S&P global corporate junk default rate increases to 2.48% in January

By Caroline Salls

Pittsburgh, March 13 – Standard & Poor’s global trailing-12-month speculative-grade corporate default rate increased to 2.48% in January from 2.45% in December, according to a report released Tuesday.

S&P said the U.S. speculative-grade corporate default rate remained at 3.07% in January. The European speculative-grade default rate contracted to 2.21% in January from 2.37% in December, while the emerging markets default rate widened to 1.09% from 0.96%.

As of Feb. 26, S&P said there had been 16 corporate defaults so far in 2018, excluding confidential defaults, accounting for $29.4 billion in debt.

Since its latest report, the agency said 11 issuers have defaulted, including Philadelphia Energy Solutions Refining and Marketing LLC, Hovnanian Enterprises Inc., iHeartMedia Inc., Cenveo Inc., BrightHouse Group plc, Charlotte Russe Inc., Remington Outdoor Co. Inc., Transworld Systems Inc., Tops Markets LLC, Eletson Holdings Inc. and Iconix Brand Group Inc.

S&P said it expects the U.S. trailing-12-month speculative-grade corporate default rate to decrease to 2.6% by December 2018 from 3% in December 2017.

Weakest links down

The agency said the global weakest links tally declined to 189 issuers as of Feb. 26, the fifth consecutive monthly decline. The 189 global weakest links have total rated debt worth about $218 billion.

Weakest links are issuers rated B- or lower with negative outlooks or ratings on CreditWatch with negative implications.

S&P said 12 weakest links were added and 18 were removed from the link since the most recent report.

Of those removed, five defaulted, three each had selective defaults, were downgraded and were downgraded with a revised outlook or CreditWatch, and two each were upgraded with a revised outlook or CreditWatch and had their outlook or CreditWatch status revised.

Meanwhile, of those added, five were downgraded and had their outlook or CreditWatch revised, three were newly rated and two each were downgraded or had their outlook or CreditWatch status revised.

Based on the number of weakest links, S&P said the consumer products sector now displays the highest potential for defaults with 33 weakest links as of Feb. 26, followed by the oil and gas sector with 24. Media and entertainment closely follows with 23 weakest links.

Together, S&P said these three sectors account for 42.3% of weakest links.

According to the report, the U.S. region held 76.2% of weakest links with 144 as of Feb. 26, up from 68% a year ago.

S&P said Europe has the second-highest concentration of weakest links, with 19, or 10.1% of the total, and total debt of $18 billion.

Leveraged loans

In the leveraged loan segment, S&P said the trailing-12-month institutional loan default rate, based on the number of loans, increased to 1.83% in January from 1.72% in December.

The loan distress ratio, which is the percentage of loans trading below 80 cents on the dollar, took a dip in December, declining to 2.39% from 3.04% in December, S&P reported.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.