On June 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Salt Lake City-based drilling services provider and manufacturer Boart Longyear Ltd. (BLY) to 'SD' from 'CC'. A majority of issuers have been rated speculative grade before--the first instance in July 2018--but the ratio has largely hovered around 50% since. On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chicago-based printing and digital media company LSC Communications Inc. to 'D' from 'CC' after the issuer filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. PDF An Empirical Analysis of Bond Recovery Rates: Exploring a Structural On June 5, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based APC Automotive Technologies Intermediate Holdings LLC to 'D' from 'CCC' after the issuer announced it was commencing Chapter 11 bankruptcy proceedings. On Jan. 8, 2021, S&P Global Ratings withdrew its issuer credit rating at the company's request. 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). Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. On April 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Luxembourg-based telecom service provider Intelsat S.A. to 'SD' from 'CCC+' after the issuer failed to pay semiannual interest payments on unsecured debt. On March 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Illinois-based engineered fastener distributor Optimas OE Solutions Holding LLC to 'SD' from 'CCC+'. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. On May 20, 2020, S&P Global Ratings lowered its issuer credit rating on Oklahoma-based casino resort operator Downstream Development Authority (DDA) to 'SD' from 'CCC'. The default rates that we refer to as weighted averages in this study use the number of issuers at the beginning of each year as the basis for each year's weight. On Dec. 22, 2020, S&P Global Ratings lowered the rating to 'D' following the debt restructuring. The issuer had also obtained a commitment for $1 billion in debtor-in-possession financing. In turn, this can result in a relatively fast descent into default (see chart 11). On Dec. 7, 2020, S&P Global Ratings raised the issuer credit rating to 'B-' from 'SD' on improved liquidity with constraints from high leverage. From Jan. 1, 1981-Dec. 31, 2020, a total of 21,693 first-time-rated organizations were added to form new static pools, while we excluded 3,098 defaulting companies and 11,448 companies that are no longer assigned ratings (NR). S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. This was the second-largest default since 2014, when Texas Competitive Electric Holdings Co. LLC defaulted with $28.7 billion in associated debt (see table 5). 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. 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. On Jan. 9, 2019, S&P Global Ratings lowered its issuer credit rating on Missouri-based retailer Moran Foods LLC (SAL Acquisition Corp.) to 'SD' from 'CCC' after the company elected not to make an interest payment due Dec. 31, 2019, while entering into a forbearance agreement. U.S., Bermuda, and the Cayman Islands, Other developed: Our assumptions included average oil prices for the rest of 2020 dropping as much as 55% from 2019 levels, which we believed was going to be a primary driver for Covia's leverage doubling in 2020 from 9.6x at the end of 2019. Table 8 provides a list of all the publicly rated companies that defaulted in 2020. On July 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Florida-based consumer products manufacturer and seller Tupperware Brands Corp. to 'SD' from 'CC' after the issuer completed a distressed exchange, for about US$97.6 million of its US$ 600 million, where noteholders received less than par value. S&P Global Ratings lowered its oil and natural gas price assumptions and forecasted that Brent crude would average $30 per barrel while West Texas Intermediate (WTI) averages $25 per barrel for the remainder of 2020. On Sept. 28, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'D' after the issuer emerged from bankruptcy with a new capital structure comprising a priority exit facility due 2023. Earlier, on March 2, 2020, we lowered our issuer credit ratings on LSC to 'CC' from 'CCC+' after the issuer entered into a forbearance agreement for failing to comply with its consolidated leverage and interest ratio credit agreements covenants. Exploring Industry-Distress Effects on Loan Recovery: A Double Machine During 2020, the company increased its stake in V.E from 69.2% to 99.8%. We calculated 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. 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. Throughout the 40-year span, only eight companies initially rated 'AAA' have ever defaulted. Low demand, weak macroeconomic performance, and the pandemic led to weakening liquidity and performance. The issuer was unable to raise capital to maintain the regulatory minimum, and subsequently the principal and interest payments to the depositors were suspended. Earlier, on April 8, 2020, we lowered our issuer credit rating on W&T Offshore to 'CCC+' from 'B-'. On June 20, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Cary, N.C.-based information technology and business skills learning solutions provider GK Holdings Inc. to 'D' from 'CC' as the company did not make the interest payments due March 31, 2020, on its revolver and first- and second-lien term loans. The key model inputs Moody's uses in its analysis, such as par, rating factor, and the recovery rate assumptions, are based on its published methodology and could differ from the trustee's reported numbers. On Sept. 14, 2020, we withdrew the issuer credit ratings on the company at its request. The date the debtor filed for, or was forced into, bankruptcy. For the most part, the speculative-grade share of every sector has grown over the past decade, with the exception of the real estate sector. On July 20, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. Over each time span, lower ratings correspond to higher default rates (see chart 4 and chart 25), and this relationship holds true when broken out by rating modifier (see tables 24 and 26) and by region (see table 25). On July 14, 2020, we withdraw our ratings on the issuer. As one measure of ratings performance, the cumulative share of defaulters was plotted against the cumulative share of issuers by rating in a Lorenz curve to visually render the accuracy of its rank ordering (for definitions and methodology, refer to Appendix II). Loan loss charges also retreated to well below management's earlier guidance to 117 million (Q3 2020: 273 million) or 10 basis Static pool methodology. Rising stars. The 30-day grace period ended on Oct. 15, 2020. On Aug. 6, 2020, S&P Global Ratings withdrew the ratings on the issuer. Issuer credit ratings can be either long-term or short-term. It is expected to reduce debt by US$500 million. On June 8, 2020, we lowered our issuer credit rating to 'D' from 'SD' after the issuer's announcement of a reorganization petition filed under Chapter 11 of the Bankruptcy Code. Note: Excludes confidentially rated defaults. Back in December, Moody's Investors Servicepegged the 2017 default rate for speculative-grade debt in the U.S. at 4% by year-end, down from 5.6%. On July 20, 2020, S&P Global Ratings raised the issuer ratings to 'B-' from 'SD' after the issuer completed its debt restructuring, resulting in its syndicated debt falling to 242 million from 575 million and the extension of debt maturities on its 160 million senior term loan and 82 million junior term loan by five and six years, respectively. The procedure for calculating the Gini coefficients is illustrated in chart 31: Area B is bounded by the random curve and the Lorenz curve, while area A is bounded by the Lorenz curve and the ideal curve. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. Throughout most of the year, the U.S. accounted for the majority of the debt (see chart 14). In both cases, the standard deviation of the times to default generally shrinks progressively as the rating gets lower. We consider companies reemerging from prior defaults to be separate entities, and their rating histories begin with the post-default rating. On Nov. 20, 2020, S&P Global Ratings withdrew its ratings on the issuer. The buyback worth was around US$76 million between March 13 and March 17 and at a discount, and these buybacks were considered distressed, rather than an opportunistic attempt. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENTS FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. A total of 3,098 defaults have been recorded globally since 1981. The company entered a "stalking horse" asset purchase agreement with private equity firm KPS Capital Partners L.P. As part of the agreement, KPS will purchase a substantial part of Garrett's assets and liabilities for US$2.1 billion in cash. On Feb. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Italy-based maritime transportation services Moby SpA to 'SD' from 'CCC-' after the company entered into a standstill agreement to not pay scheduled payments in mid-February. Date of report (Date of earliest event reported): February 13, 2023. We combined these percentages to obtain cumulative default rates for the 40 years the study covers (see tables 24-26 and 30-32). On Jan. 29, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based engineered components manufacturer and marketer Doncasters Group Ltd. after the issuer received lender support for financial restructuring.

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