On Dec. 2, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Houston-based oil and gas exploration and production company Callon Petroleum Co. to 'SD' from 'CC' following a distressed exchange wherein it exchanged US$217 million of new 9% second-lien notes due 2025 for US$389 million of its existing unsecured notes. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. Later, on Sept. 16, 2020, we withdrew the issuer credit ratings on the company at its request. The transaction was approved by 100% of lenders, and it provided the issuer with additional liquidity. On April 7, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based exploration and production (E&P) company Gavilan Resources LLC to 'D' from 'CCC-'. Initial ratings for these companies are those immediately following a prior default in 2020. The eligible holders of second-lien notes received 97.5 cents on the dollar of the principal amount, whereas first-lien notes holders received 90 cents on the dollar of the principal amount. Project Finance Bank Loans: Default and Recovery Rates for 1983-2020 (APAC) APAC Edition. On April 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based hamburger restaurant chain Steak n Shake Inc. to SD from 'CCC-' after the issuer completed a distressed exchange by retiring a portion of its term loan. Even with a 60-day grace period, we did not expect payments. Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. All of S&P Global Ratings Research's default studies have found a clear correlation between ratings and defaults: The higher the rating, the lower the observed frequency of default, and vice versa. On Feb. 24, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Mississippi-based consumer products supplier VIP Cinema Holdings Inc. to 'D' from 'CCC-' after the issuer filed for Chapter 11 bankruptcy. On Aug. 6, 2020, S&P Global Ratings withdrew the ratings on the issuer. This brought the downgrade-to-upgrade ratio to a new high of 6.6. . S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. When an issuer defaults, we assign that default to all of the static pools to which the issuer belonged. 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. Project Finance Bank Loans: Default and Recovery Rates - Moody's Live S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. The proportion of defaulters with confidential ratings in 2020 (11.5%) held steady relative to 11% in 2019. At the end of 2020, speculative-grade issuers once again became the global majority, accounting for 50.3% of rated issuers, from 49.9% at the beginning of the year. Financial services companies are typically more sensitive to sudden declines in investor and stakeholder confidence than nonfinancial companies, which can contribute to a rapid decline in funding liquidity and credit quality. These weights are based on each cohort's rating level's contribution to the 40-year total issuer base for each rating level. The defaulters are: Argentina-based oil and gas company YPF S.A., and Cayman Islands-incorporated (China-based) real estate developer Sunshine 100 China Holdings Ltd. We have also revised our default tally in a monthly reconciliation process to include Oregon-based digital media and . "The default outlook for 2022 will continue to depend on the pace of economic growth . S&P Global Ratings subsequently withdrew the ratings at the issuer's request. The company's new credit group includes wholly owned subsidiary Rocky Mountain Structures Inc. The company effectively converted its existing 270 million first-lien term loans from paying cash interest to paying interest as part-cash, part-payment-in-kind over the next three years and 20 million second-lien term loans from paying cash interest to all payment-in-kind until maturity, with unanimous lender approval. articles On May 26, 2020, we raised the issuer credit rating on Equinox to 'CCC' from 'SD'. It expected the transaction would reduce net debt by $400 million. Over the long term (1981-2020), heightened ratings stability is broadly consistent with higher ratings (see table 21). 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-'. Default & Recovery Analytics - Moody's Investors Service The links between transition matrices and average cumulative default rates are best illustrated through tables 30-32. *Fallen angels that survived to Jan. 1 of the year after they were downgraded. All of the 198 defaulters that were rated by S&P Global Ratings at the beginning of the year had speculative-grade ratings at that time. Note: The totals included may differ from the counts in table 1 because defaults that are not rated at the beginning of the pool year are excluded. With an increase in the proportion of downgrades during the year, the number of large rating changes (which we define as more than six notches) increased in 2020. Many events over the long term have contributed to the decline of global 'AAA' rated issuers. Conversely, among nonfinancial entities, willingness to operate with higher leverage to fund share buybacks, expand businesses, or finance acquisitions has gradually increased. The exchange provides additional liquidity for at least the next 12 months, but it minimally reduces leverage, and interest costs remain high. On Dec. 22, 2020, S&P Global Ratings lowered the rating to 'D' following the debt restructuring. On May 4, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New York-based apparel retailer J. Various forms of bankruptcy accounted for just over 24% of all defaults. This is followed by a rating withdrawal in 1990 and a default in 1993. 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. Earlier, on April 15, 2020, we lowered our issuer credit rating on CEC to 'CC' from 'CCC' following the company's announcement that it formed a restructuring committee to explore various strategic alternatives, including an out-of-court or in-court restructuring. In return, the issuer agreed to a small increase in overall interest (cash interest plus PIK) for the first quarter. Cross-Sector: The . Later, the issuer commenced a Chapter 11 bankruptcy and was looking to restructure its capital structure. Over the long term, the global weighted average Gini coefficient was 82.8% over the one-year horizon, 75.3% over three years, 71.5% over five years, and 69.2% over seven years (see table 27). The issuer was expected to reduce the outstanding debt amount by about US$290 million. Recovery rate is essential to the estimation of the portfolio's loss and economic capital. Of the 198 companies that defaulted in 2020 that were rated at the start of the year, all but 12 were in the 'B' category or lower, and 57% were in the 'CCC'/'C' category, leading to a one-year global Gini ratio of 86.1%. Table 11 presents the average and median times to default from each rating category for all subsequent ratings. On June 19, 2020, S&P Global Ratings lowered its issuer credit rating on Oklahoma City-based oil and gas exploration and production company Chesapeake Energy Corp. to 'D' from 'CC' as the company skipped the interest payments on its 5.375% senior notes due 2021 and 8.0% senior notes due 2027. Of the 10 that were initially investment grade, the average time to default--the time between first rating and date of default--was 21.8 years, with an associated standard deviation of 14.1 years. However, even when we limit the pool of new issuers to those that have never been rated before, speculative-grade issuers still account for 75% of the total. On June 24, 2020, S&P Global Ratings withdrew its issuer credit rating at the company's request. Data Report. The issuer was also in talks with its lenders and noteholders for a comprehensive financial restructuring. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. The company received commitments for US$256 million in debtor-in-possession financing from various lenders. default rates and decrease of recovery rates registered during a substantial part of the 1999-2009 period. 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. According to S&P, at the end of 2020, their 12-month trailing default rates amounted to 6.6% for U.S. speculative-grade. 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. 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. 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. 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). On May 21, 2020, S&P Global Ratings lowered the issuer credit rating on Colorado-based oil and gas exploration and production company Centennial Resource Development Inc. to 'SD' from 'CC' after the issuer announced the exchange of a portion of its 2026 and 2027 senior secured notes for new second-lien secured notes due 2025 at 50% of par value. Combined global bond issuance for nonfinancial corporates and financial services companies hit $5.7 trillion--a 27% increase from the high in 2019. On Nov. 25, 2020, we lowered the issuer credit rating to 'SD' from 'CCC+' after the issuer disclosed it had repurchased a significant portion of senior unsecured notes due in 2022 and 2024 below par. The issuer's business had been suffering and further deteriorated due to the coronavirus pandemic. That is, when default pressure is high, economic conditions are such that the likelihood of companies from across the rating spectrum suffering a more rapid deterioration of credit quality is higher. Rising stars. On Feb. 21, 2020, S&P Global Ratings raised the issuer ratings to 'CCC-' from 'SD', after the issuer reached a settlement on the US$350 million notes via a partial exchange, and the new shareholder Beijing Energy Group Co. Ltd. can provide credit enhancements.

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