On May 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Jersey-based vehicle renting and leasing service provider Hertz Global Holdings Inc. to 'SD' from 'CCC-' after the issuer missed lease payments on some of its asset-backed securities. In line with expectations, the majority of companies that defaulted within one year of the original rating are from the lowest speculative-grade rating categories, 'B' and lower. 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. On July 6, 2020, we raised our issue credit rating on Serta Simmons to 'CCC+' from 'SD', reflecting the improved liquidity profile, although the capital structure is still highly leveraged, and the company amended and extended its asset-based lending credit facility maturity to August 2023 from November 2021. On Dec. 8, 2020, S&P Global Ratings assigned a 'CCC+' issuer credit rating to CPK after the issuer emerged from bankruptcy, where it was able to restructure US$200 million of reported prepetition debt. For example, of the 251 companies that defaulted within 12 months of having been rated, 233 (or 92.8%) were originally in the 'B' or 'CCC'/'C' categories (see table 12). However, reported average ultimate recoveries [2] included in our data set of unrated project finance bank loans remained stable at 76.8% (Moody's) for the period 1983-2020. In this study, the insurance industry includes life insurance, health insurance, property/casualty insurance, reinsurance, bond insurance, mortgage insurance, and title insurance. Tunghsu also signed a letter of intent to acquire a 26%-38% stake in Alderon Iron Ore Corp., which would be conducted by its subsidiary. Average cumulative default rate calculation. Our data on defaulted corporate issuers globally shows that defaults among speculative-grade entities tend to be clustered in the third year after the initial rating, particularly in the 'B' rating category (see chart 9). For these counts of large downgrades, we include movements to 'D' (default) along with what we normally report as downgrades (that is, downward movements between active ratings). Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. All intermediate ratings are disregarded. In return, the issuer agreed to a small increase in overall interest (cash interest plus PIK) for the first quarter. On Feb. 28, 2020, S&P Global Ratings raised the long-term issuer ratings on Calfrac to 'CCC-' from 'SD' after it completed a debt exchange, which reduced the debt by US$98 million. Some issuers default after S&P Global Ratings no longer rates them. The downgrade to 'SD' follows GFamsa's missed interest and principal payments on its $59.1 million outstanding senior unsecured notes on June 1, 2020. *Fallen angels that survived to Jan. 1 of the year after they were downgraded. Earlier, on June 6, 2020, we lowered our issuer credit rating on SMLP to 'CCC' from 'B'. Moody's Corporation reported revenue of $1.5 billion for the three months ended March 31, 2022, down 5% from the prior-year period. On Dec. 22, 2020, S&P Global Ratings lowered the rating to 'D' following the debt restructuring. Sovereign Default and Recovery Rates - Moody's Analytics Europe: With the strongly improved U.S. economic outlook for 2021, the speculative-grade negative . Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On Sept. 4, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based action sports apparel company Boardriders Inc. to 'SD' from 'CCC+' after the issuer completed a distressed transaction to increase its liquidity and fund operations. The issuer has been facing negative free cash flows and unsustainable leverage because of its high debt balance and uneven operating performance. Defaulted issuers initially rated 'BB' show a similar pattern but peak a little later, in the fourth year. Amid the fast and robust economic rebound, the speculative-grade rating bias has rapidly recovered, but the number of upgrades has not yet matched the magnitude of downgrades seen last year. Adding those companies first rated in 1981 to the surviving members (those still actively rated and not in default) of the 1981 static pool forms the 1982 static pool. And as a general rule, the highest proportions of rating changes for any given rating or rating modifier occur at adjacent ratings and rating modifiers. On Aug. 14, 2020, we withdrew the issuer credit ratings on the company at its request. Similarly, the second- and third-year conditional marginal averages--shown in the "Summary statistics" section at the bottom portion of the table--were 3.61% for the first 39 pools (96.39% of those companies that did not default in the first year survived the second year) and 3.23% for the first 38 pools (96.77% of those companies that did not default by the second year survived the third year), respectively. In this case, these are the seven-year Gini ratios from the 1981 cohort through the 2014 seven-year cohort. This figure includes new ratings subsequent to a prior default--such as after distressed exchanges. Entities that have had ratings withdrawn--that is, revised to not rated (NR)--are surveilled with the aim of capturing a potential default. Since the beginning of 2020, secured debtholders had received 95% of par, on average, in the form of cash, preferred stock, and common equity for US$130 million of secured notes due 2023. On average, there is a negative correlation between the initial rating on an entity and its time to default, if a default occurs. The Credit Transition Model and Credit Risk Calculator give users access to easy to use, web-based tools to quickly calculate customized rating transition matrices and default rates based on the DRD data. All rating changes that took place are reflected in the newly formed 1982 static pool through the ratings on these entities as of 12:00:01 a.m. on Jan. 1, 1982. On Dec. 10, 2020, we raised the issuer credit rating on Jo-Ann to 'B-' from 'CCC' on the basis of its good business performance and extension of its asset-based lending facility. Of these new issuers, 78% were rated speculative grade. The share of newly assigned issuer credit ratings that are speculative grade has remained elevated in 2020: 78% of newly assigned issuer credit ratings globally were speculative grade. But in both cases, defaults and downgrades were largely limited to the lowest rating categories, resulting in generally strong ratings performance in 2020. On Oct. 16, 2020 S&P Global Ratings lowered its long-term issuer credit rating on Chile-based bank holding company Corp Group Banking S.A. to 'D' from 'CC' after the issuer missed its US$16.9 million semiannual interest payment on its bond. The average amount of debt per defaulter in 2020 was the same as in 2019: $1.6 billion. Performance of project finance bank loans during the pandemic-fueled default cycle in 2020; Key findings for the power, infrastructure, and oil and gas industry sectors . On May 25, 2020, S&P Global Ratings lowered the issuer credit rating on U.K.-based foreign-exchange service provider Travelex Holdings Ltd. to 'D' from 'CCC' after the issuer failed to make the interest payments on its senior secured notes. Nearly 88% of sovereign ratings were unchanged in 2021, and this was the . The issuer's operation was suffering from weak crude oil prices and depressed demand. It had other coupon payments of US$8 million each in August and October. On Nov. 23, 2020, S&P Global Ratings withdrew its rating on the issuer. On April 8, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based exploration and production company SPR Holdings LLC to 'D' from 'CCC+' after the issuer missed an interest payment due April 1, 2020. ACLI C-1 Bond Factor WG - 03-26-2021 3 Scope: Moody's Analytics to provide default probability term structures for each Moody's corporate rating and resulting C1 Bond Factors, with articulated limitations providing transparency using data and methodologies accessible and repeatable to the NAIC and industry on an ongoing basis. In the one-year global Lorenz curve, for example, 96.6% of defaults occurred in the speculative-grade category, while these ratings constituted only 39.9% of all corporate ratings (see chart 26). However, this poses no continuity problem because each study reports statistics back to Dec. 31, 1980. The issuer submitted a prepackaged plan. High technology/computers/office equipment. With the region moving to promote disintermediation, this share of speculative-grade issuers could continue to grow. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On May 11, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chinese furniture maker Yihua Enterprise (Group) Co. Ltd. to 'SD' from 'CCC' after the issuer failed to make interest payment on its domestic medium-term notes due 2022. On April 22, 2020, we lowered our issuer credit rating on Serta Simmons to 'CCC-' from 'CCC' as the spread of the COVID-19 pandemic and stay-at-home orders forced retail store closures, which resulted in a severe drop in mattress sales and minimal production. Ten of the defaulters in 2020 were initially rated investment grade, and the other 216 (96% of the total) were initially rated speculative grade. On Aug. 7, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD'. We believe the company is unlikely to make this interest payment within the 30-day grace period as it has pursued a comprehensive capital restructuring or bankruptcy filing. Of the 226 defaults in 2020, 198 were from companies rated as of the beginning of the year. A total of 3,098 defaults have been recorded globally since 1981. This difference results from the different methods of calculating default rates. The company finalized a tender offer to repurchase $213 million of its outstanding $255 million 12% senior secured notes due 2022. On April 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based clinical toxicology laboratory services provider New Millennium Holdco Inc. to 'D' from 'CC'. This reflects our forward-looking opinion post the reduction in outstanding gross debt by approximately $127 million. Second Party Opinions & Transaction Evaluations, U.S. Local Governments Credit Scenario Builder, Annual Global Trends: Defaults Reach Their Highest Level Since 2009, Lower Ratings Are Much More Vulnerable To Default, Industry Variations: Energy And Consumer Services Lead Again, But Defaults Were Widespread In 2020, Speculative-Grade Ratings Represent About Half Of Corporate Issuers, Transition And Cumulative Default Rates Demonstrate Ratings Performance, Criteria For Assigning CCC+, CCC, CCC-, And CC Ratings, U.S. Recovery Study: Clouds Loom As Defaults Rise. The largest gap between the two was in financial institutions, which had a five-notch difference: The 233 financial institutions that defaulted had a median original rating of 'B+', compared with a sector median of 'BBB'. NAIC - Supporting Insurance, Regulators, & Public Interest Earlier, on June 10, 2020, we lowered our issuer credit rating on Serta Simmons to 'CC' from 'CCC-' following the company's announcement that it entered into a transaction support agreement with a majority of its first- and second-lien term loan lenders to recapitalize the company. 'R' (regulatory intervention) indicates that an obligor is under regulatory supervision owing to its financial condition. The majority (94%) began the year rated in the 'B' or 'CCC'/'C' category (57% 'CCC'/'C' and 37% 'B'). On May 13, 2020, S&P Global Ratings lowered the issuer credit rating on New York-based youth licensed sports apparel maker Outerstuff LLC to 'SD' from 'CCC'. prior to May 2014, Kathrin was a lead analyst in Moody's EMEA Corporate Finance Group in Frankfurt, Germany, covering a diverse set of heavy industrial corporations across . The company extended the maturity on its revolving credit facility of US$135 million by one week. In contrast, the average time to default among entities initially rated speculative grade was 6.2 years, with an associated standard deviation of 6.3 years. The CreditWatch negative reflected Avianca's weakening liquidity and that the absence of extraordinary financial support from shareholders or the Colombian government could force the company to default on the repayment of its 8.375% senior unsecured notes due 2020. Corporate downgrades also increased, to near an all-time . Expansive Dataset: Includes more than 800,000 individual debt securities, both corporate and sovereign entities, and default history starting from 1920. . These default rates are the same that appear in table 24 and are average cumulative default rates conditional on survival. On Sept. 28, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD' following the debt exchange. Following a year marked by one of the deepest recessions in the past 100 years, 2021 proved to be a year of better-than-expected economic recovery, despite the lingering COVID-19 pandemic. Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby disclosesthat most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc.