complementary role in model validation and as benchmarks. 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. Both segments were facing a decline in demand, made worse by the looming recession and coronavirus pandemic. However, the data was gathered for 40 years, and all calculations are based on the rating experience of that period. 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. The date the debtor filed for, or was forced into, bankruptcy. The rating action followed Covia's announcement that its domestic subsidiaries filed voluntary petitions for restructuring under Chapter 11 of the U.S. Bankruptcy Code. For example, for the entire pool of defaulters in this study (1981-2020), the average times to default for issuers originally rated in the 'A' and 'B' categories were 14.1 years and 5.1 years, respectively, from the initial rating (or from Dec. 31, 1980, the start date of the study), whereas issuers in the 'CCC' rating category or lower had an average time to default of only 2.2 years. The company entered into a forbearance agreement with its senior debt lenders and is expected to pursue a debt restructuring. Globally, speculative-grade issuers constituted 50.3% of rated corporate issuers at the end of 2020, whereas at the end of 2019, speculative-grade ratings represented 49.9% of global ratings (see chart 22). The Content shall not be used for any unlawful or unauthorized purposes. 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. 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, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, and U.K. Australia, Canada, Japan, and New Zealand. Earlier, on May 5, 2020 we lowered the issuer credit rating on Avianca to 'CCC-' from 'CCC' and kept the ratings on CreditWatch with negative implications. We also incorporated the company's weak operating performance, negative cash flow generation, and near-term debt maturities. Broadly consistent with 2019, almost 54% of defaults in 2020 came from two sectors: consumer services and energy and natural resources (with 122 defaults combined). On Dec. 7, 2020, the issuer credit rating on the company was raised to 'CCC+'. Project Finance Bank Loans: Default and Recovery Rates for 1983-2020 (APAC) APAC Edition. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. Moody's | Better decisions 3Q 2021 Investor Presentation 2 . 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. 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. Defaults arise disproportionately from low rating categories, and this holds true over longer time horizons (see table 14). 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. On July 23, 2020, S&P Global Ratings raised the rating on the issuer to 'CCC-' from 'SD', as the new priming loan is at a senior collateral position relative to the existing debt. Australia, Canada, Japan, and New Zealand. On April 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Zealand-based nonbank financier FE Investments Ltd. to 'D' from 'CCC'. We are expecting that the issuer will be able to generate sufficient cash for debt repayment, though times are challenging. Distribuidora Internacional de Alimentacion S.A. On a year-over-year basis, the number of rated defaults globally was higher in every quarter of 2020 relative to 2019 (see chart 14). On May 11, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. The negative outlook reflects the possibility that we could lower the rating if we believe a near-term conventional default, restructuring, or transaction that we view as tantamount to a default becomes a near certainty. These average matrices are a true summary, the ratios of which represent the historical incidence of the ratings listed in the first column changing to the ones listed in the top row over the course of the multiyear period (see tables 33-40). On May 21, 2020, S&P Global Ratings withdrew its ratings on the issuer. On Aug. 26, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based fitness club operator Town Sports International Holdings Inc. to 'SD' from 'CC' after the issuer failed to pay its US$14 million outstanding revolver balance. On Dec. 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pennsylvania-based high-availability infrastructure and disaster recovery services provider Sungard AS New Holdings LLC to 'SD' from 'B-'. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Noble to 'D' from 'CCC-' as the company skipped the interest payment on its 7.75% senior notes due 2024. On Dec. 10, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC+' from 'SD' following the company's debt exchange. Through Dec. 31, 2020, 198 defaults have come from the 2020 pool of financial and nonfinancial companies, and 94% of these were from the lowest rating categories--'B' and lower. The issuer was going through debt restructuring for a wider capital improvement, but was adversely affected by falling oil prices and the coronavirus pandemic. 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. Document Information click to expand document information . For additional details on the 2020 defaulters, see Appendix III. Yet each of the four pools in which this company was included (1987-1990) would record its 1993 default at the appropriate time horizon. The study Default, Transition, and Recovery: 2019 Annual Global Corporate Default And Rating Transition Study April 29, 2020 Key Takeaways - The global speculative-grade corporate default rate rose to 2.5% in 2019 from 2.1% at the end of 2018, while the number of corporate defaults globally rose to 118, the first triple-digit total since 2016. Table 11 presents the average and median times to default from each rating category for all subsequent ratings. S&P Global Ratings then withdrew its issuer credit ratings on the company at its request. On May 4, 2020, we raised the credit ratings to 'CCC' from 'SD' after the reduction of debt by approximately US$329 million. On Nov. 11, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Spain-based transportation company Bahia de las Isletas S.L. Earlier, on June 6, 2020, we lowered our issuer credit rating on SMLP to 'CCC' from 'B'. In this proceeding, the issuer was to obtain US$80 million in debtor-in-possession, and if the prepackaged plan was approved, then the issuer would emerge with US$400 million of debt. As part of the exchange, current owner Bain Capital made a 40 million equity contribution. (For more information on methodologies and definitions, see Appendix I.). When an issuer defaults, we assign that default to all of the static pools to which the issuer belonged. We viewed the repurchases as distressed and tantamount to a default given lenders participating in the repurchase received substantially less than the original promise of the term loan. 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. Emerging markets: On June 23, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Doraville, Georgiabased leading U.S. bedding manufacturer Serta Simmons Bedding LLC to 'SD' from 'CC' as the company completed its distressed debt exchange, swapping $992 million first-lien debt and $300 million of second-lien debt for $851 million of super-priority second-out debt, and issued $200 million new super-priority first-out debt provided by the debt-exchange lenders. 17 Jan 2023 | Moody's Investors Service. S&P Global Ratings considers the repurchase to be distressed and tantamount to default given the holders received less than the original promise on the securities and that the offer was made to avoid a default and cross acceleration of Noble's unsecured debt. On April 17, 2020, we raised the issuer credit ratings to 'CCC-' after the issuer was able to shift a huge portion of debt maturing in the second quarter of 2020 to the next quarter. 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. Later, on Aug. 11, 2020, we withdrew our issuer credit ratings on the company at its request. On Sept. 10, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based business process outsourcing and product support services provider iQor Holdings Inc. to 'D' from 'CC' after the issuer filed petition under Chapter 11 of the U.S. Bankruptcy Code. 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. Ten of the defaulters in 2020 were initially rated investment grade, and the other 216 (96% of the total) were initially rated speculative grade. 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. 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. We also include the defaulting instruments for each company that S&P Global Ratings rates. S&P assumes no obligation to update the Content following publication in any form or format. Other sectors, such as consumer services, have had more frequent default cycles, both during and between economic cycles. 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. Qinghai Provincial Investment Group Co. Ltd. APC Automotive Technologies Intermediate Holdings LLC. For example, at the end of 2020, the one-year default rate among all financial entities was 0.23%, compared with 3.8% for all nonfinancial entities. 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. This report does not constitute a rating action. 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 notable exception was Europe, which continued to see historically elevated defaults through the third and fourth quarters. For example, among defaulters that were rated 'B' at origination, the default rate climbs to a high of 18.3% in the third year and decelerates thereafter. It had other coupon payments of US$8 million each in August and October. This is followed by a rating withdrawal in 1990 and a default in 1993.

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