The issuer is exploring other strategic alternatives as liquidity remains constrained. The downgrade to 'SD' follows GFamsa's missed interest and principal payments on its $59.1 million outstanding senior unsecured notes on June 1, 2020. 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. S&P Global Ratings had previously withdrawn the issuer credit ratings at the issuer's request.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). On Feb. 12, 2020, S&P Global Ratings lowered its long-term issuer credit rating on RentPath LLC to 'D' after the issuer defaulted and filed for Chapter 11 bankruptcy. On Dec. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on France-based car rental service provider company Europcar Mobility Group S.A. to 'SD' from 'CC' after the issuer elected not to pay the interest due on its 2024 and 2026 corporate senior notes prior to the end of the 30-day grace period. In other words, the use of a rating category suggests that transitions, for example, to 'AA' from 'AA-' or to 'BBB+' from 'BBB-', are not considered to be rating transitions because the rating remained within the rating category. And as a general rule, the highest proportions of rating changes for any given rating or rating modifier occur at adjacent ratings and rating modifiers. 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. Research & Ratings: Default & Ratings Analytics - Moody's Default, Transition, and Recovery: Global Corporate Defaults Drop Each one-year transition matrix displays all rating movements between letter categories from the beginning of the year through year-end. risen in recent months, direct lending's floating rate has allowed it to deliver superior yields while . In turn, this can result in a relatively fast descent into default (see chart 11). . On Nov. 4, 2020, S&P Global Ratings withdrew its ratings on the issuer. All 1981 static pool members still rated on Jan. 1, 2020, had 40 one-year transitions, while companies first rated on Jan. 1, 2020, had only one. With its highly developed financing markets, the U.S. also has a considerably higher share of speculative-grade companies than other regions--it accounted for 52.6% of speculative-grade companies globally at the beginning of 2020. S&P reserves the right to disseminate its opinions and analyses. In both cases, the standard deviation of the times to default generally shrinks progressively as the rating gets lower. On Nov. 23, 2020, S&P Global Ratings withdrew the issuer credit rating at the issuer's request. 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 Oct. 15, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC', with a negative outlook, considering the company's ability to improve its liquidity. The company was continuing discussions with its debtholders, and we believed these would result in a comprehensive debt restructuring or a bankruptcy filing. The majority of the company's revenue comes from airports, depending on airline passenger travel, which has declined sharply because of the pandemic. We use rating modifiers (plus and minus signs) to calculate upgrade and downgrade percentages, as well as the magnitude of rating changes, throughout this study. Table 10 displays the median, average, and standard deviations for the time to default from the original rating. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. This transaction was aimed at preserving liquidity as sales volume and operating income had been adversely affected by the pandemic. The links between transition matrices and average cumulative default rates are best illustrated through tables 30-32. 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. The issuer had also obtained a commitment for $1 billion in debtor-in-possession financing. On June 5, 2020, we raised the rating on the issuer to 'CCC+' from 'D' on revised credit agreements, which reduced its annual cash interest payments by $10 million, which, in turn, alleviated near-term liquidity concern. The issuer was expected to reduce the outstanding debt amount by about US$290 million. Earlier, on April 4, 2020, we lowered our issuer credit rating on Covia to 'CCC+' from 'BB-' after customers were dealing with a sudden and dramatic collapse in prices for the oil and gas they produce. The issuer has long struggled to adapt to the business model in a challenging domestic department store space, which shrank further because of the coronavirus pandemic. 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 transaction, which was settled on Oct. 14, was considered distressed, as opposed to opportunistic. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. These weights are based on each cohort's rating level's contribution to the 40-year total issuer base for each rating level. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Annual corporate bond issuance reached an all-time high in 2020, largely after the Fed and European Central Bank both created massive liquidity facilities in March, in response to the pandemic. 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). This report does not constitute a rating action. default rates and decrease of recovery rates registered during a substantial part of the 1999-2009 period. Later, the issuer commenced a Chapter 11 bankruptcy and was looking to restructure its capital structure. On Sept. 18, 2020, we placed the issuer credit ratings on CreditWatch with negative implications after Argentina's central bank tightened foreign exchange accessing regulations. These marginal averages are then used to calculate the cumulative average default rates in the row directly beneath them, as explained in the "Average cumulative default rate" section above. No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poors Financial Services LLC or its affiliates (collectively, S&P). On Feb. 21, 2020, S&P Global Ratings lowered its long-term issuer credit rating on China-based high technology service provider Tunghsu Group Co. Ltd. to 'SD' from 'CCC-' after the issuer missed interest and principal payments on three onshore bonds. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. On Aug. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based midstream energy company Martin Midstream Partners L.P. to 'SD' from 'CC' after the issuer announced the completion of the distressed exchange of US$364.5 million senior unsecured notes due in 2021. On May 21, 2020, S&P Global Ratings withdrew its ratings on the issuer. On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Missouri-based propane distributor Ferrellgas Partners L.P. to 'SD' from 'CC' after the issuer decided to not make the final maturity payment on its US$357 million unsecured notes and entered into a forbearance agreement with its debtholders until July 31, 2020. The default rates in table 34 are calculated as not conditional on survival, while those in table 24 are average default rates conditional on survival. Of the rated defaulters at the beginning of 2020, none began the year with an investment-grade rating. 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. On Feb. 14, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Kansas-based Pizza Hut restaurants franchise operator NPC International Inc. to 'SD' from 'CCC-' after the company decided not to make interest payments due Jan. 31, 2020. On July 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based oil and gas company Nostrum Oil and Gas PLC to 'SD' from 'CCC-' after the issuer announced nonpayment of interest on 2022 notes and 2025 notes and would likely use the grace period. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com. On April 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based oilfield services company KCA DEUTAG Alpha Ltd. to 'SD' from 'CCC+' after the issuer announced it would use the grace period for interest payments. We view the nonpayment of interest as akin to default on the senior secured notes. 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 Dec. 22, 2020, S&P Global Ratings lowered the rating to 'D' following the debt restructuring. The downgrade reflected our belief that continued low crude oil prices, the weak outlook for offshore drilling services, and the distressed level at which Valaris' debt is trading made it likely the company would not make the interest payments within the grace period. 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. 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 April 16, 2020, S&P Global Ratings lowered the issuer credit ratings on Cyprus-based real estate market investor O1 Properties Ltd. to 'D' from 'CC' after the issuer missed a coupon payment on US$350 million Eurobonds. *Or Dec. 31, 1980, whichever is later. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. 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). Many default studies, including this one, also look at transition rates, which gauge the degree to which ratings change--either up or down--over a particular period. 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 March 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Connecticut-based telecom operator Frontier Communications Corp. to 'SD' from 'CCC-' after the issuer missed interest payments of about US$322 million. This transactions increased available liquidity and reduced cash interest for the short term. On Dec. 16, 2020, S&P Global Ratings withdrew the issuer credit ratings at the issuer's request. On Dec. 9, 2020, we raised our issuer credit rating on Revlon to 'CCC-' from 'SD' after it completed its previously announced 5.75% senior notes exchange, which we viewed as a distressed restructuring. 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. On Oct. 1, 2020, S&P Global Ratings lowered the issuer credit rating to 'CCC-' from 'CCC+' on liquidity concerns, as audience attendance remained weak after reopening and major release dates were delayed. (EDGAR Online via COMTEX) -- NETSCOUT SYSTEMS INC false 0001078075 0001078075 2023-02-22 2023-02-22 On June 15, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Calfrac to 'D' from 'CCC-' after the issuer missed an interest payment due on June 15 and entered into the grace period. Various forms of bankruptcy accounted for just over 24% of all defaults. An obligor is considered in default unless S&P Global Ratings believes that such payments will be made within five business days of the due date in the absence of a stated grace period, or within the earlier of the stated grace period or 30 calendar days. We study the effect of industry distress on recovery rates by using 5334 debt and loan instruments from Moody's Default and Recovery Database for the period from 1990 to 2017. The company eliminated its prepetition debt during the bankruptcy process. On July 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based retailer Missouri TopCo Ltd. to 'SD' from 'CCC-' after the issuer converted its 80 million second-lien notes into a payment-in-kind (PIK) toggle instrument. 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). Of the rated companies that defaulted in 2020 (and that were rated as of Jan. 1, 2020), 79% were rated 'B-' or lower at the start of the year. 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. Multiplying 92.81% by 96.77% results in a 89.82% survival rate to the end of the third year, which results in a three-year average cumulative default rate of 10.18%. Sources: High yield spreads, default rate and unemployment assumptions sourced from Moody's Investors Service . This usually leads to shorter time frames from which to calculate default statistics. Over this same period, as the number of the highest-rated investment-grade companies dwindled, the count of the lowest-rated investment-grade companies surged. However, the speculative-grade share of both the financial and nonfinancial sectors has been growing in recent years. 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. Each static pool can be interpreted as a buy-and-hold portfolio. The pandemic, low demand, and oil prices crisis pushed the company into a weaker liquidity position, making it difficult for the company to repay the amount. On Dec. 17, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD', which reflects the completion of the distressed exchange and significant risks over the next few months given looming debt maturities and very high leverage. *This table compares the net change in ratings from the first to the last day of each year. As a result, the noteholders received less than the original promise. The rating action followed the issuer's exchange of its senior secured notes due 2027 for the new notes, including the PIK of the four quarterly principal and interest payments in the next 12 months, which are repaid pro rata during the remaining term of the notes. On Sept. 9, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Missouri-based printing equipment designer and manufacturer MAI Holdings Inc. to 'SD' from 'CCC-' after the issuer completed the partial exchange of its senior secured notes. On Oct. 19, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based health care provider Alliance HealthCare Services to 'SD' from 'B-' after the issuer completed a distressed exchange of its second-lien debt. Default rate will rise this year, Moody's says | CFO Dive Preferred stock is not considered a financial obligation; thus, a missed preferred stock dividend is not normally equated with default. The company's new credit group includes wholly owned subsidiary Rocky Mountain Structures Inc. The coronavirus pandemic-related impact has further weakened the operational performance and financial results. The Default & Recovery Database is part of Moody's Analytics broader Default Suite of products. S&P Global Ratings then withdrew its issuer credit ratings on the company at its request. The company had debt of about US$1.4 billion and was not likely to pay the interest within the grace period. Kathrin was a lead analyst in Moody's EMEA Corporate Finance Group in Frankfurt, Germany, covering a diverse set of heavy industrial corporations across Europe. For example, the share of speculative-grade ratings increased in the U.S. beginning in 2002. On Oct. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Indonesia-based retailer PT Alam Sutera Realty Tbk. The Content shall not be used for any unlawful or unauthorized purposes. 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. On March 16, 2020, S&P Global Ratings raised its rating on the issuer to 'CCC-' from 'SD'. The issuer also conveyed that it entered into a lock-up agreement with its senior secured lenders and was in talks on a restructuring plan. The negative outlook reflects that we could lower the rating on Outerstuff if operating underperformance continues to pressure liquidity such that we believe a default is inevitable within the subsequent six months. On Sept. 28, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC-' from 'SD' following the debt exchange. To facilitate the proposed exchange, the issuer entered a new term loan facility of US$190 million maturing in 2024. What is in the DRD? On Aug. 19, 2020, we raised the issuer credit rating to 'CCC-' from 'SD' after the issuer resumed interest payments on senior secured notes issued by its subsidiary. Earlier, on April 22, 2020, we lowered our issuer credit rating on Revlon to 'CC' from 'CCC-' after the company announced it was pursuing a recapitalization transaction to extend the maturity of its existing 2016 $1.8 billion term loan, term out its unrated $200 million term loan issued in 2019, and enhance its liquidity position. On March 26, 2020, we withdrew our issuer ratings at the company's request. The outlook is negative, reflecting the company's unsustainable leverage and the risk that liquidity could deteriorate without an improvement in sector conditions. These include industrials, utilities, financial institutions, and insurance companies around the world with long-term local currency ratings. Earlier, on Dec. 30, 2019, S&P Global Ratings lowered its long-term issuer credit rating on Constellis to 'CC' from 'CCC+' after the company entered into a new $110 million priority first-lien term loan. Structured finance vehicles, public-sector issuers, and sovereign issuers are the subjects of separate default and transition studies, and we exclude them from this study. Of the 226 defaults in 2020, 198 were from companies rated as of the beginning of the year. On Feb. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based home dcor and furniture retailer Pier 1 Imports Inc. to 'D' from 'CCC-' after the issuer filed for Chapter 11 bankruptcy. On June 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Lewisville, Texas-based ASP MCS Acquisition Corp. (MCS) to 'D' from 'CCC' after the company missed its June 15 interest payment on its secured term loan due 2024. 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. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. (PDF) Moody corporate default risk - Academia.edu We use the static pool methodology to avoid certain pitfalls in estimating default rates, such as by ensuring that default rates account for rating migration and allowing for default rates to be calculated across multiperiod time horizons. On Oct. 13, 2020, S&P Global Ratings raised the issuer credit rating to 'CCC' from 'SD' following the completion of the exchange. Project Finance Bank Loans: Default and Recovery Rates - Moody's Live On July 6, 2004, we withdrew our ratings on the issuer. In addition, average default statistics become less reliable at longer time horizons as the sample size becomes smaller and the cyclical nature of default rates has a bigger effect on averages. Our ongoing enhancement of the database used to generate this study could lead to outcomes that differ to some degree from those reported in previous studies. 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. 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. Sources: S&P Global Ratings Research and S&P Global Market Intelligence's CreditPro. In 2020, 216 of the 226 defaults, or 96%, were from companies originally rated speculative grade, which is nearly eight percentage points higher than the long-term average of 88.3%. PDF An Update on Proposed C1 Bond Factors - National Association of Source: Moody's Investors Service, "Moody's Corporate Default & Recovery Rates Study 2019" Senior Secured Loans Equity Unsecured Debt (ie, high yield bonds) Subordinated Bonds Senior Unsecured Bonds Loans 28.0% 47.0% 80.0% Recovery Rate 100% 80% 60% 40% 20% 0% 1 Source: S&P Global Market Intelligence, Wells Fargo, March 31, 2020 36 pages. Subsequently, on June 29, 2020, S&P Global Ratings withdrew its ratings on the issuer. On Aug. 19, 2020, we withdrew our issuer credit ratings on the company at its request. 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. 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. As has been the case for an extended period, the leisure time and media sector has by far the highest proportion of speculative-grade ratings, with 83.3% of its issuers in this rating category in 2020. Australia, Canada, Japan, and New Zealand. commercial paper obligations rated A 1 or P 1 or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively; or (iii) . 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. For the purposes of this study, we form static pools by grouping issuers (for example, by rating category) at the beginning of each year, quarter, or month that the database covers. Selective defaults accounted for just over half of all defaults in 2020. Each static pool is followed from that point forward. Throughout the 40-year span, only eight companies initially rated 'AAA' have ever defaulted.
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