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The latest step in this effort is the plan put forth by House Democrats in mid-January. Project Finance Bank Loans: Default and Recovery Rates for 1983-2020 (APAC) APAC Edition. 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. Meanwhile, the downgrade rate more than doubled, to 18.5% from 9.0% in 2019. Issuer credit ratings can be either long-term or short-term. 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. 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. On June 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Hudson, Ohio-based fabric and crafts retailer Jo-Ann Stores LLC to 'SD' from 'CCC' as the company repurchased $5.6 million of its second-lien term loan at a 57% discount in the first quarter of fiscal 2021 ended May 2, 2020, and subsequently agreed to repurchase $206 million face value of first- and second-lien debt at approximately 50% discount in the second quarter ended Aug. 1, 2020. The transactions announced represented about 23% of total first- and second-lien term loans. 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 issuer missed the interest payment on its US$450 million second-lien debt. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. Among all Moody's-rated In 2010-2020, about 77% of the initial ratings that S&P Global Ratings assigned to new issuers were speculative grade. On July 2, 2020, we raised our issuer credit rating on BLY to 'CCC+' from 'SD' as the company completed amending interest payments on its senior secured notes to PIK from cash for 2020. The transaction reduced the company's annual interest payments by about US$19.25 million. 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+'. On Oct. 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Bermuda-based onshore drilling contractor Nabors Industries Ltd to 'SD' from 'CCC+' after the issuer completed a distressed private exchange, whereby it exchanged US$115 million of the principal amount of its 0.75% exchangeable bonds due 2024 for US$50.485 million of new senior priority guaranteed notes due 2025. On March 3, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based oilfield services provider Pioneer Energy Services Corp. to 'D' from 'CCC-'. On Jan. 19, 2020, The Krystal Co. defaulted after the company filed for bankruptcy under Chapter 11 with the Northern District of Georgia. 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'. Combined global bond issuance for nonfinancial corporates and financial services companies hit $5.7 trillion--a 27% increase from the high in 2019. 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 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. Earlier, on May 13, 2020, we lowered our issuer credit rating and senior unsecured issue-level ratings on Extraction to 'CC' from 'CCC+', reflecting the increased likelihood that the issuer would enter a debt restructuring that we would view as distressed in the near term. On Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' following completion of the distressed exchange. 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. We would include this hypothetical company in the 1987 and 1988 pools with the 'BB' rating, which was the rating on the issuer at the beginning of those years. Earlier, on March 20, 2020, we lowered the issuer credit rating to 'CCC' from 'B' because the gaming operator and gaming equipment sectors were facing an unprecedented decline in revenue resulting from the temporary closures of casinos across the U.S. On May 20, 2020, S&P Global Ratings lowered its issuer credit rating on New York-based fitness club operator Equinox Holdings Inc. to 'SD' from 'CCC' after the issuer completed an amendment to its partial guarantee on affiliate company SoulCycle Inc.'s credit facility that will allow it to delay a mandatory payment, which we view as tantamount to a default. But over the past three years--now that more than a decade has passed since the financial crisis of 2008-2009--financial services defaulters show a median rating in the 'B' category five years prior to default. In addition to these subsectors, this study groups insurance service providers (such as insurance brokers and third-party administrators that are rated according to corporate criteria) with the insurance industry. Export PDF Export CSV Email . 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. 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. The issuer missed the aggregate interest payments on first-, second-, and 1.5-lien term loans due in 2021 and 2022, which was unlikely to be paid in the 30-day grace period. 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. We calculated all default rates on an issuer-weighted basis. This also applies to transition matrices that span longer time horizons. The issuer was facing a rise in additional loan loss provision, which was attributed to the large nonperforming loans. We used the same method to form static pools for 1983-2020. On Sept. 14, 2020, we withdrew our ratings on the company. On Oct. 15, 2020, S&P Global Ratings lowered the issuer credit rating to 'D' from 'SD' because the company remained in default on both its rated obligations. This restructuring was viewed as a distressed exchange because it would delay the interest payments. On Oct. 12, 2020, Texas-based oil and gas exploration and production company MD America Energy LLC filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, which S&P Global Ratings considers a default. On Dec. 8, 2020, we raised our rating on Outerstuff to 'CCC' from 'SD', reflecting its restructured debt and licensing agreements, though it still has high leverage and less than adequate liquidity. 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. 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. Several sectors have had distinct default cycles, such as the high technology, computers, and office equipment sector and the telecommunications sector, which both fueled the prolonged spike in defaults during the tech bubble, when the global speculative-grade default rate reached 12.2% in June 2002. The status of the issuer's subsidiary, Anagram International, is changed to unrestricted subsidiary, which raised another US$110 million of secured debt. We consider the exchange distressed and tantamount to default because, in our view, the transaction offers less than the original promise for the security. The date the debtor filed for, or was forced into, bankruptcy. 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. Normally, recessions include, or are followed shortly by, marked increases in corporate defaults. 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. Because of the extremely small size of the 'AAA' rating category, the downgrade of even one issuer will have a large effect on this segment's stability rate. Over the long term (since 1981), financial services defaulters show a median rating of 'BB+' five years prior to default. The issuer borrowed a US$20.2 million new term loan, including US$10.1 million of priming new money and rolling up an existing US$10.1 million term loan. Therefore, we believe Serta Simmons' capital structure remains unsustainable, especially amid an uncertain economic environment that could continue to pressure operating performance and cash flow. This transaction of extending the maturity date and 40% discount at par was not a healthy sign for the company's operational performance. As part of the exchange, current owner Bain Capital made a 40 million equity contribution. 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 Feb. 26, 2020, S&P Global Ratings withdrew its ratings on the issuer. The company noted that the filing resulted from the financial strain from the prolonged COVID-19 restaurant closures. On June 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mexican retailer Grupo Famsa S.A.B. We consider this exchange as tantamount to default. 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 . On June 2, 2020, S&P Global Ratings lowered its issuer credit rating on U.K.-based offshore drilling contractor Noble Corp. PLC to 'SD' from 'CCC-'as the company paid off 85% of its two seller loans (unrated) in exchange for a discount to the outstanding balance, effectively repurchasing both loans at about 85% of par value. On April 14, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. On July 28, 2020, we lowered the issuer credit rating to 'CC' from 'CCC- 'following the company's announcement that it commenced an offer to exchange any and all of its outstanding amounts of 5.75% notes due February 2021 for a combination of new 5.75% notes due February 2024 and an early tender/consent fee. Excludes downgrades to 'D', shown separately in the default column. We did not expect the company to make the interest payments due June 30 and anticipated that it could complete a comprehensive debt restructuring with its debtholders prior to Sept. 30, 2020, which is when its latest forbearance agreement would expire and its next interest payments come due. In both cases, the standard deviation of the times to default generally shrinks progressively as the rating gets lower. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. Throughout the 40-year span, only eight companies initially rated 'AAA' have ever defaulted. 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 Jan. 13, 2020, S&P Global Ratings lowered its long-term issuer credit rating on paper manufacturer Lecta S.A. to 'SD' from 'CC' after failing to pay the interest of 3.8 million due November 2019 on its 225 million senior secured floating notes due 2020. The issuer entered into a forbearance agreement for its term loan, which allowed it to defer the interest and principal payments for 30 days until April 30, 2020. 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 the entity in that static pool as a defaulter and categorize it in the rating category of which it was a member at that time. Table 10 displays the median, average, and standard deviations for the time to default from the original rating. Counterparty credit ratings, corporate credit ratings, and sovereign credit ratings are all forms of issuer credit ratings. The date S&P Global Ratings revised the rating(s) to 'D', 'SD', or 'R'; The date a distressed exchange offer was announced; or. We calculated standard deviations for Gini ratios in this study as the standard deviations of a sample, and not those of a population. Includes investment-grade and speculative-grade entities. 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. On Sept. 16, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. Earlier, on May 1, 2020, we lowered our issuer credit rating on Chesapeake Energy to 'CC' from 'CCC'. For example, 10 companies rated 'A' at any point in their lifetimes (excluding initial ratings) defaulted within one year of receiving this rating. However, the speculative-grade share of both the financial and nonfinancial sectors has been growing in recent years. On Nov. 3, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' on the basis of increased liquidity. On Nov. 4, 2020, S&P Global Ratings withdrew its ratings on the issuer. After speculative-grade ratings reached a peak of 51% of U.S. corporate ratings in 2007, the default rate hit its cyclical peak of 12% in 2009, following the Great Recession (see chart 23). On July 20, 2020, S&P Global Ratings lowered its issuer credit rating to 'D' from 'SD' after the company filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. On Jan. 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pinnacle Operating Corp. to 'SD' from 'CCC'. The number of 'AAA' rated issuers globally declined to just eight by the end of 2020 from 89 at the beginning of 2008. 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 June 18, 2020, we raised the issuer credit rating to 'CCC+' from 'SD' after the debt exchange was completed. In 2021, we rated over $6 trillion of issuance and served more than 1,100 issuers who accessed the markets for the first time. The two upgrades are U.S.-based Noble Energy Inc. and Infor Inc. Companies that experience large downgrades are often outliers, especially in years of high credit stability. In our view, continued supply-demand rebalancing will be necessary to slow wage . In this case, these are the seven-year Gini ratios from the 1981 cohort through the 2014 seven-year cohort. For example, 'AA+' rated issuers were still rated 'AA+' one year later 79.3% of the time, and 'AA' rated issuers were still rated 'AA' one year later 80.9% of the time. . High technology/computers/office equipment. In this case, we compared the rating at the beginning of the multiyear period with the rating at the end. 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. On Aug. 19, 2020, we raised our issuer credit rating on Forum to 'CCC+' from 'SD' following the completion of its debt exchange for the majority of its 6.25% senior unsecured notes due 2021. On June 17, 2020, we withdrew the ratings on the issuer. Default rate calculation. The estimated cross section of recovery rates is plausible, with an average recovery rate of 54% and substantial cross-sectional variation. On Dec. 23, 2020, we raised the issuer credit ratings to 'B-' from 'D'. Default activity in 2020 did increase, but to a lesser extent than recent recessions (see chart 1 and table 1). On May 27, 2020, we withdrew the ratings on the issuer. All default rates that appear in this study are based on the number of issuers rather than the dollar amounts affected by defaults or rating changes. S&P Global Ratings viewed Technicolor's completed debt-to-equity swap as equivalent to a default. 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. 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).