The issuer also amended the terms of its first- and second-lien credit agreements to extend the maturity of revolving credit and temporary allow itself to make partial PIK interest payments. These default rates are the same that appear in table 24 and are average cumulative default rates conditional on survival. We viewed the proposed transaction, if completed, as distressed and tantamount to a selective default because the proposed transaction involved debt exchange at a discount. Date Document Type Title Issuer/Entity 24 Feb 2023 Data Report Fleet Lease Securitizations: Loss Severity Modeling On June 4, 2020, S&P Global Ratings lowered its issuer credit rating on Los Angeles-based restaurant operator California Pizza Kitchen Inc. (CPK) to 'D' from 'CCC-' because the company missed its interest payments due at the end of May 2020 and entered into a forbearance agreement with its lenders. On March 20, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Kazakhstan-based Grain Insurance Co. JSC to 'D' from 'B' after the issuer missed payments to the counterparties. On Nov. 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Florida-based health care service provider CDRH Parent Inc. to 'SD' from 'CCC+' because of the distressed nature of its credit agreement amendment, where the issuer amended its credit agreement to provide covenant relief and improve liquidity. Ratings stability decreased in 2020, to 69.2%, largely the result of the downgrade rate of 18.5%, which was the highest since 2009. 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. For example, in the average one-year global transition matrix in table 33, each cell's weighted standard deviation is calculated from the series of that particular cell in each of the 40 cohorts beginning with the 1981 cohort and ending with the 2020 cohort. CEC expects to achieve a balance sheet restructuring that supports its reopenings and long-term strategic plans. FORM 8-K. CURRENT REPORT Pursuant To Section 13 or 15 (d) of The Securities Exchange Act of 1934. On Aug. 5, 2020, S&P Global Ratings raised the issuer credit ratings to 'CCC+' from 'D', as the company completed a distressed restructuring and amended its first-and second-lien credit agreements. On April 20, 2020, we raised the rating to 'CCC+' on account of liquidity the company maintained. On Dec. 28, 2020, S&P Global Ratings withdrew its rating at the issuer's request. This included two main components: first, the conversion of about 1,234 million of debt into a new 574 million facility and 660 million of equity on Sept. 22, 2020, and second, the issuance of 457 million of new debt to repay the US$110 million J.P. Morgan bridge facility and to support Technicolor's liquidity needs, undertaken in July and September 2020. Default, Transition, and Recovery: 2020 Annual Global Corporate Default And Rating Transition Study, China's Local Governments Are Shedding Their Ties To Struggling SOEs, Instant Insights: Key Takeaways From Our Research, Research Update: Dexus Wholesale Property Fund Outlook Revised To Stable From Positive On Merger Completion; 'A' Ratings Affirmed, Scenario Analysis: Higher Rates Threaten The Credit Quality Of 13 EMEA Retail And Restaurant Companies. These two sectors, along with leisure time/media, had 2020 default rates in excess of 6%, which were much higher than other sectors and were markedly higher than their sectoral long-term weighted averages (see table 19). With the strongly improved U.S. economic outlook for 2021, the speculative-grade negative . On April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based telecom service provider Speedcast International Ltd. to 'D' from 'CCC' after the issuer missed interest payments on its US$600 million term loan, due on March 31, 2020. For example, 10 companies rated 'A' at any point in their lifetimes (excluding initial ratings) defaulted within one year of receiving this rating. 2 Annualized volatility and return based on the period between 2005 and 2022. In turn, this can result in a relatively fast descent into default (see chart 11). We combined these percentages to obtain cumulative default rates for the 40 years the study covers (see tables 24-26 and 30-32). Initial ratings, or those as of Dec. 31, 1980. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. The company faced intense earnings pressure due to years of market-share declines, further exacerbated by the stay-at-home orders and economic recession stemming from COVID-19. On May 28, 2020, S&P Global Ratings withdrew its ratings on the issuer. For instance, 92.9% of issuers rated 'A' at the beginning of 2020 were still rated 'A' by Dec. 31, 2020, whereas the comparable share for issuers rated 'B' was only 72%. All four major regions also saw their 2020 speculative-grade default rates rise above their long-term annual averages (see table 7 and chart 21). 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 March 27, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Colorado-based cyber security provider Optiv Inc. to 'SD' from 'CCC+' after the issuer completed a distressed exchange, repurchasing about US$47 million of second-lien debt for about US$23 million. We believe that COVID-19-related fitness club closures have materially impaired the company's liquidity position. In this case, these are the seven-year Gini ratios from the 1981 cohort through the 2014 seven-year cohort. For example, the share of speculative-grade ratings increased in the U.S. beginning in 2002. The issuer used 43 million of cash proceeds to repurchase 51 million of notes. On Nov. 23, 2020, S&P Global Ratings withdrew its rating on the issuer. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. 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+'. The issuer with the longest time to default in 2020 was U.S.-based Revlon Inc., with an initial issuer credit rating of 'AA' as of Dec. 31, 1980, 39.4 years before the rating was lowered to 'SD' (selective default) in May 2020. On Sept. 17, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. On Aug. 24, 2020, S&P Global Ratings lowered the issuer credit ratings to 'D' from 'SD' after Travelex completed its restructuring plan, including the write-off of 225 million of debt. As in most recovery periods, defaults fell relative to the prior year, with the S&P Global Ratings global speculative-grade corporate default rate falling below 2% for only the eighth time in the past 41 . Australia, Canada, Japan, and New Zealand. Financial services companies are more likely to be initially rated in the investment-grade category, while nonfinancial companies are much more likely to initially be rated speculative grade. Earlier, on April 1, 2020, we lowered our issuer credit rating on Gavilan to 'CCC-' from 'CCC+' after the issuer drew the full amount on the US$200 million reserve-based lending facility, which was up for redetermination in April 2020. The 50.3% at the end of 2020 does represent an all-time high, albeit by a margin of only 0.1%. The principal liquidity sources for the issuer involves US$48 million cash on hand and about US$35 million to US$55 million available in revolving credits. On Aug. 21, 2020, we withdrew the issuer credit ratings on the company at its request. Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. On April 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Massachusetts-based department store operator Neiman Marcus Group Ltd. LLC to 'D' from 'CCC-' after the issuer missed paying interest due on unsecured notes maturing October 2021. In 2020, speculative-grade rating categories had higher default rates than in 2019, with an increase in the 'BB' category to 0.93% from 0.00%, 'B' category to 3.5% from 1.5%, and 'CCC'/'C' category to 47.5% from 29.8% (see table 3). Annual speculative-grade default rates increased in all major regions in 2020, relative to 2019. Includes investment-grade and speculative-grade entities. On Aug. 4, 2020, we lowered our issuer credit rating on Forum to 'SD' from 'CC' as the company closed on its previously announced debt exchange for the majority of its 6.25% senior unsecured notes due in October 2021. A mere 0.88% of the approximately $500 billion of U.S. CLOs issued from 1994-2009 that were rated by S&P Global Ratings experienced defaults, and no defaults were recorded among the AAA- and AA-rated tranches rated by Moody's. 7 In fact, default rates among CLOs were not only lower than those of CDOs, but also lower than those of similarly . The company exchanged $315 million of its existing unsecured notes for new 9% convertible secured notes due 2025, which we considered less than the original promise and tantamount to default. Table 29 displays the summary of one-year transitions in the investment-grade and speculative-grade rating categories. On Aug. 27, 2020, Texas-based oil and gas exploration and production company SAExploration Holdings Inc. defaulted after the issuer filed for reorganization under Chapter 11. Therefore, every update revises results back to the same starting date of Dec. 31, 1980, so as to avoid continuity problems. The high default rate for commodity sector in 2016 was caused by low oil prices, among other factors, and more than half of last year's 144 defaults documented by Moody's occurred in commodity . The trailing-12-month and annual default rates have become standard measures, but default rates measured over shorter time frames give a more immediate picture of credit market conditions. Earlier, on April 8, 2020, we lowered our issuer credit rating on W&T Offshore to 'CCC+' from 'B-'. The safeguard procedure, which we considered tantamount to default, implies that the debt of the protected companies is frozen, allowing for a reorganization of liabilities and a grace period. One key reason is that financial services companies typically start with investment-grade ratings, while most nonfinancial issuers have speculative-grade initial ratings, particularly over the past 10 years. On July 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Delaware-based promotional products supplier CB Poly Investments LLC to 'SD' from 'B-' after the issuer completed a distressed exchange of its second-lien debt due in August 2024. On Jan. 15, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. Defaults in 2020 came from all sectors, but--consistent with recent years--were heavily represented by two sectors: the energy and natural resources sector (with 62 defaults) and the consumer services sector (with 60 defaults). Corporate downgrades also increased, to near an all-time high. On April 14, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. However, since the financial downturn of 2008, many high-rated companies have been downgraded, leaving, for example, exceedingly few 'AAA' rated issuers at the start of 2020. Rising stars. Excludes downgrades to 'D', shown separately in the default column. Adriana Matos Measured on a dollar volume basis, Moody's global speculative-grade Senior Associate bond default rate ended 2008 at 5.8%, up from 2007's year-end level of Richard Cantor 0.6%. On April 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Chilean casino operator Enjoy S.A. to 'D' from 'B-' after the company announced suspension of its shareholder meeting to treat a capital increase while the board decided to file for judicial reorganization. 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. Once again, the default rate in the 'AAA' rating category was zero, consistent with historical trends. The issuer was engaged in discussions with creditors for a debt restructuring. 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. 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). Entities that have had ratings withdrawn--that is, revised to not rated (NR)--are surveilled with the aim of capturing a potential default. An analysis of transition rates for 2020 suggests that ratings behavior continues to exhibit consistency with long-term trends. Neglecting the randomness of the distribution of recovery rate may underestimate the risk. On Aug. 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Georgia-based building products producer Omnimax International Inc. to 'D' from 'CCC-' after the issuer announced that it missed a principal repayment due on its US$385 million senior notes. On July 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mexican lodging company Grupo Posadas S.A.B. Various forms of bankruptcy accounted for just over 24% of all defaults. In periods of high defaults, there tends to be greater variation in the distribution of ratings prior to default, which reduces the Gini. An 'SD' rating is assigned when S&P Global Ratings believes that 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. On April 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Canada-based theatrical and live entertainment company CDS Group to 'D' from 'CCC-', reflecting payment default after the issuer didn't made interest and principal payments on first lien-debt and interest payment on second-lien debt, both of which were due March 31, 2020. The issuer is facing challenges in adapting to the ongoing changes in the department store sector. Historically, nonfinancial defaulters tend to have a much smoother and shorter path to default (see chart 12). Moody's Economy.com January 21, 2009 The new president and Congress are working to implement a large fiscal stimulus plan to mitigate the severe economic downturn. In the seven-year Lorenz curve, speculative-grade issuers constituted 88.3% of defaulters and only 36.7% of the entire sample (see chart 29). On Jan. 18, 2021, S&P Global Ratings withdrew its ratings at the issuer's request. Table 11 presents the average and median times to default from each rating category for all subsequent ratings. S&P does not act as a fiduciary or an investment advisor except where registered as such. Some issuers default after S&P Global Ratings no longer rates them. In a theoretical exploration of recovery rates in a structural This usually leads to shorter time frames from which to calculate default statistics. In 2020, 226 companies, including 26 confidential issuers, defaulted on US$353.4 billion of debt. The Default & Recovery Database is part of Moody's Analytics broader Default Suite of products. Earlier, on April 2, 2020, we lowered our long-term issuer credit rating to 'CCC+' from 'B-' because of weaker operating performance projections in 2020 owing to the coronavirus pandemic. Average cumulative default rate calculation. The rating process begins when an arranger, issuer, sponsor, or underwriter contacts a member of Fitch's Business Relationship Management (BRM) group with a request to engage Fitch. On June 25, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Houston-based exploration and production (E&P) company W&T Offshore Inc. to 'SD' from 'CCC+' following the company's announcement that it repurchased about $72.5 million of its second-lien notes due 2023, about 10% of its total year-end 2019 long-term debt, for roughly $23.9 million, or an average 33% of par value. Our model further indicates that the global rate will . The issuer entered into a forbearance agreement for deferring the interest payments on its second lien-term loan until June 30, 2020. On Sept. 15, 2020, we raised the issuer credit rating to 'CC' from 'SD' after its subsidiary, Town Sports International LLC, filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, while the parent was not included in it. The issuer's business had been suffering and further deteriorated due to the coronavirus pandemic. *This total does not match table 1 because it excludes confidentially rated defaults. S&P Global Ratings assigned initial ratings to 622 issuers in 2020, down from 650 issuers in 2019 and 875 in 2018. 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 (the ideal curve), and its Gini coefficient would be 1 (see chart 31). On July 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based frac-sand and logistics company Hi-Crush Inc. to 'D' from 'CC' after the issuer filed for bankruptcy under Chapter 11 and entered into a restructuring support agreement with noteholders who control 94% of the company's senior unsecured notes due in 2026. On Sept. 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Spain-based food products retailer Distribuidora Internacional de Alimentacion S.A. to 'SD' from 'CC' after the issuer completed a distressed exchange. As an example, the standard deviation applied to the seven-year weighted average global Gini ratio in table 2 (5.3%) was calculated from the time series of all available seven-year Gini ratios by cohort. 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. S&P reserves the right to disseminate its opinions and analyses. On June 25, 2020, we raised our long-term issuer credit rating on Jo-Ann to 'CCC' from 'SD', reflecting the ongoing risk of a conventional default. S&Ps opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. Later, the issuer commenced a Chapter 11 bankruptcy and was looking to restructure its capital structure. A key consideration when analyzing transition matrices that present averages computed over multiple static pools is that the standard deviations associated with each transition point in the matrix are large relative to the averages (outside of stability rates). The issuer had also obtained a commitment for $1 billion in debtor-in-possession financing. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. On June 25, 2020, we withdrew the issuer credit rating on Unit Corp. at its request. The issuer missed an interest payment of US$8 million on its senior convertible notes due in 2024. Post the transaction, the company will have new senior secured three-and-half-year US$171.4 million notes due in 2024 and five-year US$251 million notes due in 2025. On April 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on United Arab Emirates-based health care service provider NMC Health PLC to 'D' from 'CCC-' after the issuer missed interest payments on its bank loans. 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. On Aug. 19, 2020, we withdrew our issuer credit ratings on the company at its request. The 2021 corporate default tally of 72 is the lowest since 2014--down nearly 70% from the previous year's total . As a supplement to many of the averages and time series presented in this study, standard deviations are also shown to provide a gauge of the dispersion of data behind these averages. The company instructed the trustee to give a notice of optional redemption to redeem the remaining balance on Dec. 14, 2020. Corporate Power; Enforceability : 35 : 3.3 : Company Board Approval; Fairness Opinion; Anti-Takeover Laws : 36 : . Initial ratings for these companies are those immediately following a prior default in 2020. On Aug. 18, 2020, S&P Global Ratings withdrew its ratings on the issuer. Credit deterioration was significant in 2020, with a new historical low upgrade rate (2.8%) and one of the highest annual downgrade rates (18.5%). Moody's expects the overall default rate for commodity companies to fall sharply this year, to 3.4% from 12.6% in 2016. Since 1981, the 'B' rating category has accounted for 1,735 defaults (56% of the total from initial rating), well more than double the number of defaulters from the 'BB' category (see tables 10 and 12). 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. On April 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Turkey-based household appliance manufacturer Vestel Elektronik Sanayi Ve Ticaret A.S. to 'SD' from 'CCC+' after the issuer postponed a portion of its financial obligation due in June for three to six months. Multiyear transitions. On April 21, 2020, S&P Global Ratings lowered the long-term issuer credit ratings on New Jersey-based advertising agency Engine Holding LLC to 'D' from 'CCC-' after the issuer entered into a forbearance agreement with its lenders on its failure to pay the debt interest and principal payments for the first quarter of 2020.