool cumulative corporate default rates among all rated emerging market issuers, 1997 to 2024
Rating: All rated
		--Time horizon--
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	119	0.84	4.20	9.24	9.24	13.45	21.01	22.69	22.69	22.69	22.69
1998	256	5.86	9.38	10.16	14.84	24.22	26.95	26.95	26.95	26.95	26.95
1999	313	4.15	6.07	10.86	22.68	25.56	25.56	25.56	25.56	25.56	25.88
2000	360	1.39	6.11	17.78	20.56	20.56	20.56	20.56	20.83	21.11	21.67
2001	410	4.39	15.85	18.29	18.29	18.54	18.54	18.78	19.02	19.76	20.00
2002	442	11.99	14.71	14.93	15.16	15.16	15.38	15.61	16.29	16.52	16.52
2003	490	2.65	3.27	3.47	3.47	3.67	3.88	4.49	4.90	4.90	4.90
2004	544	0.55	0.74	0.74	0.92	1.10	1.65	2.21	2.21	2.39	2.76
2005	637	0.16	0.16	0.31	0.47	1.41	2.04	2.04	2.51	2.83	2.98
2006	722	0.28	0.42	0.69	2.08	2.63	2.63	3.46	3.88	4.02	4.29
2007	789	0.13	0.63	3.04	3.93	4.06	4.94	5.58	5.70	6.08	6.46
2008	913	1.42	4.71	5.59	5.70	6.79	7.34	7.45	8.00	8.43	8.54
2009	949	3.69	4.53	4.64	5.69	6.32	6.53	7.06	7.59	7.69	8.11
2010	907	0.88	0.99	2.09	2.76	3.20	3.75	4.30	4.41	4.85	5.40
2011	933	0.21	1.71	2.57	3.22	3.97	4.72	4.82	5.25	5.79	6.43
2012	995	1.31	2.31	2.91	3.92	4.72	4.92	5.43	5.93	6.53	6.73
2013	1,082	0.92	1.48	2.77	4.07	4.34	4.81	5.27	6.01	6.28	6.56
2014	1,213	0.74	2.39	3.79	4.04	4.53	5.03	6.02	6.35	6.92	7.34
2015	1,294	1.70	3.48	3.79	4.33	4.87	5.80	6.18	6.80	7.19	7.34
2016	1,327	1.88	2.19	2.79	3.24	4.22	4.60	5.20	5.65	5.73
2017	1,393	0.29	0.79	1.36	2.37	2.73	3.37	3.95	4.02
2018	1,431	0.63	1.54	2.80	3.28	4.19	4.82	4.89
2019	1,480	1.01	2.43	2.97	3.72	4.39	4.46
2020	1,469	1.63	2.38	3.20	3.88	4.08
2021	1,430	0.98	1.96	2.80	3.08
2022	1,448	1.17	2.00	2.49
2023	1,346	1.11	1.63
2024	1,341	0.67
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		1.42	1.25	1.06	0.89	0.75	0.56	0.47	0.41	0.35	0.33
Cumulative average		1.42	2.65	3.68	4.54	5.26	5.79	6.23	6.62	6.95	7.25
Standard deviation		2.43	3.95	5.10	6.35	7.37	7.96	8.03	8.07	8.09	8.18
Median		1.06	2.31	3.01	3.92	4.37	4.92	5.50	6.01	6.73	7.34
Min		0.13	0.16	0.31	0.47	1.10	1.65	2.04	2.21	2.39	2.76
Max		11.99	15.85	18.29	22.68	25.56	26.95	26.95	26.95	26.95	26.95
*Default rates conditional on survival.Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 19

Static pool cumulative corporate default rates among all rated frontier market issuers, 1997 to 2024
Rating: All rated
		Time horizon
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5	0.00	20.00	20.00	20.00	20.00	40.00	40.00	40.00	40.00	40.00
1999	8	25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
2000	5	0.00	0.00	0.00	20.00	20.00	20.00	20.00	20.00	20.00	20.00
2001	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67
2005	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	14.29
2006	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29	14.29	14.29
2007	7	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	14.29
2008	9	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	22.22	22.22
2009	10	0.00	0.00	0.00	0.00	0.00	0.00	0.00	20.00	20.00	20.00
2010	10	0.00	0.00	0.00	0.00	0.00	0.00	20.00	20.00	20.00	20.00
2011	13	0.00	0.00	7.69	7.69	7.69	23.08	23.08	23.08	23.08	23.08
2012	14	0.00	7.14	7.14	7.14	21.43	28.57	28.57	28.57	28.57	28.57
2013	15	6.67	6.67	6.67	20.00	33.33	33.33	33.33	33.33	33.33	33.33
2014	17	0.00	0.00	11.76	23.53	29.41	29.41	29.41	29.41	29.41	29.41
2015	20	0.00	15.00	25.00	30.00	30.00	35.00	35.00	35.00	35.00	35.00
2016	23	13.04	21.74	26.09	26.09	30.43	30.43	30.43	30.43	30.43
2017	21	14.29	19.05	19.05	23.81	23.81	23.81	23.81	23.81
2018	23	4.35	4.35	8.70	8.70	8.70	8.70	8.70
2019	24	4.17	8.33	8.33	12.50	12.50	12.50
2020	21	4.76	4.76	9.52	9.52	9.52
2021	17	0.00	5.88	5.88	5.88
2022	17	5.88	5.88	5.88
2023	14	0.00	0.00
2024	14	0.00
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		3.78	3.15	3.07	2.99	2.87	2.29	1.04	1.78	2.00	1.53
Cumulative average		3.78	6.81	9.68	12.37	14.89	16.84	17.71	19.17	20.78	21.99
Standard deviation		5.83	7.83	10.09	11.60	14.51	16.38	16.46	15.97	15.28	14.12
Median		0.00	0.00	5.88	7.14	8.19	8.70	14.35	20.00	20.00	20.00
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max		25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
*Default rates conditional on survival. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 20

Static pool cumulative corporate default rates among investment-grade emerging market issuers, 1997 to 2024
Rating: Investment-grade
		--Time horizon--
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	73	1.37	2.74	2.74	2.74	4.11	12.33	12.33	12.33	12.33	12.33
1998	115	1.74	1.74	1.74	3.48	13.91	14.78	14.78	14.78	14.78	14.78
1999	117	0.00	0.00	0.85	12.82	13.68	13.68	13.68	13.68	13.68	13.68
2000	124	0.00	0.00	12.10	12.90	12.90	12.90	12.90	12.90	12.90	12.90
2001	140	0.00	10.71	10.71	10.71	11.43	11.43	11.43	12.14	12.14	12.14
2002	140	0.00	0.00	0.00	0.71	0.71	0.71	1.43	1.43	1.43	1.43
2003	155	0.00	0.00	0.00	0.00	0.00	0.65	0.65	0.65	0.65	0.65
2004	187	0.00	0.00	0.00	0.00	0.53	0.53	0.53	0.53	0.53	0.53
2005	221	0.00	0.00	0.00	0.45	0.45	0.45	0.45	0.45	0.45	0.45
2006	264	0.00	0.00	0.38	0.38	0.38	0.38	0.38	0.38	0.38	0.38
2007	295	0.00	0.34	0.68	1.02	1.02	1.36	1.36	1.36	1.36	1.36
2008	372	0.27	0.81	1.08	1.08	1.34	1.34	1.34	1.34	1.88	1.88
2009	419	0.72	0.95	0.95	1.19	1.19	1.19	1.19	1.67	1.67	1.67
2010	399	0.00	0.00	0.00	0.00	0.00	0.00	0.50	0.50	0.50	0.50
2011	424	0.00	0.00	0.00	0.00	0.00	0.47	0.47	0.47	0.47	0.47
2012	455	0.00	0.00	0.00	0.00	0.66	0.66	0.66	0.66	0.66	0.88
2013	485	0.00	0.00	0.00	0.62	0.62	0.82	0.82	0.82	0.82	0.82
2014	537	0.00	0.00	0.56	0.56	0.74	0.74	0.74	0.74	0.93	0.93
2015	608	0.00	0.33	0.33	0.49	0.49	0.49	0.49	0.66	0.66	0.66
2016	606	0.17	0.17	0.33	0.33	0.33	0.33	0.50	0.50	0.50
2017	649	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2018	654	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2019	696	0.00	0.00	0.00	0.00	0.00	0.00
2020	716	0.00	0.00	0.00	0.00	0.14
2021	697	0.00	0.00	0.00	0.14
2022	709	0.00	0.00	0.14
2023	692	0.00	0.14
2024	698	0.14
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		0.08	0.21	0.23	0.27	0.25	0.15	0.05	0.06	0.05	0.02
Cumulative average		0.08	0.29	0.52	0.79	1.04	1.19	1.24	1.30	1.35	1.37
Standard deviation		0.42	2.11	3.06	3.94	4.79	5.30	5.34	5.45	5.51	5.59
Median		0.00	0.00	0.07	0.45	0.58	0.66	0.70	0.74	0.88	0.93
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.38	0.38
Max		1.74	10.71	12.10	12.90	13.91	14.78	14.78	14.78	14.78	14.78
*Default rates conditional on survival.Source:S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 21

Static pool cumulative corporate default rates among investment-grade frontier market issuers, 1997 to 2024
Rating: Investment-grade
		--Time horizon--
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1998	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
1999	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2000	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2001	0	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
2002	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2005	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2006	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2007	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2009	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2010	1	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2011	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2012	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2013	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2014	3	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2015	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2016	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2017	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2018	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2019	4	0.00	0.00	0.00	0.00	0.00	0.00
2020	4	0.00	0.00	0.00	0.00	0.00
2021	4	0.00	0.00	0.00	0.00
2022	4	0.00	0.00	0.00
2023	4	0.00	0.00
2024	4	0.00
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Cumulative average		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Standard deviation		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Median		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Min		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	0.00	0.00
*Default rates conditional on survival.Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 22

Static pool cumulative corporate default rates among speculative-grade emerging market issuers, 1997 to 2024
Rating: Speculative-grade
		--Time horizon--
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	46	0.00	6.52	19.57	19.57	28.26	34.78	39.13	39.13	39.13	39.13
1998	141	9.22	15.60	17.02	24.11	32.62	36.88	36.88	36.88	36.88	36.88
1999	196	6.63	9.69	16.84	28.57	32.65	32.65	32.65	32.65	32.65	33.16
2000	236	2.12	9.32	20.76	24.58	24.58	24.58	24.58	25.00	25.42	26.27
2001	270	6.67	18.52	22.22	22.22	22.22	22.22	22.59	22.59	23.70	24.07
2002	302	17.55	21.52	21.85	21.85	21.85	22.19	22.19	23.18	23.51	23.51
2003	335	3.88	4.78	5.07	5.07	5.37	5.37	6.27	6.87	6.87	6.87
2004	357	0.84	1.12	1.12	1.40	1.40	2.24	3.08	3.08	3.36	3.92
2005	416	0.24	0.24	0.48	0.48	1.92	2.88	2.88	3.61	4.09	4.33
2006	458	0.44	0.66	0.87	3.06	3.93	3.93	5.24	5.90	6.11	6.55
2007	494	0.20	0.81	4.45	5.67	5.87	7.09	8.10	8.30	8.91	9.51
2008	541	2.22	7.39	8.69	8.87	10.54	11.46	11.65	12.57	12.94	13.12
2009	530	6.04	7.36	7.55	9.25	10.38	10.75	11.70	12.26	12.45	13.21
2010	508	1.57	1.77	3.74	4.92	5.71	6.69	7.28	7.48	8.27	9.25
2011	509	0.39	3.14	4.72	5.89	7.27	8.25	8.45	9.23	10.22	11.39
2012	540	2.41	4.26	5.37	7.22	8.15	8.52	9.44	10.37	11.48	11.67
2013	597	1.68	2.68	5.03	6.87	7.37	8.04	8.88	10.22	10.72	11.22
2014	676	1.33	4.29	6.36	6.80	7.54	8.43	10.21	10.80	11.69	12.43
2015	686	3.21	6.27	6.85	7.73	8.75	10.50	11.22	12.24	12.97	13.27
2016	721	3.33	3.88	4.85	5.69	7.49	8.18	9.15	9.99	10.12
2017	744	0.54	1.48	2.55	4.44	5.11	6.32	7.39	7.53
2018	777	1.16	2.83	5.15	6.05	7.72	8.88	9.01
2019	784	1.91	4.59	5.61	7.02	8.29	8.42
2020	753	3.19	4.65	6.24	7.57	7.84
2021	733	1.91	3.82	5.46	5.87
2022	739	2.30	3.92	4.74
2023	654	2.29	3.21
2024	643	1.24
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		2.50	2.11	1.73	1.40	1.17	0.89	0.80	0.69	0.60	0.57
Cumulative average		2.50	4.56	6.21	7.52	8.60	9.42	10.14	10.76	11.29	11.80
Standard deviation		3.62	5.30	6.78	8.08	9.52	10.39	10.73	10.76	10.78	10.88
Median		2.02	4.26	5.41	6.87	7.78	8.43	9.30	10.37	11.58	12.43
Min		0.00	0.24	0.48	0.48	1.40	2.24	2.88	3.08	3.36	3.92
Max		17.55	21.52	22.22	28.57	32.65	36.88	39.13	39.13	39.13	39.13
*Default rates conditional on survival.Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 23

Static pool cumulative corporate default rates among speculative-grade frontier market issuers, 1997 to 2024
Rating: Speculative-grade
		--Time horizon--
Year	Issuers	Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
1997	2	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
1998	5	0.00	20.00	20.00	20.00	20.00	40.00	40.00	40.00	40.00	40.00
1999	8	25.00	25.00	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
2000	5	0.00	0.00	0.00	20.00	20.00	20.00	20.00	20.00	20.00	20.00
2001	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2002	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2003	4	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2004	5	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	20.00
2005	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	16.67
2006	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67	16.67	16.67
2007	6	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	16.67
2008	8	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00	25.00
2009	8	0.00	0.00	0.00	0.00	0.00	0.00	0.00	25.00	25.00	25.00
2010	9	0.00	0.00	0.00	0.00	0.00	0.00	22.22	22.22	22.22	22.22
2011	11	0.00	0.00	9.09	9.09	9.09	27.27	27.27	27.27	27.27	27.27
2012	11	0.00	9.09	9.09	9.09	27.27	36.36	36.36	36.36	36.36	36.36
2013	12	8.33	8.33	8.33	25.00	41.67	41.67	41.67	41.67	41.67	41.67
2014	14	0.00	0.00	14.29	28.57	35.71	35.71	35.71	35.71	35.71	35.71
2015	16	0.00	18.75	31.25	37.50	37.50	43.75	43.75	43.75	43.75	43.75
2016	19	15.79	26.32	31.58	31.58	36.84	36.84	36.84	36.84	36.84
2017	17	17.65	23.53	23.53	29.41	29.41	29.41	29.41	29.41
2018	19	5.26	5.26	10.53	10.53	10.53	10.53	10.53
2019	20	5.00	10.00	10.00	15.00	15.00	15.00
2020	17	5.88	5.88	11.76	11.76	11.76
2021	13	0.00	7.69	7.69	7.69
2022	13	7.69	7.69	7.69
2023	10	0.00	0.00
2024	10	0.00
Summary statistics		Y1	Y2	Y3	Y4	Y5	Y6	Y7	Y8	Y9	Y10
Marginal average		4.59	3.85	3.75	3.65	3.52	2.82	1.29	2.21	2.48	1.89
Cumulative average		4.59	8.26	11.70	14.93	17.92	20.24	21.27	23.01	24.91	26.33
Standard deviation		6.41	8.80	11.25	13.21	16.53	18.53	18.61	18.05	17.16	15.67
Median		0.00	0.00	7.69	9.09	9.81	10.53	15.26	22.22	23.61	22.22
Min		0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Max		25.00	26.32	37.50	37.50	50.00	50.00	50.00	50.00	50.00	50.00
Default rates conditional on survival. Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 24

Average multi-year (three-year) emerging market corporate transition matrices, 1997 to 2024
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	54.05	40.54	0.00	0.00	0.00	0.00	0.00	0.00	5.41
	(52.86)	(52.08)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
AA	4.47	68.69	21.73	0.00	0.00	0.00	0.00	0.00	5.11
	(13.76)	(26.44)	(25.06)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(5.26)
A	0.00	2.04	78.75	9.78	0.72	0.37	0.00	0.03	8.31
	(0.00)	(2.00)	(7.56)	(5.59)	(1.37)	(0.70)	(0.00)	(0.16)	(2.96)
BBB	0.00	0.01	4.83	69.62	8.81	0.90	0.29	0.76	14.78
	(0.00)	(0.09)	(3.31)	(6.61)	(6.26)	(1.38)	(1.16)	(2.53)	(3.07)
BB	0.00	0.00	0.08	8.86	55.21	7.25	0.85	2.64	25.10
	(0.00)	(0.00)	(0.19)	(4.83)	(6.00)	(3.69)	(1.57)	(4.41)	(4.38)
B	0.00	0.00	0.00	0.50	11.66	41.09	5.05	8.64	33.06
	(0.00)	(0.00)	(0.00)	(0.76)	(7.49)	(5.65)	(3.42)	(5.46)	(4.62)
CCC/C	0.00	0.00	0.00	0.13	1.17	27.01	12.99	25.19	33.51
	(0.00)	(0.00)	(0.00)	(0.57)	(1.77)	(16.84)	(12.35)	(15.93)	(14.04)
Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 25

Average multi-year (three-year) frontier market corporate transition matrices, 1997 to 2024
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	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)	(0.00)
AA	0.00	36.36	36.36	0.00	0.00	0.00	0.00	0.00	27.27
	(0.00)	(45.45)	(50.71)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(41.22)
A	0.00	13.04	60.87	13.04	0.00	0.00	0.00	0.00	13.04
	(0.00)	(27.13)	(45.27)	(31.07)	(0.00)	(0.00)	(0.00)	(0.00)	(31.07)
BBB	0.00	0.00	0.00	84.21	0.00	0.00	0.00	0.00	15.79
	(0.00)	(0.00)	(0.00)	(30.06)	(0.00)	(0.00)	(0.00)	(0.00)	(30.06)
BB	0.00	0.00	0.00	3.75	46.25	20.00	1.25	1.25	27.50
	(0.00)	(0.00)	(0.00)	(10.95)	(29.44)	(17.12)	(4.94)	(4.94)	(23.66)
B	0.00	0.00	0.00	0.00	4.38	53.13	10.00	10.63	21.88
	(0.00)	(0.00)	(0.00)	(0.00)	(6.75)	(19.25)	(12.68)	(13.45)	(20.68)
CCC/C	0.00	0.00	0.00	0.00	0.00	4.35	4.35	60.87	30.43
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(11.77)	(9.94)	(32.03)	(37.58)
Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 26

Average multi-year (five-year) emerging market corporate transition matrices, 1997 to 2024
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	27.03	67.57	0.00	0.00	0.00	0.00	0.00	0.00	5.41
	(47.10)	(49.65)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(23.98)
AA	8.18	52.79	32.34	0.37	0.00	0.00	0.00	0.00	6.32
	(19.17)	(25.29)	(28.81)	(2.04)	(0.00)	(0.00)	(0.00)	(0.00)	(6.50)
A	0.00	2.93	68.86	12.71	1.56	0.16	0.00	0.04	13.75
	(0.00)	(2.04)	(7.48)	(5.31)	(2.30)	(0.27)	(0.00)	(0.17)	(3.60)
BBB	0.00	0.02	6.66	57.47	10.73	1.37	0.28	1.64	21.83
	(0.00)	(0.12)	(3.43)	(5.82)	(5.56)	(1.48)	(0.78)	(4.04)	(3.50)
BB	0.00	0.00	0.14	11.16	40.32	7.43	0.54	4.65	35.77
	(0.00)	(0.00)	(0.33)	(5.54)	(6.86)	(3.46)	(1.13)	(6.45)	(6.14)
B	0.00	0.00	0.00	1.04	11.52	26.33	4.10	12.41	44.61
	(0.00)	(0.00)	(0.00)	(1.21)	(7.17)	(5.55)	(3.07)	(6.65)	(4.59)
CCC/C	0.00	0.00	0.00	0.31	4.59	23.39	3.82	25.84	42.05
	(0.00)	(0.00)	(0.00)	(0.95)	(5.18)	(13.32)	(6.31)	(17.26)	(14.69)
Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Table 27

Average multi-year (five-year) frontier market corporate transition matrices, 1997 to 2024
From/To	AAA	AA	A	BBB	BB	B	CCC/C	D	NR
AAA	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)	(0.00)
AA	0.00	9.09	54.55	0.00	0.00	0.00	0.00	0.00	36.36
	(0.00)	(20.33)	(52.49)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(45.45)
A	0.00	23.81	38.10	14.29	0.00	0.00	0.00	0.00	23.81
	(0.00)	(37.64)	(47.38)	(32.32)	(0.00)	(0.00)	(0.00)	(0.00)	(37.64)
BBB	0.00	0.00	0.00	76.92	0.00	0.00	0.00	0.00	23.08
	(0.00)	(0.00)	(0.00)	(34.26)	(0.00)	(0.00)	(0.00)	(0.00)	(34.26)
BB	0.00	0.00	0.00	6.58	28.95	28.95	1.32	3.95	30.26
	(0.00)	(0.00)	(0.00)	(14.13)	(23.09)	(20.06)	(5.06)	(10.14)	(26.56)
B	0.00	0.00	0.00	0.00	6.38	32.62	6.38	19.86	34.75
	(0.00)	(0.00)	(0.00)	(0.00)	(7.35)	(14.37)	(11.99)	(21.09)	(21.52)
CCC/C	0.00	0.00	0.00	0.00	0.00	5.00	0.00	70.00	25.00
	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(12.62)	(0.00)	(34.51)	(36.23)
Source: S&P Global Ratings Credit Research & Insights; S&P Global Market Intelligence’s CreditPro®.

Appendix III: Gini Methodology

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. Max O. Lorenz developed the Lorenz curve as a graphical representation of the proportionality of a distribution.

To build the Lorenz curve, we ordered the observations 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 and the Gini coefficient--which is a summary statistic of the Lorenz curve--would be zero. If corporate ratings were perfectly rank ordered so that all defaults occurred only among the lowest-rated entities, the curve would capture all of the area above the diagonal on the graph and the Gini coefficient would be 1.0 (see chart 12).

We calculate the Gini coefficients 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.

Glossary

Greater China--China, Hong Kong, Macao Special Administrative Region of China, and Taiwan.

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Ratings Performance Analytics:	Luca Rossi, Paris +33 6 2518 9258; luca.rossi@spglobal.com
	Stefan Bauerschafer, Paris (33) 6-1717-0491; stefan.bauerschafer@spglobal.com
	Jose M Perez-Gorozpe, Madrid +34 914233212; jose.perez-gorozpe@spglobal.com
	Nick W Kraemer, FRM, New York + 1 (212) 438 1698; nick.kraemer@spglobal.com
Research Contributor:	Nivedita Daiya, CRISIL Global Analytical Center, an S&P affiliate, Mumbai