The issuer announced that it completed a transaction to exchange US$700 million of the US$1.476 billion senior unsecured debt due in 2028 with US$400 million in cash and 10 million common shares. For example, the one-year default rate column of table 24 is equivalent to column 'D' of the average one-year transition matrix in table 21, as well as the cumulative average in the "Summary statistics" of the one-year column in table 32. On Oct. 21, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. 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. Each static pool can be interpreted as a buy-and-hold portfolio. 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. This transaction was viewed as distressed because the exchange was at a much discounted rate, of about 70 cents on a dollar. KIS Research and revenue from providing ESG research, data and assessments. On June 3, 2020, S&P Global Ratings lowered its issuer credit rating on U.K.-based offshore drilling contractor Valaris PLC to 'D' from 'CCC-' because the company did not paid the June 1 interest payments on its senior notes due 2022 and 2042, and the company continued to discuss the terms of a comprehensive debt restructuring with its debtholders. On Sept. 25, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' as the liquidity metrics significantly improved and debt was lower, with sources of cash exceeding uses by significantly more than 1.5x in the following 12 months. We understood that the company was making those amendments to preserve cash because customers have had to suspend their mining operations or delay their project spending due to the coronavirus pandemic. As coincident indicators, the proportion of new speculative-grade ratings at 'B-' or lower in the U.S. and the year-end U.S. speculative-grade default rate generally mirror each other throughout most of their shared history (see chart 17). All of the defaulters in 2020 with active ratings immediately prior to default were rated in the lowest rating categories. On Nov. 18, 2020, S&P Global Ratings lowered the issuer credit ratings to 'D' from 'CCC-' after the issuer missed interest payments due on Oct. 15, 2020, and announced that it had entered into a restructuring support agreement, which it intended to file for bankruptcy. Across sectors, the average difference between an industry's median initial rating and the median initial rating of its defaulters was about 1.5 notches. On May 15, 2020, S&P Global Ratings lowered its issuer credit rating on Colorado-based oil and gas exploration and production company Extraction Oil & Gas Inc. to 'D' from 'CC' after the issuer missed the interest payment on its 7.375% senior notes due 2024. As is the case globally, the proportion of speculative-grade ratings reached an all-time high in the U.S. as well, at 57.8%. The issuer missed the interest and principal payment on its term loan of outstanding value of US$557 million, which was originally US$600 million. Other sectors, such as consumer services, have had more frequent default cycles, both during and between economic cycles. On May 26, 2020, S&P Global Ratings lowered its issuer credit rating on Oklahoma-based oil and gas exploration and production company Unit Corp. to 'D' from 'CC' after the issuer reorganized under Chapter 11 of the U.S. Bankruptcy Code. On average, there is a negative correlation between the initial rating on an entity and its time to default, if a default occurs. This helps explain the resemblance between the annual default rates of nonfinancial entities and those of the speculative-grade segment as a whole, which certainly contributes to the vast differences between cumulative default rates across financial and nonfinancial sectors (see table 16). On Aug. 19, 2020, we withdrew our issuer credit ratings on the company at its request. The issuer announced a restructuring agreement as well as filed petitions under Chapter 11. The issuer entered into a forbearance agreement with its first-lien lenders and missed the quarterly interest payment on second-lien debt. Corporate downgrades also increased, to near an all-time high. Earlier, on July 2, 2020, S&P Global Ratings lowered the issuer credit rating to 'CC' from 'CCC+' after the issuer defaulted on its unrated asset-backed lending credit facility. For instance, an issuer continually rated from the middle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transition matrices from 1985-1991. Revenue for MIS in the first quarter of 2022 was $827 million, down 20% from . Later, the issuer commenced a Chapter 11 bankruptcy and was looking to restructure its capital structure. One-year Gini coefficients appear to be broadly cyclical and negatively correlated with default rates (see chart 30). This study--in line with previous default studies--confirms that over the long term (1981-2020), higher ratings are more stable than lower ratings. Earlier, on Jan. 17, 2020, we withdrew our ratings on the issuer due to insufficient information. In its base case, Moody's analyzed the underlying collateral pool as having a performing par of USD267.4 million, On June 25, 2020, we withdrew the issuer credit rating on Unit Corp. at its request. The issuer was going through debt restructuring for a wider capital improvement, but was adversely affected by falling oil prices and the coronavirus pandemic. For example, three-year transition matrices were the result of comparing ratings at the beginning of the years 1981-2018 with the ratings at the end of the years 1983-2020. On April 24, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. In light of our expectation of a continued economic recovery and accommodative funding conditions in the coming year, Moody's Analytics Credit Transition Model projects the global default rate will fall to 1.7% at the end of this year. It is expected that North American and international markets are likely to contract up to 50% and 20%, respectively. Defaults US HY default rate: According to Moody's Investors Service, the U.S.' trailing 12-month high-yield default rate jumped from August 2019's 3.1% to August 2020's 8.7% and may average 10.6% during 2020's final quarter. Noteholders validly tendered about 69% of the total outstanding principal amount of the notes through the exchange. "The default outlook for 2022 will continue to depend on the pace of economic growth . Speculative-grade-rated issuers account for more than 60% of total issuers in eight of the 13 industries we track. Although MCS had sufficient liquidity to make the interest payment, S&P Global Ratings believed that the company was unlikely to pay it within the five-day grace period, given its unsustainable capital structure. It had other coupon payments of US$8 million each in August and October. Consistent with the increase in the number of defaults in 2020, the volume of debt affected by defaults almost doubled to $353.4 billion. On July 30, 2020, S&P Global Ratings withdrew the ratings on the issuer. Fourth quarter earnings releases have provided insight into corporate margin pressures, but labor market commentary signals that some of these headwinds may be abating. In periods of high defaults, there tends to be greater variation in the distribution of ratings prior to default, which reduces the Gini. On May 21, 2020, S&P Global Ratings withdrew its ratings on the issuer. This relationship between higher ratings and higher ratings stability holds even over longer time horizons (see table 21) and when broken out by region (see table 22). On Oct. 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Netherlands-based general merchandise retailer Hema B.V. to 'SD' from 'CC' after the issuer completed a distressed debt restructuring transaction on Oct. 19, 2020. The company was to pay 12.0% and 14.5% PIK interest in June and December, respectively, rather than the previous 10.0% rate. The global trailing-12-month speculative-grade default rate rose to 5.5% at the end of 2020--above its annual average of 4% (since 1981)--from 2.5% in 2019. The company extended the maturity on its revolving credit facility of US$135 million by one week. Speculative-grade bond spreads in the U.S. widened to 991 basis points (bps) on March 23, but finished the year at 434 bps. On Oct. 9, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD'. Its rating history after the default event is included in all calculations as entirely separate from its experience leading up to its earlier default. While these payments would have a higher interest rate, we considered this modification a selective default since investors were receiving less than they were originally promised under the security, partly because the amendment would delay the timing of the interest payments. 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 (see table 22). Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hungary, Iceland, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova Republic of, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the U.K. These include industrials, utilities, financial institutions, and insurance companies around the world with long-term local currency ratings. PFS also announced an agreement to merge with Animal Supply Co. On May 6, 2020, S&P Global Ratings lowered its ratings on the issuer to 'D' from 'SD' upon missed interest payments, following which, on May 14, 2020, the ratings on the issuer were withdrawn. On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Ohio-based glassware manufacturer Libbey Inc. to 'SD' from 'CCC' after the issuer deferred an excess prepayment of about US$12 million. Historically, a growing concentration of speculative-grade ratings often precedes a period of increased defaults. 3Q 2021 . On June 5, 2020, we raised our issuer credit rating on Noble to 'CCC-' from 'SD' as the company's repurchased about $118 million in principal value of its two seller loans due 2022 and 2023 at 85% of par value in a transaction we viewed as a selective default. That was below the . Over the long term (1981-2020), heightened ratings stability is broadly consistent with higher ratings (see table 21). At the end of 2020, speculative-grade issuers once again became the global majority, accounting for 50.3% of rated issuers, from 49.9% at the beginning of the year. On Sept. 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based hydraulic fracturing services provider FTS International Inc. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. On Sept. 16, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. This reflects our forward-looking opinion post the reduction in outstanding gross debt by approximately $127 million. The 50.3% at the end of 2020 does represent an all-time high, albeit by a margin of only 0.1%. On May 15, 2020, S&P Global Ratings lowered the issuer credit rating on Texas-based oilfield products and services provider Forum Energy Technologies Inc. to 'SD' from 'CC'. On Jan. 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based shoes and accessories seller TOMS Shoes LLC to 'D' (default) from 'CCC' after the company restructured substantially all of its debt and its term loan lenders took ownership of the company. The number of defaulters that began the year with active ratings more than doubled in 2020, to 198 from 94 in 2019. The U.S. has the largest number of rated corporate issuers, accounting for roughly 45.9% of the global total at the start of 2020. On June 24, 2020, we raised the credit ratings on the issuer to 'CCC+' from 'SD' after it extended the maturities on all its loans to 2021 and 2022, which helps CSM maintain liquidity for its operation over the next 12 months. The issuer agreed with certain majority debtholders to convert US$2.2 billion of existing debt into new equity. In large part, this reflects the private nature of the leveraged finance market before the financial crisis in 2008. Fitch Ratings provides forward-looking credit opinions, as indicated by its ratings, that reflect its expectations of credit behavior over a range of scenarios. On July 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Ohio-based oil and gas exploration and production company Chaparral Energy Inc. to 'D' from 'CCC-' after the issuer elected not to make interest payments of US$13.1 million due on its unsecured notes due 2023. Earlier in the month, on Feb. 5, 2020, American Commercial Lines Inc. announced it would execute a restructuring, after which S&P Global Ratings lowered the long-term issuer credit rating to 'CC' from 'CCC'. Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. However, defaults from most other sectors increased as well. Lower-rated companies also exhibit lower survival rates over time. 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. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. The issuer had also obtained a commitment for $1 billion in debtor-in-possession financing. The issuer is exploring other strategic alternatives as liquidity remains constrained. The higher default rates for nonfinancial sectors are not surprising, given their higher concentration of speculative-grade issuers. On Oct. 5, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD'. In Europe, by contrast, the share of speculative-grade ratings remains in the minority. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. 1Great Financial Crisis 2008/2009. S&P does not act as a fiduciary or an investment advisor except where registered as such. to 'D' from 'CC' after the issuer completed a distressed debt exchange for both its US$115 million notes due in April 2021 and US$370 million notes due in April 2022. 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. We calculated standard deviations for Gini ratios in this study as the standard deviations of a sample, and not those of a population. Earlier, on April 10, 2020, we lowered the rating on the issuer to 'CC' from 'CCC-' after it was unable to obtain mezzanine debt lenders' consent to extend the loan and had insufficient liquidity. On Dec. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based payroll software provider Zellis Holdings Ltd. to 'SD' from 'CCC+'. In cases where an issuer emerges from a prior default (including distressed exchanges), we consider it a separate entity, and the original rating is the first after the default event. On Nov. 4, 2020, S&P Global Ratings withdrew its ratings on the issuer. A total of 3,098 defaults have been recorded globally since 1981. This study analyzes the rating histories of 21,693 companies that S&P Global Ratings rated as of Dec. 31, 1980, or that were first rated between that date and Dec. 31, 2020. 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. On June 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Michigan-based inventory service and data collection provider RGIS Holdings LLC to 'D' from 'CCC-' after the issuer missed an interest payment on its secured term loan due on April 30, 2020. The exchange occurred at a weighted average ratio of approximately US$557 per US$1,000 of principal exchanged plus a total of 1.76 million warrants with a strike price of US$5.60. Later, on Aug. 11, 2020, we withdrew our issuer credit ratings on the company at its request. Default activity in 2020 did increase, but to a lesser extent than recent recessions (see chart 1 and table 1). 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. expect solid corporate bond issuance and low defaults. On July 30, 2020, Delaware-based media solutions provider Mood Media Corp. defaulted, as the issuer filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. On Aug. 6, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD'. Earlier, on March 3, 2020, we lowered our long-term issuer credit rating to 'CCC-' from 'BB' after the issuer announced the financial statement discrepancies and asked its lenders to support an informal standstill request. The company issued new money debt of about US$155 million and released another US$492 million of preferred stock to lenders who contributed new money. For example, of all the companies that defaulted during 1981-2020, only two entities rated 'AAA' at inception defaulted within seven years. Multiyear transitions were also calculated for periods of two up to 20 years. Some countries can be included in multiple regions, and S&P Global Ratings does not have corporate ratings within every country. The default rate for all Moody's-rated corporate issuers rose to 5.4% at the end of 2009 from 2.0% at year-end 2008. 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. Earlier, on Dec. 5, 2019, we lowered the rating on the company to 'CCC+' from 'B' because it was facing heightened risk in addressing the US$550 million secured notes maturing in November 2022.
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