2018 Annual Global Corporate Default And Rating …...Default, Transition, and Recovery: 2018 Annual...

Default, Transition, and Recovery:

2018 Annual Global Corporate Default And RatingTransition StudyApril 9, 2019

Key Takeaways

- Despite escalating market volatility and political uncertainty in 2018, funding conditionsremained accommodative, and the global speculative-grade corporate default rate fellto 2.1% in 2018 from 2.5% at the end of 2017. The number of corporate defaults globallyfell to 82. More companies were upgraded than downgraded, and 73% of companiesretained the same ratings by year-end.

- All companies that defaulted in 2018 that were rated at the start of the year werespeculative grade (rated 'BB+' or lower), and 74% of these were in the 'CCC'/'C' ratingcategory. As a result, the one-year global Gini ratio rose to 93% in 2018 from 92.7% in2017, reaching its highest since 2014.

- Emerging markets experienced the largest increases in the number of downgrades in2018. Corporate downgrades in Brazil, Argentina, and Turkey more than doubled, mostlyas a result of sovereign downgrades for each of these countries during the year.

- For the first time in the 38-year history of the ratings covered in our global corporatedefault and transition studies, speculative-grade issuers represented the majority ofglobal ratings as of year-end. In large part, this resulted from the growing number ofnewly rated speculative-grade issuers over the past several years.

Despite greater market volatility and political uncertainty in 2018, funding conditions forcompanies remained accommodative for much of the year, and the global corporate default ratedeclined. By many measures, 2018 showed improved performance for S&P Global Ratings'corporate credit globally. Even amid rising trade tensions, populism's growing political influence,and Brexit, companies were largely able to brush aside the noise and benefit from the continuedgrowth of the global economy. Against this backdrop, many of S&P Global Ratings' measures forrating performance and rating stability, as well as the proportion of upgrades, rose to their highestlevels since 2014. Meanwhile, the number of defaults fell to 82, its lowest level since that year (seechart 1 and table 1).

Over half of all defaults in 2018 came from two sectors: the consumer services sector and energy

Default, Transition, and Recovery:

2018 Annual Global Corporate Default And RatingTransition StudyApril 9, 2019

GLOBAL FIXED INCOME RESEARCH

Diane Vazza

New York

(1) 212-438-2760

[email protected]

Nick W Kraemer, FRM

New York

(1) 212-438-1698

[email protected]

Evan M Gunter

New York

(1) 212-438-6412

[email protected]

RESEARCH CONTRIBUTORS

Nivritti Mishra Richhariya

CRISIL Global Analytical Center, anS&P Global Ratings affiliate, Mumbai

Mallika Jain

CRISIL Global Analytical Center, anS&P Global Ratings affiliate, Mumbai

Abhik Debnath

CRISIL Global Analytical Center, anS&P Global Ratings affiliate, MumbaiSee complete contact list at end of article.

www.spglobal.com/ratingsdirect April 9, 2019 1

mailto: [email protected]






and natural resources (with 22 defaults each). These were the only two sectors with default ratesin 2018 that exceeded their long-term weighted averages (see chart 2). Residual stress hascontinued to weigh on energy and natural resources, and brick-and-mortar retailers in consumerservices are facing structural changes. Even though both sectors exhibited above-average defaultrates in 2018, these default rates (and the number of defaults for each sector) modestly declinedfrom 2017.

This study includes industrials, utilities, financial institutions (banks, brokerages, assetmanagers, and other financial entities), and insurance companies globally with long-term localcurrency ratings from S&P Global Ratings. We calculated all default rates on an issuer-weightedbasis. The default rates that we refer to as weighted averages in this study use the number ofissuers at the beginning of each year as the basis for each year's weight. (For a detailedexplanation of our data sources and methodology, see Appendix I.)

Chart 1

Table 1

Global Corporate Default Summary

YearTotal

defaults*Investment-grade

defaultsSpeculative-grade

defaults

Defaultrate(%)

Investment-gradedefault rate (%)

Speculative-gradedefault rate (%)

Total debtoutstanding

(bil. $)

1981 2 0 2 0.14 0.00 0.62 0.06

1982 18 2 15 1.19 0.18 4.41 0.90

1983 12 1 10 0.76 0.09 2.94 0.37

1984 14 2 12 0.91 0.17 3.27 0.36

1985 19 0 18 1.11 0.00 4.33 0.31

1986 34 2 30 1.72 0.15 5.70 0.46


Default, Transition, and Recovery: 2018 Annual Global Corporate Default And Rating Transition Study

Table 1

Global Corporate Default Summary (cont.)

YearTotal

defaults*Investment-grade

defaultsSpeculative-grade

defaults

Defaultrate(%)

Investment-gradedefault rate (%)

Speculative-gradedefault rate (%)

Total debtoutstanding

(bil. $)

1987 19 0 19 0.94 0.00 2.81 1.60

1988 32 0 29 1.38 0.00 3.86 3.30

1989 44 3 35 1.78 0.22 4.68 7.28

1990 70 2 56 2.73 0.14 8.12 21.15

1991 93 2 65 3.25 0.14 11.05 23.65

1992 39 0 32 1.49 0.00 6.10 5.40

1993 26 0 14 0.60 0.00 2.50 2.38

1994 21 1 15 0.63 0.05 2.11 2.30

1995 35 1 29 1.05 0.05 3.53 8.97

1996 20 0 16 0.51 0.00 1.81 2.65

1997 23 2 20 0.63 0.08 2.01 4.93

1998 56 4 48 1.28 0.14 3.67 11.27

1999 109 5 92 2.14 0.17 5.56 39.38

2000 136 7 109 2.48 0.24 6.23 43.28

2001 229 7 173 3.79 0.23 9.87 118.79

2002 226 13 159 3.60 0.42 9.49 190.92

2003 119 3 89 1.93 0.10 5.07 62.89

2004 56 1 38 0.78 0.03 2.02 20.66

2005 40 1 31 0.60 0.03 1.51 42.00

2006 30 0 26 0.48 0.00 1.19 7.13

2007 24 0 21 0.37 0.00 0.91 8.15

2008 127 14 89 1.80 0.42 3.70 429.63

2009 268 11 224 4.19 0.33 9.94 627.70

2010 83 0 64 1.21 0.00 3.02 97.48

2011 53 1 44 0.80 0.03 1.84 84.30

2012 83 0 66 1.14 0.00 2.59 86.70

2013 81 0 64 1.06 0.00 2.31 97.29

2014 60 0 45 0.69 0.00 1.44 91.55

2015 113 0 94 1.36 0.00 2.77 110.31

2016 163 1 143 2.08 0.03 4.23 239.79

2017 95 0 83 1.20 0.00 2.46 104.57

2018 82 0 72 1.03 0.00 2.09 131.65

*This column includes companies that were no longer rated one year prior to default. Sources: S&P Global Fixed Income Research and S&PGlobal Market Intelligence's CreditPro®.



Chart 2

Of the 82 defaults in 2018, 72 were from companies rated as of the beginning of the year. The 10defaults from companies that were not rated at the beginning of 2018 included five for which theratings were withdrawn before the beginning of 2018 and five that were first rated by S&P GlobalRatings after Jan. 1, 2018. We consider companies reemerging from a prior default to be separateentities, with their rating histories beginning with the postdefault rating. As in 2017, there were nodefaults by companies that were rated investment grade ('BBB-' or higher). Each of the rateddefaulters was rated speculative grade ('BB+' or lower) at the beginning of 2018, and 74% of thesewere rated in the lowest rating category of 'CCC'/'C'.

With such a large share of defaults coming from companies at the lowest rating levels in 2018, theone-year Gini ratio rose to its highest since 2014, to 93% from 2017's 92.7% (see chart 3). The Giniratio is a measure of the rank-ordering power of ratings over a given time horizon, from onethrough seven years. It shows the ratio of actual rank-ordering performance to theoreticallyperfect rank ordering. The one-year Gini in 2018 was well above the one-year weighted-average(since 1981) Gini ratio of 82.5% (see table 2 and chart 30). (For details on the Gini methodology,refer to Appendix II.)



Chart 3

All of S&P Global Fixed Income Research's default studies have found a clear correlation betweenratings and defaults: The higher the rating, the lower the observed frequency of default, and viceversa. Over each time span, lower ratings correspond to higher default rates (see chart 4 and chart25), and this relationship holds true when broken out by rating category and by rating modifier (seetables 24 and 26), as well as by region (see table 25).

As the Gini ratios show, the ability of corporate ratings to serve as effective measures of relativerisk remains intact over time, particularly in low-default years. Many default studies, includingthis one, also look at transition rates, which gauge the degree to which ratings change--either upor down--over a particular period. Transition studies have repeatedly confirmed that higherratings tend to be more stable and that speculative-grade ratings generally experience morevolatility.

However, since the financial downturn of 2008, many highly rated companies have beendowngraded, leaving, for example, exceedingly few 'AAA' rated issuers at the start of 2018 andfewer still by year-end. As such, rating categories with smaller populations will experience highrating transition rates when even a small number of issuers are upgraded or downgraded.

Table 2

Global Average Gini Coefficients By Broad Sector (1981-2018)

(%) --Time horizon--

Sector One-year Three-year Five-year Seven-year

Global

Weighted average 82.50 75.17 71.49 69.40

Average 85.31 78.34 74.15 71.04

Standard deviation (5.61) (5.15) (5.44) (5.36)



Table 2

Global Average Gini Coefficients By Broad Sector (1981-2018) (cont.)



Financial


Average 82.51 75.14 67.09 60.62


Nonfinancial


Average 84.53 76.76 72.83 70.05


Note: Numbers in parentheses are standard deviations. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence'sCreditPro®.

Chart 4

For the ninth consecutive year, there were no defaults by companies from the 'A' category orhigher. Last year was also the second year in a row with no defaults from the 'BBB' category. Evenamong speculative-grade ratings, defaults were generally lower, with no defaults in the 'BB'category (down from 0.08% in 2017) and a slight decline in the 'B' category (to 0.98% from 0.99%).Only the 'CCC'/'C' category showed a rising default rate, up to 27.18% from 26.45%, reaching itshighest level since 2016 (see table 3).

Outside of the 'CCC'/'C' category, default rates across all other rating categories were either at orbelow their long-term weighted averages. Most notably, the default rate for the 'B' category was



nearly 2.5 percentage points below its long-term weighted average (see table 4). Once again, thedefault rate in the 'AAA' rating category was zero, continuing the unblemished default record forcorporate ratings in this category and consistent with historical trends.

Table 3

Global Corporate Annual Default Rates By Rating Category

(%) AAA AA A BBB BB B CCC/C

1981 0.00 0.00 0.00 0.00 0.00 2.27 0.00

1982 0.00 0.00 0.21 0.34 4.22 3.13 21.43

1983 0.00 0.00 0.00 0.33 1.16 4.58 6.67

1984 0.00 0.00 0.00 0.67 1.14 3.41 25.00

1985 0.00 0.00 0.00 0.00 1.49 6.47 15.38

1986 0.00 0.00 0.18 0.33 1.32 8.39 23.08

1987 0.00 0.00 0.00 0.00 0.38 3.09 12.28

1988 0.00 0.00 0.00 0.00 1.05 3.64 20.37

1989 0.00 0.00 0.18 0.60 0.72 3.38 33.33

1990 0.00 0.00 0.00 0.58 3.57 8.56 31.25

1991 0.00 0.00 0.00 0.55 1.69 13.84 33.87

1992 0.00 0.00 0.00 0.00 0.00 6.99 30.19

1993 0.00 0.00 0.00 0.00 0.70 2.62 13.33

1994 0.00 0.00 0.14 0.00 0.28 3.08 16.67

1995 0.00 0.00 0.00 0.17 0.99 4.58 28.00

1996 0.00 0.00 0.00 0.00 0.45 2.91 8.00

1997 0.00 0.00 0.00 0.25 0.19 3.51 12.00

1998 0.00 0.00 0.00 0.41 0.82 4.63 42.86

1999 0.00 0.17 0.18 0.20 0.95 7.29 33.33

2000 0.00 0.00 0.27 0.37 1.16 7.70 35.96

2001 0.00 0.00 0.27 0.34 2.97 11.53 45.45

2002 0.00 0.00 0.00 1.02 2.89 8.20 44.44

2003 0.00 0.00 0.00 0.23 0.58 4.07 32.73

2004 0.00 0.00 0.08 0.00 0.44 1.45 16.18

2005 0.00 0.00 0.00 0.07 0.31 1.74 9.09

2006 0.00 0.00 0.00 0.00 0.30 0.82 13.33

2007 0.00 0.00 0.00 0.00 0.20 0.25 15.24

2008 0.00 0.38 0.39 0.49 0.81 4.10 27.27

2009 0.00 0.00 0.22 0.55 0.75 10.98 49.46

2010 0.00 0.00 0.00 0.00 0.58 0.87 22.62

2011 0.00 0.00 0.00 0.07 0.00 1.68 16.30

2012 0.00 0.00 0.00 0.00 0.30 1.58 27.52

2013 0.00 0.00 0.00 0.00 0.10 1.64 24.67

2014 0.00 0.00 0.00 0.00 0.00 0.78 17.51



Table 3

Global Corporate Annual Default Rates By RatingCategory (cont.)

(%) AAA AA A BBB BB B CCC/C

2015 0.00 0.00 0.00 0.00 0.16 2.41 26.67

2016 0.00 0.00 0.00 0.06 0.47 3.74 33.33

2017 0.00 0.00 0.00 0.00 0.08 0.99 26.45

2018 0.00 0.00 0.00 0.00 0.00 0.98 27.18

Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Table 4

Descriptive Statistics On One-Year Global Default Rates

AAA AA A BBB BB B CCC/C

Minimum 0.00 0.00 0.00 0.00 0.00 0.25 0.00

Maximum 0.00 0.38 0.39 1.02 4.22 13.84 49.46

Weighted long-term average 0.00 0.02 0.06 0.17 0.65 3.44 26.63

Median 0.00 0.00 0.00 0.06 0.58 3.40 24.83

Standard deviation 0.00 0.07 0.10 0.26 1.00 3.29 11.47

2008 default rates 0.00 0.38 0.39 0.49 0.81 4.10 27.27

Latest four quarters (2018Q1-2018Q4) 0.00 0.00 0.00 0.00 0.00 0.98 27.18

Difference between last four quarters andweighted average

0.00 (0.02) (0.06) (0.17) (0.65) (2.46) 0.54

Number of standard deviations 0.00 (0.29) (0.55) (0.64) (0.64) (0.75) 0.05


2018 Summary Findings

- Of the 82 corporate defaults in 2018, the majority (47) were from companies in the U.S. andassociated tax havens (Bermuda and the Cayman Islands). The emerging markets regionfollowed with 17 defaults, Europe with 13, and the other developed region (Australia, Canada,Japan, and New Zealand) with five.

- Distressed exchanges accounted for the largest share of defaults (among publicly ratedcompanies) in 2018, with 38%, followed by missed interest or principal payments (32%) andChapter 11 filings (23%). Two defaults resulted from payment suspension and two from foreignbankruptcy, while another resulted from the issuer being placed under regulatory directive.

- The global trailing-12-month speculative-grade default rate fell to 2.1% at the end of 2018from 2.5% in 2017, remaining below its annual average rate (since 1981) of 3.99%. Thespeculative-grade default rate fell in the U.S. (to 2.4%) and Europe (1.9%) but rose modestly inthe emerging markets (1.3%) and other developed (3.3%) regions.

- All of the 72 defaulters that were rated by S&P Global Ratings at the beginning of the year hadspeculative-grade ratings at that time. The remainder of the 2018 defaulters began the year



without ratings or were first assigned ratings later in the year. None began the year ratedinvestment grade. Of the companies that defaulted in 2018 (and that had ratings as of Jan. 1,2018), 87.5% were rated 'B-' or lower at the start of the year.

- The volume of debt affected by default rose by 26% to $131.65 billion in 2018, even as thenumber of defaults fell from 2017. The average amount of debt per defaulter rose to $1.6 billionin 2018 from $1.1 billion in 2017, modestly higher than the post-Lehman Bros. (2009 onward)annual average of $1.4 billion.

- The largest default of the year was from Texas-based media and entertainment companyiHeartCommunications Inc., with $20.2 billion (15.3%) of the outstanding debt.

- Global new corporate bond issuance in 2018 totaled $3.9 trillion, down 10.3% from 2017.Nearly all of the drop-off came from the developed markets.

- Bond spreads in the U.S. widened through most of 2018. Investment-grade spreads moved 57basis points (bps) wider over the course of the year, while speculative-grade spreads widenedby 154 bps. Most of this movement took place in the fourth quarter.

- Ratings showed increasing stability in 2018. About 73.2% of global corporate ratings wereunchanged during the year, up from 72.07% in 2017 and above the annual average of 71.31%since 1981.

- The percentage of defaulters with confidential ratings fell in 2018 (to 11%) as compared with2017. However, the count of confidentially rated issuers that defaulted remained at nine.

- Two of the defaulters in 2018 were initially rated investment grade, and the other 80 (98% ofthe total) were initially rated speculative grade.

- Of these two that were initially investment grade, the average time to default--the timebetween first rating and date of default--was 24.1 years, with an associated standard deviationof 18.5 years. In contrast, the average time to default among entities initially rated speculativegrade was 5.4 years, with an associated standard deviation of five years. For all of the issuersthat defaulted in 2018, the average time to default from the first rating was 5.8 years, with amedian of 4.2 years and a standard deviation of six years.

- The issuer with the longest time to default in 2018 was U.S.-based retailer Sears, Roebuck andCo., with an initial rating of 'AA' as of Dec. 31, 1980, 37.2 years before the issuer credit ratingwas lowered to 'SD' (selective default) in March 2018.

- The issuer with the shortest time to default (13 days) was House of Fraser (UK & Ireland) Ltd.The company defaulted twice in 2018.

- The consumer services sector and energy and natural resources sector had the largest numberof defaulters last year, with 22 each. All other sectors had fewer than 10 defaults, and only theinsurance sector had zero defaults.

- Credit quality displayed modest net improvement in 2018. A slightly higher share of companieswere upgraded in 2018 than in 2017, bringing upgrades to their highest level (9.02%) since2014.

- The number of 'AAA' rated companies declined by one during the year, after Singapore-basedSMRT Corp. Ltd. was downgraded to 'AA+' from 'AAA' on March 13, 2018. As of the end of 2018,there were just eight companies still rated 'AAA' globally.

- By the end of 2018, speculative-grade issuers represented the majority of rated companiesglobally, accounting for 50.3% of rated issuers, up from 49.4% at the beginning of the year. Inlarge part, this expansion represents the growing number of newly rated issuers that are



speculative grade. S&P Global Ratings assigned initial ratings to 905 issuers in 2018, up from775 issuers in 2017. Of these new issuers, 79.1% had speculative-grade ratings--the highestshare since 2010 and one of the highest proportions annually.

Annual Global Trends: A Year Of Credit Stability

The number of defaulters that began the year with active ratings fell to 72 in 2018 from 83 in 2017.This marks the lowest count since 2014 (see chart 5). Nonetheless, the default total in 2018 wassubstantially higher than in 2014 (when there were 45 rated at the beginning of the year and 60 intotal). Although the number of defaulters fell during the year, the amount of debt affected bydefault rose by 26% to $131.7 billion (see chart 6).

As in most years, the U.S. accounted for the majority of defaults in 2018, by both count and theamount of affected debt. The U.S. has the largest population of rated corporate issuers,accounting for roughly 46% of the global total at the start of 2018. With its highly developedfinancing markets, the U.S. also has a considerably higher share of speculative-grade companiesthan other regions, and U.S. issuers accounted for 51% of total speculative-grade companiesglobally as of the beginning of 2018.

Meanwhile, the emerging markets region was the only region that experienced an increase in thenumber of defaults, to 12 from eight. By sector, financial institutions led defaults in the emergingmarkets region (with five), followed by the aerospace/automotive/capital goods/metals sector(with four).

While the default rate fell globally, credit quality also showed a modest net improvement in 2018,with more companies upgraded than downgraded. The share of companies upgraded rose to9.02% in 2018, and the share of ratings that were unchanged during the year rose to 73.21%. Boththese rates reached their highest levels since 2014. Meanwhile, the ratio of downgrades toupgrades remained unchanged at 0.97 (see table 6). A ratio of 1 would indicate that thepercentages of upgrades and downgrades were equal. The share of companies with ratingswithdrawn during the year declined by about one percentage point to 8.02% in 2018.

By region, the largest share of downgrades were in the U.S., with 47%, followed by the emergingmarkets with 31%, Europe with 18%, and the other developed region with 5%. In the U.S., most ofthe downgrades were concentrated among issuers in the speculative-grade category, which tendsto be less stable. Consumer services and the leisure/media sector experienced the highest shareof downgrades: Together, these two sectors accounted for nearly a third of U.S. corporatedowngrades during the year.

Within the emerging markets, corporate issuers from Brazil, China, Argentina, and Turkey had thehighest numbers of downgrades, and the sovereign downgrades of Brazil, Argentina, and Turkeycontributed to the corporate downgrades within this region. European downgrades were led bycompanies from the U.K., where uncertainty regarding Brexit continued to be a key risk.

Table 5

Largest Global Rated Defaulters By Year

Largest corporate defaulters by outstanding debt amount

Year defaulted Issuer Amount (mil. $)

1994 Confederation Life Insurance 2,415

1995 Grand Union Co./Grand Union Capital 2,163



Table 5

Largest Global Rated Defaulters By Year (cont.)

Largest corporate defaulters by outstanding debt amount

Year defaulted Issuer Amount (mil. $)

1996 Tiphook Finance 700

1997 Flagstar Corp. 1,021

1998 Service Merchandise Co. 1,326

1999 Integrated Health Services Inc. 3,394

2000 Owens Corning 3,299

2001 Enron Corp. 10,779

2002 WorldCom Inc. 30,000

2003 Parmalat Finanziaria SpA 7,177

2004 RCN Corp. 1,800

2005 Calpine Corp. 9,559

2006 Pliant Corp. 1,644

2007 Movie Gallery Inc. 1,225

2008 Lehman Brothers Holdings Inc. 144,426

2009 Ford Motor Co. 70,989

2010 Energy Future Holdings Corp. 47,648

2011 Texas Competitive Electric Holdings Co. LLC 32,460

2012 BTA Bank J.S.C. 10,184



2015 Arch Coal Inc. 6,025

2016 Petroleos de Venezuela S.A. 19,859

2017 Petroleos de Venezuela S.A. 17,617

2018 iHeartCommunications Inc. 20,176




Chart 5



Chart 6

Table 6

Summary Of Annual Corporate Rating Changes*

(%)

Year

Issuersas of

Jan. 1 Upgrades Downgrades§ DefaultsWithdrawn

ratingsChanged

ratingsUnchanged

ratingsDowngrade/upgrade

ratio

1981 1,381 9.78 13.32 0.14 2.03 25.27 74.73 1.36

1982 1,429 5.88 12.67 1.19 5.39 25.12 74.88 2.15

1983 1,450 7.10 11.79 0.76 5.24 24.90 75.10 1.66

1984 1,537 11.26 10.02 0.91 2.86 25.05 74.95 0.89

1985 1,624 7.88 13.73 1.11 4.06 26.79 73.21 1.74

1986 1,859 7.26 15.81 1.72 6.83 31.63 68.37 2.18

1987 2,012 7.16 11.88 0.94 9.19 29.17 70.83 1.66

1988 2,101 8.85 11.90 1.38 8.14 30.27 69.73 1.34

1989 2,140 9.67 10.98 1.78 7.94 30.37 69.63 1.14

1990 2,125 6.16 15.25 2.73 6.54 30.68 69.32 2.47

1991 2,060 6.02 14.32 3.25 3.54 27.14 72.86 2.38

1992 2,144 9.56 11.47 1.49 3.96 26.49 73.51 1.20

1993 2,327 8.55 9.24 0.60 8.34 26.73 73.27 1.08



Table 6

Summary Of Annual Corporate Rating Changes* (cont.)

(%)

Year

Issuersas of

Jan. 1 Upgrades Downgrades§ DefaultsWithdrawn

ratingsChanged

ratingsUnchanged

ratingsDowngrade/upgrade

ratio

1994 2,558 7.08 9.34 0.63 4.61 21.66 78.34 1.32

1995 2,868 9.10 9.87 1.05 4.60 24.62 75.38 1.08

1996 3,128 9.69 7.80 0.51 7.03 25.03 74.97 0.81

1997 3,487 9.23 7.94 0.63 7.57 25.38 74.62 0.86

1998 4,073 7.54 11.64 1.28 7.95 28.41 71.59 1.54

1999 4,524 5.92 12.02 2.14 9.06 29.16 70.84 2.03

2000 4,677 6.86 12.66 2.48 7.12 29.12 70.88 1.84

2001 4,751 6.00 16.63 3.79 7.56 33.97 66.03 2.77

2002 4,783 5.23 19.13 3.60 7.25 35.21 64.79 3.66

2003 4,779 6.49 14.58 1.93 7.32 30.32 69.68 2.25

2004 5,014 8.78 7.60 0.78 7.24 24.39 75.61 0.87

2005 5,306 12.87 9.20 0.60 8.44 31.12 68.88 0.71

2006 5,464 12.34 8.71 0.48 8.73 30.25 69.75 0.71

2007 5,649 13.54 9.29 0.37 10.62 33.83 66.17 0.69

2008 5,730 7.91 15.99 1.80 7.71 33.40 66.60 2.02

2009 5,615 4.81 19.09 4.19 8.87 36.95 63.05 3.97

2010 5,309 11.90 8.74 1.21 6.50 28.35 71.65 0.73

2011 5,624 12.20 11.97 0.80 7.81 32.77 67.23 0.98

2012 5,802 8.38 12.22 1.14 6.91 28.65 71.35 1.46

2013 6,038 11.46 9.34 1.06 6.72 28.59 71.41 0.82

2014 6,482 9.18 8.44 0.69 7.16 25.47 74.53 0.92

2015 6,902 7.35 11.78 1.36 8.30 28.79 71.21 1.60

2016 6,907 7.89 12.15 2.08 8.34 30.46 69.54 1.54

2017 6,889 8.96 8.70 1.20 9.07 27.93 72.07 0.97

2018 6,981 9.02 8.71 1.03 8.02 26.79 73.21 0.97

Weightedaverage

8.75 11.55 1.48 7.50 29.29 70.71 1.50

Average 8.55 11.73 1.44 6.96 28.69 71.31 1.54

Median 8.46 11.79 1.16 7.29 28.62 71.38 1.35

Standarddeviation

2.21 3.01 0.98 1.92 3.40 3.40 0.78

Minimum 4.81 7.60 0.14 2.03 21.66 63.05 0.69

Maximum 13.54 19.13 4.19 10.62 36.95 78.34 3.97

*This table compares the net change in ratings from the first to the last day of each year. All intermediate ratings are disregarded. §Excludesdowngrades to 'D', shown separately in the defaults column. Sources: S&P Global Fixed Income Research and S&P Global MarketIntelligence's CreditPro®.



Even though ratings stability increased during the year, the number of large rating changes (whichwe define as those of more than six notches) also increased. In 2018, there were four largedowngrades and no large upgrades, compared with one each in 2017 (see chart 7). For thesecounts of large downgrades, we include movements to 'D' (default) along with what we normallyreport as downgrades (i.e., downward movements between active ratings). All of the four largedowngrades in 2018 were from companies that defaulted during the year: Turkey-based FleetcorpOperasyonel Tasit Kiralama ve Turizm A.S., Luxembourg-based QGOG Constellation S.A., the ChinaHuayang Economic and Trade Group Co., and one issuer that was confidentially rated.

Chart 7

These four companies with large downgrades in 2018 were outliers during a year of increasedcredit stability, as the average number of notches for a rating change was little changed during theyear. The average number of notches from an upgrade declined slightly, to 1.10 in 2018 from 1.14in 2017, while downgrades moved by an average of 1.37 notches in 2018, nearly unchanged from1.36 notches in 2017 (see chart 8).



Chart 8

The speculative-grade default rate declined in the two largest regions, the U.S. and Europe, in2018, and this decline more than offset a slight increase in the default rates in the emergingmarkets and other developed regions. The annual speculative-grade default rate decreased in theU.S. to 2.42% (from 3.14% in 2017) and in Europe to 1.9% (from 2.38%). Meanwhile, thespeculative-grade default rate rose in the emerging markets to 1.35% (from 0.96%) and in theother developed region to 3.29% (from 3.03%) (see table 7 and chart 21).

Table 7

Annual Corporate Speculative-Grade Default Rates By Geographic Region

(%)

Year U.S. and tax havens* Europe§ Emerging markets Other†

1981 0.63 0.00 N.A. 0.00

1982 4.44 0.00 N.A. 0.00

1983 2.99 0.00 N.A. 0.00

1984 3.32 0.00 N.A. 0.00

1985 4.42 0.00 N.A. 0.00

1986 5.79 0.00 N.A. 0.00

1987 2.85 0.00 N.A. 0.00

1988 3.90 0.00 N.A. 0.00

1989 4.34 0.00 N.A. 37.50

1990 7.94 0.00 N.A. 28.57



Table 7

Annual Corporate Speculative-Grade Default Rates By Geographic Region (cont.)

(%)


1991 10.73 50.00 N.A. 25.00

1992 6.25 0.00 N.A. 0.00

1993 2.40 20.00 0.00 0.00

1994 2.20 0.00 0.00 0.00

1995 3.65 9.09 0.00 0.00

1996 1.85 0.00 0.00 2.70

1997 2.17 0.00 0.00 1.92

1998 3.26 0.00 8.55 1.43

1999 5.25 6.32 7.62 4.40

2000 7.39 2.56 1.65 6.52

2001 10.63 8.46 6.25 12.36

2002 7.25 12.59 17.67 5.94

2003 5.59 3.73 3.95 4.76

2004 2.44 1.60 0.85 1.99

2005 2.02 0.94 0.25 1.30

2006 1.37 1.79 0.44 0.76

2007 1.02 0.96 0.20 2.26

2008 4.30 2.50 2.42 3.85

2009 11.81 8.63 5.50 9.68

2010 3.47 1.02 1.56 8.04

2011 2.16 1.59 0.48 6.19

2012 2.66 2.26 2.63 2.38

2013 2.19 3.47 2.00 2.01

2014 1.61 0.98 1.04 2.87

2015 2.86 1.96 3.18 2.84

2016 5.15 1.94 3.53 6.25

2017 3.14 2.38 0.96 3.03

2018 2.42 1.90 1.35 3.29

Average 4.15 2.94 3.13 4.21

Median 3.29 1.94 1.65 3.03

Standard deviation 2.71 3.15 4.00 2.91

Minimum 0.63 0.00 0.00 0.76



Table 7

Annual Corporate Speculative-Grade Default Rates By Geographic Region (cont.)

(%)


Maximum 11.81 12.59 17.67 12.36

Note: Descriptive statistics for regions other than U.S. calculated from 1996-2018 due to sample size considerations. *U.S., Bermuda, andCayman Islands. §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 the U.K. †Australia, Canada, Japan, and New Zealand. N.A.--Not available. Sources: S&P Global Fixed Income Research and S&P GlobalMarket Intelligence's CreditPro®.

Data on defaulted corporate issuers globally show that defaults among speculative-grade entitiestend to be clustered in the third year after the initial rating, particularly in the 'B' rating category(see chart 9). For example, among defaulters that were rated 'B' at origination, the default rateclimbs to a high of 18.7% in the third year and decelerates thereafter.

Defaulted issuers initially rated 'BB' show a similar pattern but peak a little later, in the fourthyear. Defaulters initially rated 'CCC' show the reverse pattern, with the highest default rateobserved in the first year, which is not surprising given the low rating and S&P Global Ratings'associated criteria (see "Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings," Oct. 1,2012).

Chart 9

In 2018, 80 of the 82 defaults, or 97.6%, were from companies originally rated speculative grade,which is 10 percentage points higher than the long-term average of 87.5%. In years withlower-than-average default rates, we often see that more than 90% of defaulters were initiallyrated speculative grade, as reflected in the rating path observed for defaulters in the trailing 12



quarters (see chart 10). The median rating for all recently defaulted entities was solidly in thespeculative-grade category in the seven years preceding default, and for most of that period, itwas at least one notch below that of the long-term equivalent.

Financial services companies are typically more sensitive to sudden declines in investor andstakeholder confidence than nonfinancial companies, which can contribute to a rapid decline infunding liquidity and credit quality. In turn, this can result in a relatively fast descent into default(see chart 11). This was especially evident during the global financial crisis, when many highlyrated banks defaulted within a short amount of time from their initial downgrades. Since 1981,financial services defaulters show a median rating in the 'BBB' category five years prior to default.But now that a decade has passed since the crisis, financial services defaulters from the pastthree years show a median rating in the 'B' category five years prior to default.

Historically, nonfinancial defaulters tend to have a much smoother and shorter path to default(see chart 12). One key reason is that financial services companies typically start withinvestment-grade ratings, while most nonfinancial issuers have speculative-grade initial ratings,particularly over the past 10 years.

Another major difference between financial and nonfinancial companies is the incidence ofdefault. Defaults are much less frequent for financial services companies than for nonfinancials,which can allow outliers to bias the averages. For instance, in the three years ended Dec. 31, 2018,308 nonfinancial companies defaulted, while only 32 financials did. Despite the much smallersample of financial services defaults over the past three years, most of these defaulters wererated in the lowest rating categories several years ahead of their eventual default.

Chart 10



Chart 11



Chart 12

Some issuers default after S&P Global Ratings no longer rates them. We make our best effort tocapture such defaults in the database, and we include an entity in the annual default ratecalculations if it was rated as of Jan. 1 in the year of default. If, however, S&P Global Ratingswithdrew the rating prior to Jan. 1 of the year of default, we do not include the issuer in the defaultrate calculation in that year. Although defaulters that are not rated ("NR") are not always capturedin the default rate calculations for the year of default, we do capture them in the longer-termcumulative default rate statistics, which are tied back to the year in which defaulters were lastrated.

Of the defaulted companies in 2018, 7.3% were not rated just prior to default, which is slightlylower than the long-term percentage of 16.9% (see chart 13). All of the defaulters in 2018 that hadactive ratings immediately prior to default were rated in the lowest rating categories. Specifically,83% were rated 'CCC+' or lower just prior to default, which is much higher than the 67.5%long-term average.



Chart 13a Chart 13b

Table 8 provides a list of all the publicly rated companies that defaulted in 2018. For additionaldetails on the 2018 defaulters, see Appendix III.

Table 8

2018 Global Publicly Rated Corporate Defaults

Company nameReason fordefault Country Industry

Debtamount

outstanding(mil. $)

Defaultdate

Ratingoneyearprior todefault

Ratingthreeyearsprior todefault

Firstrating

Date offirst rating

Expro Holdings U.K. 3Ltd.

Distressedexchange

U.K. Energy and naturalresources

1,475.0 1/2/2018 CCC+ - CCC+ 11/1/2016

Fieldwood Energy LLC Missedprincipal orinterest

U.S. Energy and naturalresources

4,048.1 1/3/2018 CCC - CCC 6/16/2016

Liberty Tire RecyclingHoldco LLC

Distressedexchange

U.S. Health care/chemicals 170.0 1/4/2018 B- - B- 6/16/2015

BIS Industries Ltd. Distressedexchange

Australia Energy and naturalresources

250.0 1/15/2018 B- B B 3/12/2014

RGL ReservoirManagement Inc.

Distressedexchange

Canada Energy and naturalresources

346.0 1/18/2018 CCC+ - CCC+ 6/9/2016

Philadelphia EnergySolutions Refining andMarketing LLC

Chapter 11 U.S. Energy and naturalresources

550.0 1/24/2018 B B+ B+ 3/7/2013

Hovnanian EnterprisesInc.

Distressedexchange

U.S. Forest and buildingproducts/homebuilders

2,020.0 1/30/2018 CCC+ B- CCC- 11/3/2011

iHeartCommunicationsInc.

Missedprincipal orinterest

U.S. Leisure time/media 20,176.4 2/1/2018 - - CCC 2/13/2017



Table 8

2018 Global Publicly Rated Corporate Defaults (cont.)


Debtamount

outstanding(mil. $)

Defaultdate



Firstrating

Date offirst rating

Cenveo Inc. Chapter 11 U.S. Leisure time/media 895.0 2/2/2018 CCC+ - CCC+ 7/18/2016

BrightHouse GroupPLC

Distressedexchange

U.K. Financial institutions 308.4 2/5/2018 CCC+ B- B- 6/7/2013

Charlotte Russe Inc. Distressedexchange

U.S. Consumer services 230.0 2/5/2018 B- B B- 5/8/2013

Remington Outdoor Co.Inc.


U.S. Leisure time/media 820.0 2/13/2018 B- B B+ 7/9/2009

Transworld SystemsInc.


U.S. Telecommunications 440.0 2/16/2018 CCC - B 7/27/2015

Tops Holding II Corp. Chapter 11 U.S. Consumer services 777.5 2/21/2018 - - CCC+ 8/15/2017

Eletson Holdings Inc. Missedprincipal orinterest

Liberia Transportation 300.0 2/22/2018 B B B 12/11/2013

Iconix Brand Group Inc. Distressedexchange

U.S. Consumer services 300.0 2/23/2018 B B+ B+ 4/19/2007

PaperWorks IndustriesHolding Corp.

Distressedexchange

U.S. Forest and buildingproducts/homebuilders

365.0 3/6/2018 B- B- B 9/30/2011

HGIM Corp. Chapter 11 U.S. Energy and naturalresources

1,175.0 3/8/2018 CCC+ B B 6/4/2013

EV Energy Partners L.P. Chapter 11 U.S. Energy and naturalresources

500.0 3/16/2018 CCC+ B B 3/10/2011

Claire's Stores Inc. Chapter 11 U.S. Consumer services 2,105.0 3/19/2018 CC - CC 10/4/2016

Noble Group Ltd. Missedprincipal orinterest

Bermuda Energy and naturalresources

2,750.0 3/20/2018 B+ BBB- BB+ 3/2/2005

Sears, Roebuck andCo. (A)

Distressedexchange

U.S. Consumer services 5,587.4 3/22/2018 CCC+ CCC+ AA 12/31/1980

BI-LO Holding FinanceLLC

Chapter 11 U.S. Consumer services 1,800.0 3/28/2018 CCC+ - B- 1/9/2017

NCSG Crane & HeavyHaul Corp.



305.0 3/29/2018 CCC+ B B 7/28/2014

FirstEnergy SolutionsCorp.

Chapter 11 U.S. Energy and naturalresources

2,738.3 4/2/2018 CCC+ BBB- BBB 3/26/2007

Nine West HoldingsInc.

Chapter 11 U.S. Consumer services 1,419.0 4/6/2018 CCC B- B 2/19/2014

Bertucci's Corp. Distressedexchange

U.S. Consumer services 0.0 4/15/2018 NR NR B+ 7/8/1998

Guitar Center Inc. Distressedexchange

U.S. Consumer services 0.0 4/16/2018 NR NR B 6/19/1996



Table 8



Debtamount

outstanding(mil. $)

Defaultdate



Firstrating

Date offirst rating

Corporacion ElectricaNacional S.A.(Bolivarian Republic ofVenezuela)


Venezuela Utility 650.0 4/24/2018 - - CC 1/29/2018

Gibson Brands Inc. Chapter 11 U.S. Consumer services 375.0 5/1/2018 CCC B- B 7/23/2013

PT MNC InvestamaTbk.

Distressedexchange

Indonesia Aerospace/auto/capitalgoods/metals

365.0 5/4/2018 B- BB- BB- 4/30/2013

Bank of Astana JSC Missedprincipal orinterest

Kazakhstan Financial institutions 60.7 5/4/2018 NR B- B- 7/30/2014

QGOG ConstellationS.A.


Luxembourg Energy and naturalresources

1,304.6 5/9/2018 B+ B+ BB+ 11/9/2012

Northern Oil and GasInc.

Distressedexchange


700.0 5/16/2018 CCC B B 5/9/2012

GetBack S.A. Missedprincipal orinterest

Poland Financial institutions 0.0 5/17/2018 B - B 3/17/2017

Proserv Group Inc. Distressedexchange


540.0 5/21/2018 CCC+ B B 1/23/2015

Triple Point GroupHoldings Inc.

Distressedexchange

U.S. Hightech/computers/officeequipment

475.0 5/23/2018 CCC+ B- B 6/19/2013

Grupo SendaAutotransporte S.A. deC.V.


Mexico Transportation 0.0 5/25/2018 B B B+ 9/18/2006

Westmoreland Coal Co. Distressedexchange


1,070.0 5/29/2018 CCC+ B CCC+ 3/2/2011

Murray Energy Corp. Distressedexchange


6,837.0 6/15/2018 B- - CCC+ 4/27/2016

Trident Holding Co. LLC Distressedexchange

U.S. Health care/chemicals 570.0 6/22/2018 B- - B- 4/14/2016

Community HealthSystems Inc.

Distressedexchange

U.S. Health care/chemicals 18,500.0 6/26/2018 B B+ B+ 9/28/2001

Del Monte Foods Inc. Distressedexchange

U.S. Consumer services 970.0 6/28/2018 CCC+ B B 11/7/2013

Intelsat S.A. Distressedexchange

Luxembourg Hightech/computers/officeequipment

15,435.0 7/13/2018 CCC+ - CCC+ 6/19/2017

HoldIKKS SAS Missedprincipal orinterest

France Consumer services 372.6 7/18/2018 CCC+ B+ B+ 7/1/2014

House of Fraser (UK &Ireland) Ltd. (A)

Distressedexchange

U.K. Consumer services 230.0 7/30/2018 B B B+ 5/19/2011



Table 8



Debtamount

outstanding(mil. $)

Defaultdate



Firstrating

Date offirst rating

Windstream HoldingsInc.

Distressedexchange

U.S. Telecommunications 8,713.6 8/3/2018 B+ BB- BB- 9/9/2013

Fleetcorp OperasyonelTasit Kiralama veTurizm A.S.


Turkey Financial institutions 0.0 8/9/2018 - - B 1/4/2018

House of Fraser (UK &Ireland) Ltd. (B)

Foreignbankruptcy

U.K. Consumer services 222.6 8/16/2018 - - CCC- 8/3/2018

American TireDistributors Inc.


U.S. Aerospace/auto/capitalgoods/metals

1,770.0 9/5/2018 B B B 3/9/2005

Derindere TurizmOtomotiv Sanayi veTicaret A.S.


Turkey Financial institutions 0.0 9/5/2018 B - B 10/5/2015

Bellatrix ExplorationLtd.

Distressedexchange


250.0 9/13/2018 B B+ B+ 5/8/2015

Legacy Reserves L.P. Distressedexchange


850.0 9/21/2018 CCC B+ B 11/13/2012

Jupiter Resources Inc. Missedprincipal orinterest


1,125.0 10/1/2018 B B+ B+ 7/28/2014

China HuayangEconomic and TradeGroup Co. Ltd.


China Aerospace/auto/capitalgoods/metals

0.0 10/2/2018 - - B+ 3/13/2018

Astaldi SpA Paymentsuspension

Italy Aerospace/auto/capitalgoods/metals

866.9 10/2/2018 B- B+ B+ 12/17/2013

Mattress Firm HoldingCorp.

Chapter 11 U.S. Consumer services 0.0 10/5/2018 NR B+ B 9/19/2014

FR Dixie AcquisitionCorp.


U.S. Aerospace/auto/capitalgoods/metals

304.0 10/10/2018 CCC+ B B+ 1/7/2014

Sears, Roebuck andCo.(B)

Chapter 11 U.S. Consumer services 5,757.2 10/15/2018 - - CCC- 4/9/2018

David's Bridal Inc. Missedprincipal orinterest

U.S. Consumer services 790.0 10/16/2018 CCC+ B- B 1/8/2007

International Bank ofSaint-Petersburg

Regulatorydirective

RussianFederation

Financial institutions 0.0 10/17/2018 B- B- CCC 9/12/2003

Gastar Exploration Inc. Chapter 11 U.S. Energy and naturalresources

0.0 10/31/2018 NR B- CCC+ 11/15/2007

Community ChoiceFinancial Inc.


U.S. Financial institutions 437.0 11/5/2018 CCC - CCC 4/26/2016

PetroQuest Energy Inc. Chapter 11 U.S. Energy and naturalresources

0.0 11/6/2018 CCC - CCC 10/21/2016



Table 8



Debtamount

outstanding(mil. $)

Defaultdate



Firstrating

Date offirst rating

FULLBEAUTY BrandsHoldings Corp.


U.S. Consumer services 1,165.0 11/8/2018 CCC+ B- B- 10/29/2015

Johnston Press PLC Foreignbankruptcy

U.K. Leisure time/media 287.6 11/21/2018 CCC+ B B 7/11/2014

China AutomationGroup Ltd.

Distressedexchange

CaymanIslands

Hightech/computers/officeequipment

24.0 11/25/2018 CCC B+ BB- 4/6/2011

Odebrecht Engenhariae Construcao S.A.


Brazil Aerospace/auto/capitalgoods/metals

4,050.0 11/26/2018 CCC+ BBB- BB- 3/26/2002

LBI Media Inc. Chapter 11 U.S. Leisure time/media 326.7 11/27/2018 CCC CCC CCC 2/13/2015

CMC di RavennaSocieta Cooperativa

Paymentsuspension

Italy Aerospace/auto/capitalgoods/metals

654.0 12/6/2018 B B B 8/22/2014

Parker Drilling Co. Chapter 11 U.S. Energy and naturalresources

585.0 12/12/2018 B- B+ B+ 10/22/1996

Checkout Holding Corp. Chapter 11 U.S. Leisure time/media 1,610.0 12/13/2018 CCC+ B- B+ 11/5/2010

Sterling Mid-HoldingsLtd.

Distressedexchange

Jersey Financial institutions 745.0 12/13/2018 CCC - CCC 12/1/2017

Total 130,839.6

Note: This total does not match table 1 because it excludes confidentially rated defaults. (B) indicates that initial ratings for these companies are those following a priordefault in 2018. Initial ratings, or those as of Dec. 31, 1980. NR--Not rated. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Table 9

One-Year Global Corporate Default Rates By Rating Modifier

(%) AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC/C

1981 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.28 0.00 0.00

1982 0.00 0.00 0.00 0.00 0.00 0.33 0.00 0.00 0.68 0.00 0.00 2.86 7.04 2.22 2.33 7.41 21.43

1983 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.35 2.17 0.00 1.59 1.23 9.80 4.76 6.67

1984 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.41 0.00 0.00 1.64 1.49 2.15 3.51 7.69 25.00

1985 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.64 1.49 1.35 2.61 13.11 8.00 15.38

1986 0.00 0.00 0.00 0.00 0.00 0.00 0.76 0.00 0.78 0.00 1.82 1.19 1.14 4.71 12.16 16.67 23.08

1987 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.83 1.32 5.95 6.82 12.28

1988 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.34 2.00 4.50 9.80 20.37

1989 0.00 0.00 0.00 0.00 0.00 0.00 0.58 0.90 0.78 0.00 0.00 0.00 2.02 0.43 7.80 4.88 33.33

1990 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.76 0.00 1.10 2.78 3.09 4.50 4.89 12.26 22.58 31.25

1991 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.83 0.74 0.00 3.70 1.14 1.05 8.72 16.25 32.43 33.87

1992 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.72 14.93 20.83 30.19



Table 9

One-Year Global Corporate Default Rates By Rating Modifier (cont.)

(%) AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC/C

1993 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.94 0.00 1.30 5.88 4.17 13.33

1994 0.00 0.00 0.00 0.00 0.46 0.00 0.00 0.00 0.00 0.00 0.00 0.86 0.00 1.84 6.58 3.13 16.67

1995 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.64 0.00 1.56 1.12 2.77 8.00 7.50 28.00

1996 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.65 0.56 2.37 3.74 3.85 8.00

1997 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.37 0.35 0.00 0.00 0.00 0.41 0.72 5.30 14.58 12.00

1998 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.27 1.05 0.67 1.06 0.73 2.60 7.56 9.46 42.86

1999 0.00 0.00 0.00 0.36 0.00 0.25 0.28 0.00 0.28 0.31 0.55 1.34 0.91 4.22 10.45 15.60 33.33

2000 0.00 0.00 0.00 0.00 0.00 0.24 0.58 0.00 0.26 0.89 0.00 0.82 2.07 5.83 10.04 11.61 35.96

2001 0.00 0.00 0.00 0.00 0.57 0.25 0.00 0.24 0.49 0.28 0.52 1.22 5.64 5.84 17.24 22.46 45.45

2002 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.10 0.88 1.07 1.59 1.78 4.83 3.27 10.23 19.85 44.44

2003 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.20 0.54 0.51 0.98 0.28 1.73 5.34 9.52 32.73

2004 0.00 0.00 0.00 0.00 0.00 0.24 0.00 0.00 0.00 0.00 0.00 0.67 0.53 0.46 2.36 2.84 16.18

2005 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.17 0.00 0.38 0.00 0.51 0.79 2.65 2.96 9.09

2006 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.39 0.00 0.50 0.55 0.82 1.57 13.33

2007 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.32 0.24 0.19 0.00 0.90 15.24

2008 0.00 0.00 0.43 0.41 0.32 0.21 0.60 0.19 0.61 0.73 1.23 0.66 0.68 3.16 3.47 7.59 27.27

2009 0.00 0.00 0.00 0.00 0.30 0.40 0.00 0.42 0.19 1.14 0.00 1.05 0.98 6.02 10.84 18.12 49.46

2010 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.85 0.37 0.57 0.00 0.75 2.14 22.62

2011 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.21 0.00 0.00 0.00 0.42 1.28 4.51 16.30

2012 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.79 0.61 1.45 3.53 27.52

2013 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.26 0.77 0.83 4.71 24.67

2014 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.19 0.33 2.77 17.51

2015 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.26 0.22 1.76 2.04 4.30 26.67

2016 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.15 0.00 0.23 0.00 1.10 0.93 2.31 10.76 33.33

2017 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.22 0.00 0.41 0.44 2.88 26.45

2018 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.94 2.08 27.18

Average 0.00 0.00 0.01 0.02 0.04 0.05 0.07 0.13 0.22 0.24 0.50 0.72 1.22 2.10 5.97 8.82 24.17

Median 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.51 0.70 1.52 4.90 7.11 24.83

Standarddeviation

0.00 0.00 0.07 0.09 0.13 0.11 0.20 0.29 0.34 0.42 0.89 0.82 1.64 2.06 4.89 7.48 11.47

Minimum 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Maximum 0.00 0.00 0.43 0.41 0.57 0.40 0.76 1.10 1.41 1.35 3.70 3.09 7.04 8.72 17.24 32.43 49.46




2018 Timeline: Credit Holds Through The Tempest

After 2017 proved to be a banner year, 2018 brought headwinds for financial markets across theglobe, with multiple bouts of heightened volatility, often provoked by geopolitical events. Troublesbegan in February, sending the VIX to a high of 37 on Feb. 5. While S&P Global Ratings has viewedgeopolitical risk as elevated in recent years, markets have either been more sanguine or had littleidea on how to accurately price it. That changed in 2018 as the Fed continued its pursuit of higherinterest rates, U.S.-China trade talks failed to reach an amicable conclusion, and Europepresented multiple pain points for the year--notably, the slowly collapsing Brexit negotiations andItaly's high indebtedness amid fiscally chaotic leadership.

Through it all, credit risk remained relatively stable, with spates of downgrades limited tocountry-specific events that had been developing for some time in certain emerging economies.Defaults were also concentrated in the energy and consumer services sectors, which are now insomewhat specific multiyear periods of stress.

Political risk was not limited to the U.S., China, or Europe. Early in the year, Brazil became the firstsovereign of the year to be downgraded, on Jan. 11. The sovereign long-term foreign currencyrating was lowered to 'BB-' from 'BB', reflecting the country's slower-than-expected progress andlower support by the country's political class to put in place meaningful legislation to correctstructural fiscal slippage on a timely basis. This was the single largest impetus behind subsequentcorporate downgrades in 2018. The next day, 51 downgrades within Brazil occurred, andultimately the resultant downgrade total in January reached 61, out of the monthly total of 83globally.

Feb. 5 brought the first noticeable bout of market volatility for the year, likely in reaction togrowing evidence that wage growth had finally established itself, raising investor worries thatinterest rates would rise more quickly than expected. The VIX closed at 37.3 and reached anintraday high of 50 the next day. The S&P 500 went on to lose 8.5% between the end of Januaryand Feb. 8 and 3.8% between the end of January and the end of February. It would take roughly sixmonths for the S&P 500 to return to its high from the end of January. China's Shenzhen Index lostground at a similar pace at this point in the year but never rebounded in 2018, losing 33%.

Initial fears over an increasing pace of rate hikes were compounded by mounting concern overrising U.S.-China trade tensions in March. Early in the month, the Trump Administrationannounced that the U.S. would implement tariffs on aluminum and steel imports, as well asimpose restrictions on technology transfers and acquisitions by China. China followed suit withhigher tariffs on an initial $3 billion of U.S. imports. These measures rattled other U.S. tradepartners, such as Japan and the EU, which sought to be exempt from the U.S. measures. In NorthAmerica, Canada and Mexico were initially spared, largely due to the ongoing revisions to theNorth American Free Trade Agreement (NAFTA). In nearly all cases, talk of tariffs by the U.S. led tothreats of retaliation by major trading partners. Many of the tariffs were aimed at sectors relianton global growth, which, after solid performance in 2017, was now feared to be in danger ofslowing.

Over the course of the month, the tone of the trade situation improved and declined, leading tomore market volatility. This erratic timeline of events and subsequent market reactions becamecommonplace throughout the year, and amid the trade conflict, the National People's Congressreached a near-unanimous vote to remove term limits on Chinese President Xi Jinping in March.But despite whipsawed markets, economic growth remained robust, leading the Fed tounanimously vote to raise interest rates by a quarter of a point at its March meeting and to signalthe potential for a faster pace of interest rate hikes ahead.



For Europe, trade talks in March weren't limited to dealings with the U.S. The thorny issue ofpost-Brexit trade between the EU and the U.K. resulted in an agreement of terms to a 21-monthtransition period after the U.K.'s March 2019 departure deadline. During that time, the U.K. wouldfollow EU rules and trade freely in the common market. After that point, the U.K. would be able tonegotiate bilateral deals. However, unresolved at the time--and still unresolved through the firstthree months of 2019--was the issue of the Irish border.

Finally, March also ushered in a sea change in Italian politics as the two anti-establishmentparties, the League and Five-Star Movement, both ousted the more traditional parties previouslyin power. The two parties represent different factions and different regions within Italy, but bothshare a rejection of established politics and a strong skepticism of the EU. The rise of euroskepticparties in Italy (and earlier in Germany) caused much angst in the investment community,particularly given the criticism of European budgetary austerity and the timing of the victoriesduring the fraught Brexit negotiations. The election resulted in a hung parliament, with highpotential for a second general election.

April started with China hitting back on the trade front, imposing a 15% tax on about 120 U.S.products and another 25% tax on eight U.S. products, including aluminum and pork. Almostimmediately, the U.S. retaliated with a 25% tax on nearly 1,300 Chinese products worth about $50billion in imports. China quickly followed up with tariffs on $50 billion of U.S. imports across 106products. U.S. President Donald Trump shortly after announced another $100 billion in potentialtariffs in the quickly escalating process. These developments prompted President Trump to send adelegation to Beijing in the first week of May, acknowledging many obstacles remained.

Despite the escalating tension between the two countries, markets seemed to take it in strideduring April as the VIX fell to 15.9 on April 30 from a high of 23.6 on April 2. Some of theenthusiasm might have been a result of increased opportunities for speculative-grade companiesto take out loans. Since 2016, rising interest rates had already been making leveraged loans apreferred investment relative to bonds. But April saw an additional increase in collateralized loanobligation (CLO) deals after the U.S. Court of Appeals in Washington D.C. ruled that CLO managerswere not subject to the risk retention rule introduced as part of the Dodd-Frank Act. Previously,CLO managers were required to hold a 5% stake in any deals they sold.

Coinciding with the U.S. trade envoy's timed meeting in Beijing, the European Central Bank issueda warning in early May that the rise in trade protectionism could hurt the global economy. TheWorld Trade Organization echoed this sentiment in a joint statement. This came at a time wheninvestor confidence in Europe had been declining since the start of the year, alongside datashowing declining German factory orders. That said, the month ended with the U.S. ending atwo-month exemption by forging ahead with tariffs on aluminum (of 10%) and steel (25%) importsfrom Canada, Mexico, and the EU.

By the end of May, Italy had set a new record for going without a functional government (88 days).The League and the Five-Star Movement were failing to form a coalition, and markets respondedwith Italian 10-year government bond yields rising to 3% at the end of May from 1.8% at the end ofApril. A final coalition was formed on the last day of the month, resulting in the election ofGiuseppe Conte as prime minister, whose "Conte Cabinet" would be largely made up of Five-Starand League members.

With one of the year's hot-button issues finally at rest, markets could regain some footing towardthe second half of the year. A strong jobs report out of the U.S. in June showed that theunemployment rate had hit its lowest level since April 2000, at 3.8%, supporting a round of equitymarket gains in the first half of June. Given the performance of U.S. labor markets, the Fed raisedrates for a second time in 2018 at its June meeting, with another 25 bps increase taking thefederal funds rate up to a range of 1.75%-2%.



The second half of the year began with the Mexican general election, resulting in a victory forAndres Manuel Lopez Obrador. This was the first outright majority win by a presidential candidatein Mexico since 1988, and in a new global trend, a victory by another economic nationalist. Thisresult added another layer to the ongoing renegotiation of NAFTA, a process already long plaguedby missed deadlines.

Economic growth in the U.S. had surged in the second quarter, nearly reaching 4% in seasonallyadjusted annual terms. Spending by multiple sectors (consumers, business, and government)grew, and initial data in July suggested exports increased as well. In one of the most impactfulevents of the U.S.-China trade standoff, the Trump Administration announced a list of tariffs on$200 billion of Chinese goods on July 10. These tariffs underwent a two-month review process andtargeted many products from sectors in China's "Made in China 2025" strategic economic plan.Central to the dispute were U.S. claims of unfair trading practices by China, particularly in keyareas of intellectual property protections for U.S. goods, as well as technological and tradesecrets.

At this dollar level of goods, China would not be able to respond in kind to the U.S., so instead fileda complaint against the latest round of tariffs with the World Trade Organization on July 16, withthe formal complaint process to begin in August. This was met with President Trump announcingthe potential for more tariffs, targeting roughly $500 billion in Chinese imports.

Meanwhile, in Europe, U.K. Foreign Secretary Boris Johnson and David Davis, the minister incharge of Britain's negotiations with the EU, resigned within a 24-hour time span between July 8and July 9. Mr. Davis' resignation came after he decided he couldn't support the Brexit plan agreedupon by the cabinet, which he believed gave too much ground to the EU. Only days later, anothernine members of Parliament resigned in reaction to Prime Minister Theresa May's plan for a"common rulebook" with the EU. Many, if not all, of the resignations were by Conservatives whofavored a full break with Europe, opening the possibility of challenges to May's leadership.

July ended on a positive note for global trade relations as the U.S. and EU negotiations resulted inno new tariffs by the U.S.--a particularly sensitive issue for European automakers--in exchangefor increased EU purchases of U.S. soybeans and the building of more terminals to import U.S.liquefied natural gas. Before long, however, investor concerns over trade tensions returned, inAugust, but those were overshadowed somewhat by the currency crisis facing Turkey.

U.S. tariffs had hit countries beyond China, the EU, and NAFTA partners, and Turkey was amongthem. In retaliation for a doubling of U.S. tariffs, Turkey doubled its own tariffs on certain U.S.imports. Previously, Turkey had been facing sanctions by the U.S., largely in response to thedetention of an evangelical pastor accused of being involved in the failed 2016 coup. Turkey hadalso been dealing with a large current account deficit and high inflation. As a result, S&P GlobalRatings lowered the sovereign long-term foreign currency rating to 'B+' from 'BB-', largely on theexpectation that this level of volatility would continue.

On the trade front, the U.S. adopted a carrot-and-stick approach to dealing with China in August,both relaunching negotiations with midlevel representatives and pursuing either 10% or 25%tariffs on $200 billion of Chinese imports. At this point, the U.S. had implemented only 25% tariffson $34 billion of Chinese imports--which had been matched equally by China. Another $16 billionof Chinese imports would soon be subject to the 25% tariffs, which China threatened toreciprocate.

Closer to home, the U.S. reached a deal with Mexico on the future of NAFTA at the end of themonth, after extended bilateral talks between the two countries managed to resolve issues(largely concerning automobiles and energy), allowing Canada to return to trilateral negotiations.Yet as NAFTA negotiations moved closer to an amicable conclusion, worries among investors and



other observers mounted that the agreement would cause the U.S.-China conflict to escalate.Some of this worry stemmed from a belief that in forging ahead with its main trading partners, theU.S. would build a united multinational front against Chinese trade practices.

As the NAFTA process reached the finish line in September, President Trump announced thepossibility of a third round of tariffs aimed at an additional $267 billion of Chinese goods. As ofSeptember, officials from both sides were slated to meet in November--after crucial midtermelections in the U.S. Later in the month, after the initial review period, the second round of tariffstook effect. With $200 billion of Chinese goods now subject to 10% tariffs, this brought the total to$250 billion of Chinese imports subject to the new 10% tariffs, with the rate set to increase to 25%at the start of 2019.

At the end of the month--and right before the proposed deadline--the U.S., Canada, and Mexicofinalized the new trade deal, dubbed the United States-Mexico-Canada Agreement (USMCA).Coinciding with this high note in global trade developments, which had hounded markets in theyear, the S&P 500 hit its peak daily close on Sept. 20, at 2,931. Few would have guessed how far itwould subsequently fall in the course of one month and how much further it would fall byyear-end.

While the U.S. was experiencing some of the strongest economic growth in recent years and equitymarket resilience in the face of the chaotic trade dispute, Europe was not as fortunate. The regionwas dogged by the unraveling Brexit process throughout the year, as well as several majorcountries' governments taking a populist shift, particularly heavily indebted Italy. But in additionto those headwinds, Europe's GDP suffered due to the global scope of U.S. trade policies. Theimpact was direct (in the form of increased tariffs, even if only until an agreement was reached)but also indirect (via the effect of the U.S.-China conflict on global trade).

German, British, and other European equity markets suffered declines in the fourth quarteralongside the U.S., but through September, the S&P 500 had reached a high point for the year,while European peers had experienced theirs much earlier in the year. Emerging markets werealso hard hit by the slowdown in the global economy--resulting from trade conflicts--by the timethe fall arrived.

As October unfolded, talk on both sides of the Brexit process increasingly mentioned thepossibility of a "no deal" outcome. A summit was scheduled for Oct. 17, the outcome of whichcould be chaotic if a deal wasn't attainable in the lead-up. A point of growing concern, particularlyin the U.K., was the Irish border. Offering some relief to financial markets and businesses, EUfinancial regulators joined their U.K. counterparts in warning of the risks of a no-deal outcome andoffered to do what they could to ensure a smooth transition, regardless of the political outcome.

Not long after a third interest rate increase by the Fed in September and a strong jobs report inearly October, equity markets the world over suffered sharp losses on or after Oct. 8. At this point,U.S.-China trade negotiations were nonexistent after the last round of tariffs, the U.S.unemployment rate had hit a low not seen in roughly 50 years (alongside increased consumerconfidence and wage increases), a "hard" Brexit outcome was becoming much more likely, and thenew Italian government had dug in its heels on its new budget, which was rejected by the EU. Thisconfluence of events, along with recent data hinting at more rate hikes in 2019 by the Fed,perhaps proved too much for previously resilient financial markets.

Nonetheless, late in October, Brazil elected right-wing Jair Bolsonaro as president, who marketswelcomed given his intent to cut spending, pursue tax reform, reduce bureaucracy, and privatizestate-run firms. The Bovespa Index started increasing in mid-September and would finish the yearup almost 18% from Sept. 11 (up 15% from January).

Despite the unexpected outcome of the 2016 U.S. presidential election, which caught pollsters



and pundits by surprise, most polls were right in their expectations for the results of the 2018 U.S.midterm congressional elections. The Democrats won the House of Representatives, while theRepublicans expanded their majority in the Senate. Faced with a split legislature andinvestigations into the president's dealings, U.S. leverage in the trade talks with China becameviewed as weakened. At the end of the month, President Trump and Chinese President Xi Jinpingmet at the G-20 summit in Argentina.

The main outcome of the meeting was a "truce" between the two nations, in which the U.S. wouldpostpone increasing tariffs to 25% on $200 billion of Chinese goods from the current 10%. China,in turn, would reduce its 40% tariffs on American cars. Nonetheless, the main issues of forcedtechnology transfers by U.S. companies doing business in China, intellectual property protections,and impediments to U.S. access to Chinese markets remained unresolved. The truce was toextend for about three months, while negotiations would continue yet again.

Late November also brought progress in negotiations on the Brexit front, with the EU agreeing to adraft withdrawal treaty penned by Prime Minister May and her cabinet. The EU warned that thiswould be its final offer, and now the draft bill would have to go to Parliament for a vote. This wasthe same draft that caused the second Brexit secretary in 2018, Dominic Raab, to quit in protest,with others in the cabinet following.

The fourth-quarter rout in global equity markets coincided with even greater declines in the priceof oil. On Oct. 3, the price of a barrel of West Texas Intermediate was $76.4. It fell to a low of $44.5by Dec. 27, prompting OPEC and Russia to cut production by a combined 1.2 million barrels to helpstabilize the market. During December, credit markets in the U.S. and Europe froze up, with nospeculative-grade bonds issued in either region, alongside a dramatic drop in leveraged loanissuance. Nonetheless, economic data remained strong, and the Fed raised interest rates for afourth time in 2018.

The year in full was characterized by a slew of geopolitical events that moved many markets intofits and bouts of increased volatility, ultimately leading to losses across most major equityindices. Both the U.S. and China lost ground by this measure, with the S&P 500 shedding over 6%and the Shenzhen Index contracting over 33%. The FTSE 100 in Britain was ultimately down over12% as the deteriorating Brexit process took its toll, but Germany's DAX 30 lost an even greatershare, down 18%. Within U.S. corporate bond markets, investment-grade bonds were in the red allyear, finishing down 1.8%. Meanwhile, the speculative-grade segment saw gains through the thirdquarter only to lose it all by year-end, finishing down 2.1%.

Ultimately, economic fundamentals were positive, and in some cases strong, despite the effect oftrade tensions on slowing growth over the course of the year. This helped corporate credit remainfairly solid, and ratings displayed stability through the noise.

Quarterly Trends

On a year-over-year basis, the number of rated defaults globally was lower in each quarter of 2018except the first quarter (see chart 14). The U.S. led with the most corporate defaults in eachquarter except for the third.

In contrast, the amount of debt affected by default globally fell year over year in the first quarterand then rose in the subsequent quarters (see chart 15). Much of the increase came fromcompanies in the U.S., while both the emerging market and other developed regions experienceddeclines in the amount of debt affected by default in 2018. The largest defaulter in 2018 was theU.S. media company iHeartCommunications Inc., which had $20.2 billion in associated debt at thetime of default. This marked the largest default since 2014, when Texas Competitive Electric



Holdings Co. LLC defaulted with $28.7 billion in associated debt (see table 5).

Chart 14



Chart 15

The trailing-12-month and annual default rates have become standard measures, but defaultrates measured over shorter time frames give a more immediate picture of credit marketconditions. Based on quarterly intervals of measurement (nonannualized), default ratescontracted across most major regions throughout 2018 (see chart 16). From the first quarterthrough the fourth, the default rate fell globally, as well as in the U.S. and emerging markets, whilethe quarterly speculative-grade default rate in Europe rose to 0.59% in the fourth quarter, up by27 bps from the first quarter. Despite that modest increase, quarterly default rates globally and inthese major regions remained below the long-term average quarterly default rates for each region.



Chart 16

Lower Ratings Are More Vulnerable To Default

On average, there is a negative correlation between the initial rating on a firm and its time todefault, if a default occurs. For example, for the entire pool of defaulters in this study (1981-2018),the average times to default for issuers originally rated in the 'A' and 'B' categories were 13.5 yearsand 4.9 years, respectively, from the initial rating (or from Dec. 31, 1980, the start date of thestudy), whereas issuers in the 'CCC' rating category or lower had an average time to default of only2.3 years.

In cases where an issuer emerges from a prior default (including distressed exchanges), weconsider it a separate entity, and the original rating is the first after the default event. Table 10displays the median, average, and standard deviations for the time to default from the originalrating. The differences between each rating category's minimum and maximum times to defaultare in the last column, under "range." Table 11 presents the average and median times to defaultfrom each rating category for all subsequent ratings.

In both cases, the standard deviation of the times to default generally shrinks progressively as therating gets lower. Broadly speaking, the average and median times to default for each ratingcategory are longer when based on the initial rating than when based on subsequent ratings,particularly for speculative-grade ratings.

Table 10

Time To Default From Original Rating For Global Corporate Defaulters (1981-2018)

Originalrating Defaults

Average years fromoriginal rating*

Median years fromoriginal rating

Standard deviation of yearsfrom original rating Range

AAA 8 18.0 18.5 11.4 23.0



Table 10

Time To Default From Original Rating For Global Corporate Defaulters(1981-2018) (cont.)

Originalrating Defaults

Average years fromoriginal rating*

Median years fromoriginal rating

Standard deviation of yearsfrom original rating Range

AA 30 16.0 16.8 9.2 35.7

A 98 13.5 10.9 8.5 34.5

BBB 208 8.8 7.1 6.5 36.1

BB 613 6.8 5.2 5.5 35.8

B 1,523 4.9 3.6 4.1 30.5

CCC/C 274 2.3 1.3 2.9 17.4

Total 2,754 5.8 4.0 5.5 37.2

*Or Dec. 31, 1980, whichever is later. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Table 11

Time To Default From Post-Original Ratings For Global Corporate Defaulters(1981-2018)

RatingAverage years from rating

categoryMedian years from rating

categoryStandard deviation of years from

rating category

AAA 23.7 23.3 8.2

AA 14.1 15.5 8.9

A 11.0 9.6 7.8

BBB 8.1 6.3 6.8

BB 5.8 4.0 5.6

B 3.0 1.8 3.6

CCC/C 0.9 0.3 1.6

NR 4.8 2.9 5.2

Total 3.2 1.3 4.8

NR--Not rated. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Table 12 shows the cumulative distribution of defaulters by timeline, based on the original rating.The first row shows the ratings distribution of defaults occurring within 12 months of the originalrating. The second row shows the distribution of the cumulative count of defaults occurring withinthree years of the original rating. In line with expectations, the majority of companies thatdefaulted within one year of the original rating are from the lowest speculative-grade ratingcategories of 'B' and lower. For example, of the 207 companies that defaulted within 12 months ofhaving been rated, 191 (or 92.3%) were originally in the 'B' or 'CCC'/'C' categories.

Only in longer time frames do companies with higher original ratings surface among thedefaulters. For example, of all the companies that defaulted during 1981-2018, only two entitiesrated 'AAA' at inception defaulted within seven years. Throughout the 38-year span, only eightcompanies initially rated 'AAA' have ever defaulted. These were Macy's Inc., Ally Financial Inc.,Ambac Assurance Corp., Mutual Benefit Life Insurance Co., Executive Life Insurance Co. CA,



Confederation Life Insurance Co., Motors Liquidation Co. (formerly known as General MotorsCorp.), and Eastman Kodak Co.

Table 12

Cumulative Defaulters By Time Horizon Among Global Corporates, From OriginalRating (1981-2018)*

AAA AA A BBB BB B CCC/C Total

Number of issuers defaulting per time frame

One year 0 0 0 3 13 81 110 207

Three years 0 1 6 29 141 587 210 974

Five years 0 3 13 71 293 1,012 240 1,632

Seven years 2 6 28 102 399 1,231 256 2,024

Total 8 30 98 208 613 1,523 274 2,754

Percentage of total defaults per time frame (%)

One year 0.0 0.0 0.0 1.4 6.3 39.1 53.1

Three years 0.0 0.1 0.6 3.0 14.5 60.3 21.6

Five years 0.0 0.2 0.8 4.4 18.0 62.0 14.7

Seven years 0.1 0.3 1.4 5.0 19.7 60.8 12.6

Total 0.3 1.1 3.6 7.6 22.3 55.3 9.9


Table 13 shows the cumulative defaults over various time horizons from all ratings receivedsubsequent to initial ratings. Each issuer is likely to be captured multiple times, in line with itsmigration from one rating to another, so the total count in table 13 is different from that in table12. For example, 10 companies rated 'A' at any point in their lifetimes (excluding initial ratings)defaulted within one year of receiving this rating.

In table 13, the times to default are from the date that each entity received each unique rating inits path to default. In contrast, table 21 reports transition-to-default rates using the static poolmethodology, which calculates movements to default from the beginning of each static pool year.This usually leads to shorter time frames from which to calculate default statistics. Data providedin table 13 also differ from default rates in table 24, owing to the use of the static poolmethodology. (For more information on methodologies and definitions, see Appendix I.)

Table 13

Cumulative Defaulters By Time Horizon Among Global Corporates, FromPost-Original Ratings (1981-2018)

AAA AA A BBB BB B CCC/C NR Total

Number of issuers defaulting per time frame

One year 0 0 10 65 178 1,007 2,458 137 3,855

Threeyears

0 7 40 140 441 1,977 2,968 316 5,889

Five years 0 9 61 197 608 2,410 3,073 406 6,764

Sevenyears

0 15 74 257 736 2,633 3,114 472 7,301



Table 13

Cumulative Defaulters By Time Horizon Among Global Corporates, FromPost-Original Ratings (1981-2018) (cont.)

AAA AA A BBB BB B CCC/C NR Total

Total 3 48 208 484 1,062 2,945 3,158 615 8,523

Percentage of total defaults per time frame (%)

One year 0.0 0.0 0.3 1.7 4.6 26.1 63.8 3.6

Threeyears

0.0 0.1 0.7 2.4 7.5 33.6 50.4 5.4

Five years 0.0 0.1 0.9 2.9 9.0 35.6 45.4 6.0

Sevenyears

0.0 0.2 1.0 3.5 10.1 36.1 42.7 6.5

Total 0.0 0.6 2.4 5.7 12.5 34.6 37.1 7.2


Defaults arise disproportionately from low rating categories, and this is also true over longer timehorizons (see table 14). For example, 324 defaults were recorded in the five-year pool that beganin January 2014, of which 316 were rated speculative grade on Jan. 1, 2014. (See table 15 for theeight publicly rated investment-grade defaults during this period.) With higher rates of default, wealso observe lower survival rates over time for lower-rated issuers.

The nonfinancial sectors tend to have a much higher share of companies rated speculative grade,with 59.8% globally as of the beginning of 2018, compared with just 25.6% of financial servicescompanies. However, the speculative-grade share of both the financial and nonfinancial sectorshas been growing in recent years.

Thus far, 72 defaults have come from the 2018 pool of financial and nonfinancial companies, andall of these were from the lowest rating categories of 'B' and lower. Most were nonfinancialcompanies, and six were financial services issuers.

Table 14

Defaults And Survival Rates In Latest One-Year, Three-Year, And Five-Year Pools

--Latest one-year-- --Latest three-year-- --Latest five-year--

Rating

Numberof ratingsas of Jan.

1, 2018

Number ofdefaultsthrough

December2018

Survivalrate (%)


1, 2016

Number ofdefaultsdefaultsthrough

December2018

Survivalrate (%)


1, 2014


December2018

Survivalrate (%)

Global

AAA 9 0 100.0 17 0 100.0 20 0 100.0

AA 327 0 100.0 355 0 100.0 329 0 100.0

A 1,383 0 100.0 1,357 0 100.0 1,304 0 100.0

BBB 1,813 0 100.0 1,796 4 99.8 1,705 8 99.5

BB 1,324 0 100.0 1,284 9 99.3 1,156 30 97.4

B 1,930 19 99.0 1,900 167 91.2 1,791 228 87.3



Table 14

Defaults And Survival Rates In Latest One-Year, Three-Year, And Five-Year Pools(cont.)

--Latest one-year-- --Latest three-year-- --Latest five-year--

Rating


1, 2018


December2018

Survivalrate (%)


1, 2016

Number ofdefaultsdefaultsthrough

December2018

Survivalrate (%)


1, 2014


December2018

Survivalrate (%)

CCC/C 195 53 72.8 198 90 54.5 177 58 67.2

Nonfinancials

AAA 6 0 100.0 12 0 100.0 13 0 100.0

AA 93 0 100.0 105 0 100.0 94 0 100.0

A 590 0 100.0 565 0 100.0 529 0 100.0

BBB 1,258 0 100.0 1,227 3 99.8 1,170 6 99.5

BB 1,038 0 100.0 988 9 99.1 907 30 96.7

B 1,686 15 99.1 1,660 149 91.0 1,582 206 87.0

CCC/C 179 50 72.1 177 83 53.1 143 51 64.3

Financials

AAA 3 0 100.0 5 0 100.0 7 0 100.0

AA 234 0 100.0 250 0 100.0 235 0 100.0

A 793 0 100.0 792 0 100.0 775 0 100.0

BBB 555 0 100.0 569 1 99.8 535 2 99.6

BB 286 0 100.0 296 0 100.0 249 0 100.0

B 244 4 98.4 240 18 92.5 209 22 89.5

CCC/C 16 3 81.3 21 7 66.7 34 7 79.4

Note: The totals may differ from those in table 1 because defaulters that were not rated at the beginning of the pool year are excluded.Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Table 15

Investment-Grade Defaults In The Five-Year 2014 Static Pool

Company name Country IndustryDefaultdate



Firstrating

Date offirst rating

Year ofdefault

Cleveland-CliffsInc.

U.S. Energy and natural resources 4/12/2016 B BBB- BBB- 9/8/2008 2016

FirstEnergySolutions Corp.

U.S. Energy and natural resources 4/2/2018 CCC+ BBB- BBB 3/26/2007 2018

GovernmentDevelopmentBank for PuertoRico

U.S. Financial institutions 4/11/2016 B- BBB- A+ 8/9/1989 2016



Table 15

Investment-Grade Defaults In The Five-Year 2014 Static Pool (cont.)

Company name Country IndustryDefaultdate



Firstrating

Date offirst rating

Year ofdefault

IstmoCompania deReaseguros Inc.

Panama Insurance 12/16/2016 BBB BBB BBB- 1/31/2007 2016

Noble GroupLtd.

Bermuda Energy and natural resources 3/20/2018 B+ BBB- BB+ 3/2/2005 2018

OdebrechtEngenharia eConstrucao S.A.

Brazil Aerospace/automotive/capitalgoods/metals

11/26/2018 CCC+ BBB- BB- 3/26/2002 2018

Oi S.A. Brazil Telecommunications 6/21/2016 BB+ BBB- BBB- 9/6/2011 2016

SamarcoMineracao S.A.

Brazil Energy and natural resources 9/28/2016 BB+ BBB BBB 10/22/2012 2016

Note: Excludes confidentially rated defaults. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Since 1981, the 'B' rating category has accounted for 1,523 defaults (55.3% of the total from initialrating), well more than double the number of defaulters from the 'BB' category (see tables 10 and12). Given this track record, monitoring the trends of newly assigned ratings could prove useful inanticipating future default activity, based on the notion that years characterized by high numbersof new ratings of 'B-' or lower will likely be followed by increased default risk.

Chart 17 plots the proportion of all new speculative-grade ratings of 'B-' or lower in the U.S.against the year-end U.S. speculative-grade default rate. As coincident indicators, the two seriesgenerally mirror each other in broad movements throughout most of their shared history. However,in most of the relatively benign period since the financial crisis, the two series have divergedsomewhat, as they did in 2004-2007. The two series diverged again in 2018, when thespeculative-grade default rate fell even as a growing share of newly rated speculative-gradeissuers were assigned ratings of 'B-' or lower amid generally accommodative credit markets.



Chart 17

Industry Variations: Energy And Consumer Services Lead Defaults

While default rates modestly declined for the broad nonfinancial sector and rose slightly for thefinancial services sector in 2018 relative to 2017, the one-year default rate for each of thesecategories remained below the long-term average over the one-year horizon (see table 16).Meanwhile, the trailing three- and 10-year default rates for financial services in 2018 were alsobelow their long-term averages, even as nonfinancials had a three-year trailing default rate of5.15%, slightly above its long-term average rate of 5.11%, and a 10-year trailing default rate of12.05%, above its long-term average rate of 11.45%.

Nonfinancial companies show a higher average default rate than financial services companiesover the one-, three-, and 10-year horizons. This trend continued in 2018, with the default ratesfor nonfinancials exceeding those of financials. Financial services companies accounted for about11% of total defaults globally in 2018, and the default rate for financial services was just 0.33%.Financial services sectors tend to have a higher share of companies rated investment grade, andat the beginning of 2018, just 16% of speculative-grade companies globally were from financialservices.

Table 16

Cumulative Global Corporate Default Rates By Sector

(%) 2018 2017 Average (1981-2018) Median Standard deviation Minimum Maximum

Financial institutions

One-year 0.54 0.46 0.66 0.34 0.72 0.00 2.80

Three-year 1.82 2.26 1.92 1.45 1.61 0.00 6.52



Table 16

Cumulative Global Corporate Default Rates By Sector (cont.)

(%) 2018 2017 Average (1981-2018) Median Standard deviation Minimum Maximum

10-year 4.37 5.39 4.83 4.20 2.53 1.66 10.12

Insurance

One-year 0.00 0.12 0.50 0.23 0.90 0.00 4.65

Three-year 0.23 0.35 1.54 0.99 1.62 0.12 6.98

10-year 1.43 1.98 4.94 4.35 3.03 1.43 14.29

All financials

One-year 0.33 0.32 0.58 0.42 0.54 0.00 2.07

Three-year 1.20 1.50 1.74 1.40 1.19 0.18 4.97

10-year 3.14 3.98 4.85 3.98 2.25 2.39 8.87

All nonfinancials

One-year 1.34 1.61 1.81 1.47 1.31 0.16 5.73

Three-year 5.15 5.49 5.11 3.98 2.87 1.88 12.49

10-year 12.05 12.78 11.45 11.02 3.19 6.98 19.40


Over the long term, nonfinancial sectors have tended to show a more pronounced cyclicality ofdefaults than the financial sectors. While the one-year default rate for nonfinancial companieshas climbed above 3.5% in three previous cyclical peaks (1991, 2001-2002, and 2009), the annualdefault rate for financial services has remained below 2% since 1990 (see chart 18). The higherdefault rates for nonfinancials is not surprising, given this sector's higher concentration ofspeculative-grade issuers. Financial services companies are more likely to be initially rated in theinvestment-grade category, while nonfinancial companies are more likely to initially be ratedspeculative grade.

Over the 38 years this study covers, 71.2% of financial entities were initially rated investmentgrade, compared with only 30.5% of nonfinancial companies. This helps to explain theresemblance between the annual default rates of nonfinancial entities and those of thespeculative-grade universe as a whole, which certainly contributes to the vast differencesbetween cumulative default rates across financial and nonfinancial sectors (see table 16). Forexample, at the end of 2018, the one-year default rate among all financial entities was 0.33%,compared with 1.34% for all nonfinancials. The gap becomes even wider over longer time horizons,such as three years and 10 years (see chart 19).



Chart 18

Chart 19

Among the 2,754 defaults recorded globally over the long term, six sectors displayed averagetimes to default that are lower than the overall average of 5.8 years. These sectors are energy andnatural resources; financial institutions; high technology, computers, and office equipment;



leisure time and media; real estate; and telecommunications (see table 17). Using the medianrather than the mean adds the transportation and utility sectors to the list. Across sectors, theaverage difference between an industry's median initial rating and the median initial rating of itsdefaulters was about 1.3 notches. The largest gap between the two was in financial institutions,which had a four-notch difference: The 221 financial institutions that defaulted had a medianoriginal rating of 'BB-', compared with a sector median of 'BBB'.

Table 17

Time To Default From Original Rating By Industry*

Medianoriginal rating(defaulters)

Medianoriginalrating(industry) Defaults

Averageyears from

originalrating*

Medianyears from

originalrating

Standarddeviation of

years fromoriginal rating

Range(years)

Aerospace/auto/capitalgoods/metals

B+ BB- 382 6.4 4.5 5.7 36.1

Consumer/service B+ B+ 510 6.4 4.5 5.9 37.2

Energy & naturalresources

B B+ 334 4.6 3.4 4.6 35.4

Financial institutions BB- BBB 221 5.4 3.6 5.7 28.6

Forest & buildingproducts/homebuilders

B+ B+ 161 6.4 4.7 5.2 27.8

Health care/chemicals B+ B+ 154 6.0 4.1 5.5 33.7

Hightech/computers/officeequipment

B+ B+ 94 5.4 3.9 4.7 28.4

Insurance BBB+ A- 74 8.0 6.6 6.3 28.6

Leisure time/media B B+ 371 5.7 4.0 5.3 34.1

Real estate BB- BBB- 46 3.6 2.8 2.8 10.5

Telecommunications B B+ 175 3.9 3.2 3.0 21.4

Transportation B+ BB 150 6.5 3.9 6.7 36.3

Utility BB+ BBB+ 82 6.2 4.0 6.5 30.4

Total B+ BB 2,754 5.8 4.0 5.5 37.2


Table 18

Time To Default From Post-Original Ratings By Industry

Average years todefault

Median years todefault

Standard deviation of years todefault

Aerospace/auto/capital goods/metals 3.7 1.5 5.0

Consumer/service 3.6 1.6 5.1

Energy & natural resources 2.7 1.0 4.2

Financial institutions 2.9 1.0 4.7

Forest & building products/homebuilders 2.9 1.3 3.9

Health care/chemicals 3.1 1.4 4.7



Table 18

Time To Default From Post-Original Ratings By Industry (cont.)

Average years todefault

Median years todefault

Standard deviation of years todefault

High tech/computers/office equipment 4.0 2.0 5.1

Insurance 3.1 1.7 3.7

Leisure time/media 3.1 1.2 4.5

Real estate 1.4 0.8 1.7

Telecommunications 1.6 0.6 2.7

Transportation 4.8 1.8 6.5

Utility 3.2 0.8 5.2

Total 3.2 1.3 4.8


Defaults in 2018 were concentrated within the consumer services sector (with 22 defaults) and theenergy and natural resources sector (with 22 defaults). Together, these two sectors accounted formore than half of global defaults. Despite the concentration of defaults in these two sectors, thedefault rate in each fell from 2017. These two sectors displayed the highest default rates in 2018,and these were also the only two sectors with default rates above their long-term averages (seetable 19).

The number of defaults in the consumer services sector fell by two in 2018, and the default ratefell by 24 bps from 2017. This sector continues to experience elevated credit stress as many globalretailers and consumer products companies face shifts in their business models, confronted bycompetition from online retailers and large discount chains and increased price transparency forconsumers.

In the energy and natural resources sector, elevated defaults continue to reflect credit weaknessin the sector as companies recover from the plunge in oil prices from late 2014. Last year'sdefaulters were largely concentrated in the U.S. and Canada. While Brent crude oil prices returnedto over $85 per barrel in mid-2018, prices fell to near $50 per barrel by year-end.

Table 19

Global Corporate Default Rates By Industry

(%) 2018 2017Weighted average

(1981-2018) MedianStandarddeviation Minimum Maximum

Aerospace/auto/capitalgoods/metals

1.13 1.33 2.11 1.32 2.02 0.00 9.47

Consumer/service 2.49 2.74 2.30 1.79 1.56 0.00 6.29

Energy & natural resources 3.95 4.72 3.05 1.72 2.86 0.00 13.67

Financial institutions 0.54 0.46 0.66 0.34 0.72 0.00 2.80

Forest & buildingproducts/homebuilders

0.82 1.65 2.48 1.46 2.87 0.00 14.51

Health care/chemicals 0.87 1.11 1.37 0.84 1.30 0.00 4.89

High tech/computers/officeequipment

0.86 1.53 1.15 0.94 1.43 0.00 4.82



Table 19

Global Corporate Default Rates By Industry (cont.)

(%) 2018 2017Weighted average

(1981-2018) MedianStandarddeviation Minimum Maximum

Insurance 0.00 0.12 0.30 0.23 0.90 0.00 4.65

Leisure time/media 1.44 1.42 3.29 2.11 3.27 0.00 17.02

Real estate 0.26 0.27 0.69 0.00 2.72 0.00 12.00

Telecommunications 0.94 0.93 2.47 0.92 3.83 0.00 18.52

Transportation 0.69 0.37 2.00 1.77 1.64 0.00 6.00

Utility 0.00 0.31 0.43 0.17 0.75 0.00 4.26

Note: Includes investment-grade- and speculative-grade-rated entities. Sources: S&P Global Fixed Income Research and S&P Global MarketIntelligence's CreditPro®.

When comparing default rates across sectors, we note some key differences between the variousindustries. Several sectors have had distinct default cycles, such as the high technology,computers, and office equipment sector and the telecommunications sector, which both fueledthe prolonged and pronounced spike in the default rate during the tech bubble, when the globalspeculative-grade default rate reached 12.1% in June 2002. Other sectors, such as the consumerservices sector, have had more frequent default cycles, both during and between economic cycles.

However, some of the variation in default rates between sectors stems from overall sample sizedifferences, as well as differentiation in the ratings distribution across industries. For example,the leisure and media sector has a much higher proportion of speculative-grade ratings than thefinancial institutions or insurance sectors (see chart 20).

Furthermore, the speculative-grade share of every sector has grown over the past decade.Speculative-grade-rated issuers account for more than 60% of total issuers in eight of the 13industries. As has been the case for an extended period, the leisure time and media sector has farand away the highest proportion of speculative-grade ratings, with nearly 84% of its issuers in thisrating category in 2018.



Chart 20

Speculative-Grade Ratings Are Now A Global Majority

On a trailing-12-month basis, the global speculative-grade default rate fell to 2.1% in December2018 from 2.5% one year earlier (see chart 21). With the default rate falling, risk tolerance amonglenders has generally increased, and the share of newly assigned issuer credit ratings that arespeculative grade has been rising. In 2018, 79.1% of newly assigned issuer credit ratings globallywere speculative grade--the highest share since 2010.



Chart 21

This growing number of newly rated speculative-grade issuers has helped tip the balance ofratings out of investment grade. Globally, speculative-grade issuers now constitute the majority ofrated corporate issuers: By the end of 2018, speculative-grade issuers accounted for 50.3% ofglobal issuers. This is the first time in the 38-year history of the ratings covered in our study thatspeculative-grade ratings represent the majority of global ratings (see chart 22). However, themajority of U.S. corporate ratings have been speculative grade for much of the past decade.

Over the past four years, more than 75% of the initial ratings that S&P Global Ratings hasassigned to new issuers have been speculative grade. This influx of new speculative-grade issuershas contributed to the growing share of speculative-grade ratings globally.



Chart 22

Historically, a growing concentration of speculative-grade ratings often precedes a period ofincreased defaults. For example, the share of speculative-grade ratings surged in the U.S.beginning in 2002. After speculative-grade ratings reached a peak of 51% of U.S. corporate ratingsin 2007, the default rate reached its cyclical peak of 12% in 2009, following the Great Recession(see chart 23).

In Europe, by contrast, the share of speculative-grade ratings remains in the minority. In largepart, this reflects the private nature of the leveraged finance market before the financial crisis in2008. In 2006, the speculative-grade share of European corporate ratings peaked near 21%, andonce the cycle turned, the European speculative-grade default rate peaked at 9.9% in November2009.

However, since 2008, the number of speculative-grade ratings in Europe has surged, and theshare of speculative-grade ratings has more than doubled to 43% at the end of 2018. Thisblossoming of the publicly rated speculative-grade market in Europe has resulted from acombination of downgrades and newly assigned ratings. Before 2010, the majority of newlyassigned European issuer credit ratings were investment grade, but since then, nearly 73% ofnewly assigned ratings have been speculative grade. With the region moving to promotedisintermediation, we expect this share of speculative-grade issuers to continue to grow.



Chart 23

Chart 24



Transition Tables And Cumulative Default Rates Demonstrate RatingsPerformance

An analysis of transition rates over the four quarters ended December 2018 suggests that ratingsbehavior continues to exhibit consistency with long-term trends. Higher ratings show a negativecorrespondence with the observed frequency of default. Investment-grade-rated issuers globallytend to exhibit greater ratings stability (as measured by the frequency of rating transitions) thanthose rated speculative grade (see table 20).

For instance, 92% of issuers rated 'A' at the beginning of 2018 were still rated 'A' by Dec. 31, 2018,whereas the comparable share for issuers rated 'B' was only 78.1%. One exception is the 'AAA'category, which had a stability rate of 89% in 2018. This was the lowest stability rate among theinvestment-grade rating categories, due to the small sample size of 'AAA' rated issuers.

At the beginning of 2018, just nine issuers globally were rated 'AAA'. Because of the extremelysmall size of the 'AAA' rating category, the downgrade of even one issuer will have a large effect onthis segment's stability rate. In 2018, S&P Global Ratings lowered the issuer credit rating on justone 'AAA' issuer, Singapore-based SMRT Corp. Ltd., which was downgraded to 'AA+' from 'AAA' onMarch 13, 2018.

This downgrade is yet another from recent years that has contributed to the dwindling populationof 'AAA' corporates. The sovereign downgrades of China in 2017, the U.K. in 2016, France in 2012,and the U.S. in 2011 have factored in the downgrades of many higher-rated financial servicescompanies. Conversely, among nonfinancial entities, there has been a more gradual trend ofincreased willingness to operate with higher leverage to fund share buybacks, expand businesses,or finance acquisitions. These factors have combined with a growing tolerance by asset managersto invest in lower-rated companies, leaving just a handful of the highest-rated firms.

The number of 'AAA' rated issuers has declined from 89 globally at the beginning of 2008 to justeight by the end of 2018. Over this same period, as the number of the highest-ratedinvestment-grade companies has dwindled, the number of the lowest-rated investment-gradecompanies has surged. The number of companies rated in the 'BBB' category has grown by 30%since the beginning of 2008, to 1,882 at the end of 2018.

Table 20

2018 One-Year Corporate Transition Rates By Region

(%)

From/to AAA AA A BBB BB B CCC/C D NR

Global

AAA 88.89 11.11 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AA 0.00 92.05 5.50 0.00 0.00 0.00 0.00 0.00 2.45

A 0.00 0.87 91.97 3.69 0.00 0.00 0.00 0.00 3.47

BBB 0.00 0.00 2.81 90.79 1.43 0.00 0.06 0.00 4.91

BB 0.00 0.00 0.00 4.08 82.93 4.15 0.00 0.00 8.84

B 0.00 0.00 0.00 0.00 2.80 78.13 3.99 0.98 14.09

CCC/C 0.00 0.00 0.00 0.00 0.51 12.82 46.15 27.18 13.33



Table 20

2018 One-Year Corporate Transition Rates By Region (cont.)

(%)


U.S.

AAA 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AA 0.00 92.36 6.94 0.00 0.00 0.00 0.00 0.00 0.69

A 0.00 0.95 92.05 4.55 0.00 0.00 0.00 0.00 2.46

BBB 0.00 0.00 2.44 91.60 1.63 0.00 0.00 0.00 4.34

BB 0.00 0.00 0.00 2.91 86.18 3.09 0.00 0.00 7.82

B 0.00 0.00 0.00 0.00 2.55 79.14 4.28 0.55 13.48

CCC/C 0.00 0.00 0.00 0.00 0.00 9.45 48.03 29.13 13.39

Europe

AAA 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AA 0.00 86.46 7.29 0.00 0.00 0.00 0.00 0.00 6.25

A 0.00 1.61 90.59 3.23 0.00 0.00 0.00 0.00 4.57

BBB 0.00 0.00 5.02 88.52 0.72 0.00 0.24 0.00 5.50

BB 0.00 0.00 0.00 5.00 78.18 3.64 0.00 0.00 13.18

B 0.00 0.00 0.00 0.00 2.42 77.42 3.49 1.34 15.32

CCC/C 0.00 0.00 0.00 0.00 0.00 21.05 42.11 18.42 18.42

Emerging markets

AAA 66.67 33.33 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AA 0.00 97.50 2.50 0.00 0.00 0.00 0.00 0.00 0.00

A 0.00 0.40 93.25 3.57 0.00 0.00 0.00 0.00 2.78

BBB 0.00 0.00 2.06 90.95 2.26 0.00 0.00 0.00 4.73

BB 0.00 0.00 0.00 4.65 81.62 5.86 0.00 0.00 7.88

B 0.00 0.00 0.00 0.00 3.73 75.47 3.20 1.60 16.00

CCC/C 0.00 0.00 0.00 0.00 0.00 18.18 45.45 27.27 9.09


This study--in line with previous default studies--confirms that over the long term (1981-2018),higher ratings are more stable than lower ratings. Issuers rated 'AAA' were still rated 'AAA' oneyear later 87% of the time, while issuers rated in the 'CCC'/'C' category retained those ratings just43.5% of the time. Ratings continue to exhibit this long-term relationship between higher ratingsand higher ratings stability even over longer time horizons (see table 21) or when broken out byregion (see table 22). A key consideration when analyzing transition matrices that presentaverages computed over multiple static pools is that the standard deviations associated with eachtransition point in the matrix are large relative to the averages (outside of stability rates).

In contrast, the relationship is slightly more discontinuous when we examine rating transitionsacross modifiers (the plus or minus after a rating), but these variations are likely a result ofsample size considerations, and we do not consider them significant (see table 23). For example,



'AA+' rated issuers were still rated 'AA+' one year later 78.4% of the time, and 'AA' rated issuerswere still rated 'AA' one year later 80.6% of the time. In this particular case, however, the 'AA+'figure was derived from a much smaller sample than that for the 'AA' rating. And as a general rule,the highest proportions of rating changes for any given rating or rating modifier occur at adjacentratings and rating modifiers.

Table 21

Global Corporate Average Transition Rates (1981-2018)

(%)


One-year

AAA 86.99 9.12 0.53 0.05 0.08 0.03 0.05 0.00 3.15

(7.19) (7.26) (0.82) (0.25) (0.25) (0.17) (0.35) (0.00) (2.43)

AA 0.50 87.06 7.85 0.49 0.05 0.06 0.02 0.02 3.94

(0.53) (5.24) (4.15) (0.68) (0.19) (0.20) (0.07) (0.08) (1.86)

A 0.03 1.69 88.17 5.16 0.29 0.12 0.02 0.06 4.48

(0.09) (1.03) (3.65) (2.13) (0.38) (0.26) (0.06) (0.11) (1.72)

BBB 0.01 0.09 3.42 86.04 3.62 0.46 0.11 0.17 6.10

(0.04) (0.15) (1.59) (3.83) (1.55) (0.67) (0.21) (0.25) (1.56)

BB 0.01 0.03 0.11 4.83 77.50 6.65 0.55 0.65 9.67

(0.06) (0.09) (0.25) (1.83) (4.45) (3.06) (0.74) (0.83) (2.26)

B 0.00 0.02 0.08 0.17 4.93 74.53 4.42 3.44 12.41

(0.00) (0.08) (0.20) (0.22) (2.02) (4.08) (2.06) (3.19) (2.26)

CCC/C 0.00 0.00 0.11 0.20 0.59 13.21 43.51 26.89 15.50

(0.00) (0.00) (0.42) (0.65) (0.92) (7.62) (8.60) (10.77) (5.21)

Three-year

AAA 65.40 22.21 2.34 0.32 0.19 0.08 0.11 0.13 9.23

(11.54) (12.26) (1.73) (0.76) (0.45) (0.29) (0.42) (0.37) (5.24)

AA 1.18 66.47 18.38 2.01 0.34 0.22 0.03 0.12 11.25

(0.83) (9.51) (6.17) (1.39) (0.50) (0.44) (0.07) (0.18) (4.08)

A 0.06 3.96 69.34 11.56 1.23 0.43 0.09 0.24 13.10

(0.09) (2.10) (6.61) (2.78) (1.00) (0.61) (0.13) (0.28) (3.44)

BBB 0.02 0.27 8.31 65.13 7.01 1.57 0.28 0.84 16.58

(0.06) (0.39) (2.98) (6.94) (1.94) (1.28) (0.36) (0.93) (3.24)

BB 0.01 0.05 0.48 10.99 47.56 11.40 1.22 3.78 24.50

(0.05) (0.13) (0.69) (3.20) (7.21) (2.65) (0.90) (3.44) (3.89)

B 0.00 0.03 0.19 0.73 10.01 41.60 4.68 12.34 30.42

(0.05) (0.11) (0.41) (0.77) (3.20) (5.35) (1.60) (7.15) (4.81)

CCC/C 0.00 0.00 0.13 0.61 1.59 17.28 10.11 40.99 29.30

(0.00) (0.00) (0.50) (1.19) (1.66) (6.82) (6.05) (12.08) (8.61)



Table 21

Global Corporate Average Transition Rates (1981-2018) (cont.)

(%)


Five-year

AAA 49.48 28.68 4.80 0.80 0.24 0.16 0.08 0.35 15.40

(11.88) (13.38) (2.70) (1.53) (0.47) (0.40) (0.28) (0.60) (6.51)

AA 1.46 51.37 24.34 3.56 0.57 0.37 0.04 0.33 17.96

(0.94) (9.05) (5.14) (1.75) (0.63) (0.59) (0.10) (0.38) (4.64)

A 0.07 5.05 56.08 14.79 1.99 0.67 0.14 0.52 20.68

(0.10) (2.30) (7.35) (2.41) (1.15) (0.85) (0.18) (0.44) (4.01)

BBB 0.02 0.42 10.48 52.12 7.58 2.14 0.38 1.76 25.09

(0.07) (0.53) (3.09) (7.64) (1.63) (1.41) (0.38) (1.46) (4.39)

BB 0.01 0.08 0.98 12.68 32.02 11.00 1.20 7.29 34.74

(0.06) (0.17) (0.97) (3.09) (7.32) (2.11) (0.92) (4.85) (4.30)

B 0.01 0.03 0.24 1.50 10.30 25.35 2.93 18.33 41.32

(0.10) (0.09) (0.54) (1.17) (2.62) (5.23) (0.97) (8.53) (5.53)

CCC/C 0.00 0.00 0.11 0.68 2.81 12.47 2.49 45.85 35.58

(0.00) (0.00) (0.48) (1.75) (2.01) (4.70) (3.57) (12.13) (9.21)

Seven-year

AAA 37.96 32.37 6.89 1.47 0.30 0.19 0.11 0.52 20.19

(11.06) (13.70) (2.93) (1.88) (0.53) (0.43) (0.31) (0.74) (6.73)

AA 1.52 39.98 27.80 4.74 0.75 0.38 0.03 0.54 24.28

(0.92) (5.75) (3.80) (1.68) (0.60) (0.50) (0.08) (0.53) (4.29)

A 0.07 5.39 46.60 16.55 2.47 0.82 0.14 0.90 27.07

(0.12) (1.78) (6.55) (1.53) (1.21) (0.90) (0.17) (0.55) (3.82)

BBB 0.03 0.55 11.07 43.37 7.29 2.32 0.37 2.72 32.27

(0.11) (0.59) (2.77) (7.17) (0.89) (1.15) (0.32) (1.75) (4.39)

BB 0.00 0.08 1.34 12.69 23.17 9.75 0.96 10.48 41.53

(0.00) (0.18) (1.06) (3.11) (6.56) (2.13) (0.68) (5.33) (3.83)

B 0.01 0.02 0.33 2.03 9.08 16.47 1.71 22.79 47.58

(0.08) (0.08) (0.58) (1.43) (1.92) (4.52) (0.58) (8.39) (5.05)

CCC/C 0.00 0.00 0.20 0.98 3.68 7.76 1.43 49.04 36.90

(0.00) (0.00) (0.58) (2.05) (1.96) (3.88) (1.96) (11.44) (9.00)

Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global FixedIncome Research and S&P Global Market Intelligence's CreditPro®.



Table 22

Average One-Year Corporate Transition Rates (1981-2018)

(%)


U.S.

AAA 87.33 8.66 0.58 0.04 0.12 0.04 0.04 0.00 3.18

(10.17) (10.34) (1.16) (0.21) (0.36) (0.27) (0.27) (0.00) (2.49)

AA 0.51 87.15 7.45 0.57 0.08 0.10 0.03 0.03 4.07

(0.52) (6.23) (4.55) (0.83) (0.23) (0.28) (0.11) (0.16) (2.44)

A 0.04 1.72 88.00 5.32 0.38 0.15 0.03 0.07 4.29

(0.12) (1.19) (4.11) (2.50) (0.49) (0.33) (0.11) (0.16) (1.87)

BBB 0.01 0.12 3.49 86.33 3.67 0.58 0.11 0.20 5.49

(0.05) (0.18) (1.91) (4.69) (1.78) (0.84) (0.16) (0.31) (1.92)

BB 0.02 0.05 0.18 4.84 77.29 7.50 0.56 0.75 8.81

(0.08) (0.12) (0.31) (2.30) (5.32) (3.90) (0.71) (0.86) (2.49)

B 0.00 0.03 0.10 0.19 4.53 75.46 4.59 3.63 11.45

(0.00) (0.10) (0.23) (0.25) (2.03) (4.52) (2.40) (3.33) (2.34)

CCC/C 0.00 0.00 0.16 0.25 0.66 11.88 43.86 28.89 14.30

(0.00) (0.00) (0.55) (0.80) (1.15) (7.72) (8.47) (11.17) (5.18)

Europe

AAA 82.79 11.07 0.61 0.20 0.00 0.00 0.20 0.00 5.12

(7.87) (8.49) (1.70) (1.22) (0.00) (0.00) (1.01) (0.00) (5.03)

AA 0.27 85.28 10.02 0.55 0.00 0.00 0.00 0.00 3.88

(0.49) (7.13) (6.46) (1.16) (0.00) (0.00) (0.00) (0.00) (2.13)

A 0.01 1.83 87.03 5.79 0.17 0.01 0.00 0.04 5.12

(0.05) (1.40) (4.41) (3.37) (0.35) (0.06) (0.00) (0.09) (1.82)

BBB 0.00 0.09 4.30 84.42 3.52 0.32 0.10 0.07 7.18

(0.00) (0.20) (1.85) (3.83) (2.68) (0.54) (0.29) (0.21) (2.51)

BB 0.00 0.00 0.08 5.34 73.66 6.89 0.35 0.35 13.35

(0.00) (0.00) (0.64) (2.38) (6.54) (3.63) (1.02) (0.87) (4.18)

B 0.00 0.00 0.03 0.28 5.84 71.79 4.15 2.14 15.77

(0.00) (0.00) (0.23) (0.55) (3.06) (6.24) (2.24) (2.99) (5.22)

CCC/C 0.00 0.00 0.00 0.31 0.00 13.98 41.30 25.47 18.94

(0.00) (0.00) (0.00) (0.74) (0.00) (11.05) (16.42) (16.24) (10.02)

Emerging markets

AAA 89.29 9.52 0.00 0.00 0.00 0.00 0.00 0.00 1.19

(21.48) (21.09) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (6.37)

AA 1.13 87.98 8.16 0.23 0.00 0.00 0.00 0.00 2.49

(5.32) (12.08) (9.65) (1.45) (0.00) (0.00) (0.00) (0.00) (3.70)



Table 22

Average One-Year Corporate Transition Rates (1981-2018) (cont.)

(%)


A 0.00 1.71 90.69 4.68 0.30 0.30 0.00 0.04 2.28

(0.00) (1.66) (5.45) (4.11) (0.78) (1.15) (0.00) (0.15) (1.06)

BBB 0.00 0.02 2.40 86.64 4.63 0.38 0.18 0.13 5.64

(0.00) (0.09) (2.28) (5.63) (4.27) (1.28) (1.06) (0.37) (1.89)

BB 0.00 0.00 0.00 4.36 80.16 4.83 0.66 0.57 9.42

(0.00) (0.00) (0.00) (2.43) (4.42) (2.17) (2.15) (1.17) (3.31)

B 0.00 0.00 0.00 0.02 6.08 72.55 3.62 3.04 14.69

(0.00) (0.00) (0.00) (0.12) (3.78) (5.16) (3.01) (3.57) (3.05)

CCC/C 0.00 0.00 0.00 0.00 0.46 18.52 44.60 18.36 18.06

(0.00) (0.00) (0.00) (0.00) (0.96) (13.56) (14.73) (15.31) (10.97)

Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. For Europe and emerging markets, calculationsare for 1996-2018 due to sample size considerations. NR--Not rated. Sources: S&P Global Fixed Income Research and S&P Global MarketIntelligence's CreditPro®.

Table 23

Average One-Year Transition Rates For Global Corporates By Rating Modifier (1981-2018)

(%)

From/to AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC/C D NR

AAA 86.99 5.89 2.54 0.69 0.16 0.24 0.13 0.00 0.05 0.00 0.03 0.05 0.00 0.00 0.03 0.00 0.05 0.00 3.15

(7.19) (6.21) (3.29) (1.04) (0.44) (0.56) (0.34) (0.00) (0.25) (0.00) (0.17) (0.19) (0.00) (0.00) (0.17) (0.00) (0.35) (0.00) (2.43)

AA+ 2.36 78.45 11.09 3.62 0.72 0.34 0.19 0.05 0.10 0.05 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.04

(3.79) (11.25) (7.25) (4.08) (2.34) (0.82) (0.48) (0.25) (0.66) (0.22) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (2.98)

AA 0.42 1.32 80.55 8.56 2.78 1.18 0.38 0.39 0.13 0.08 0.05 0.03 0.02 0.02 0.00 0.02 0.05 0.02 4.02

(0.51) (1.58) (8.93) (6.13) (2.58) (1.23) (0.65) (0.81) (0.35) (0.23) (0.16) (0.12) (0.10) (0.12) (0.00) (0.09) (0.15) (0.08) (2.55)

AA- 0.04 0.11 3.82 78.58 9.81 2.24 0.62 0.26 0.15 0.07 0.03 0.00 0.00 0.03 0.08 0.00 0.00 0.03 4.13

(0.13) (0.30) (4.25) (7.41) (4.78) (2.56) (0.82) (0.49) (0.43) (0.25) (0.20) (0.00) (0.00) (0.15) (0.37) (0.00) (0.00) (0.10) (2.01)

A+ 0.00 0.06 0.45 4.49 78.05 8.86 2.18 0.62 0.35 0.09 0.06 0.09 0.01 0.07 0.03 0.00 0.00 0.05 4.53

(0.00) (0.19) (0.68) (2.53) (5.69) (3.18) (1.50) (0.65) (0.43) (0.19) (0.16) (0.25) (0.05) (0.19) (0.13) (0.00) (0.00) (0.14) (1.84)

A 0.04 0.04 0.22 0.42 5.34 78.60 6.84 2.44 0.89 0.28 0.10 0.11 0.07 0.09 0.02 0.00 0.01 0.06 4.45

(0.13) (0.13) (0.49) (0.48) (2.05) (5.36) (3.01) (1.71) (0.92) (0.38) (0.20) (0.27) (0.30) (0.33) (0.09) (0.00) (0.06) (0.12) (2.22)

A- 0.04 0.01 0.06 0.16 0.44 6.50 77.67 7.40 2.06 0.59 0.14 0.14 0.12 0.11 0.02 0.01 0.03 0.06 4.46

(0.19) (0.05) (0.15) (0.27) (0.61) (3.16) (5.95) (3.03) (1.54) (0.61) (0.32) (0.34) (0.23) (0.29) (0.07) (0.08) (0.14) (0.18) (1.82)

BBB+ 0.00 0.01 0.06 0.06 0.21 0.79 7.18 75.32 8.16 1.64 0.37 0.30 0.14 0.16 0.10 0.02 0.06 0.10 5.31

(0.00) (0.05) (0.16) (0.18) (0.43) (1.01) (2.87) (6.23) (3.27) (1.45) (0.52) (0.57) (0.22) (0.41) (0.29) (0.09) (0.17) (0.26) (1.94)

BBB 0.01 0.01 0.04 0.03 0.11 0.32 1.03 7.86 75.46 6.23 1.40 0.60 0.28 0.23 0.11 0.04 0.06 0.16 6.04

(0.07) (0.07) (0.13) (0.12) (0.21) (0.67) (0.96) (3.12) (4.48) (2.29) (1.04) (0.61) (0.46) (0.44) (0.38) (0.10) (0.12) (0.27) (2.01)



Table 23

Average One-Year Transition Rates For Global Corporates By Rating Modifier (1981-2018) (cont.)

(%)

From/to AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- B+ B B- CCC/C D NR

BBB- 0.01 0.01 0.02 0.05 0.06 0.15 0.28 1.22 9.28 72.05 5.56 2.15 0.86 0.37 0.23 0.17 0.22 0.24 7.08

(0.07) (0.05) (0.06) (0.20) (0.17) (0.38) (0.56) (1.12) (3.11) (5.06) (2.65) (1.49) (0.75) (0.73) (0.47) (0.44) (0.54) (0.40) (2.21)

BB+ 0.04 0.00 0.00 0.03 0.01 0.09 0.09 0.41 1.68 11.50 64.64 7.53 2.72 1.00 0.57 0.24 0.38 0.32 8.73

(0.22) (0.00) (0.00) (0.12) (0.09) (0.38) (0.28) (0.69) (1.82) (4.22) (6.22) (3.98) (1.96) (1.57) (1.14) (0.38) (0.92) (0.61) (2.72)

BB 0.00 0.00 0.04 0.01 0.00 0.06 0.05 0.17 0.50 2.06 9.63 64.96 8.44 2.25 1.02 0.31 0.53 0.53 9.43

(0.00) (0.00) (0.20) (0.06) (0.00) (0.36) (0.21) (0.41) (0.84) (2.14) (4.10) (5.13) (3.45) (1.49) (1.29) (0.57) (0.96) (0.67) (3.04)

BB- 0.00 0.00 0.00 0.01 0.01 0.01 0.05 0.10 0.23 0.36 1.77 9.71 63.28 8.47 3.08 0.82 0.68 0.95 10.48

(0.00) (0.00) (0.00) (0.10) (0.08) (0.07) (0.27) (0.24) (0.43) (0.62) (1.62) (3.98) (5.21) (3.70) (1.56) (0.82) (0.84) (1.42) (2.56)

B+ 0.00 0.01 0.00 0.03 0.00 0.03 0.06 0.05 0.05 0.11 0.32 1.46 8.18 62.74 9.19 2.53 1.72 2.01 11.51

(0.00) (0.06) (0.00) (0.14) (0.00) (0.09) (0.20) (0.13) (0.16) (0.21) (0.35) (1.10) (3.39) (5.67) (3.68) (1.27) (1.59) (2.04) (2.69)

B 0.00 0.00 0.01 0.01 0.00 0.03 0.04 0.02 0.06 0.03 0.12 0.25 1.15 7.70 61.91 8.76 3.88 3.41 12.62

(0.00) (0.00) (0.09) (0.06) (0.00) (0.19) (0.36) (0.07) (0.29) (0.10) (0.36) (0.54) (1.21) (3.07) (7.03) (3.24) (3.17) (4.13) (2.63)

B- 0.00 0.00 0.00 0.00 0.02 0.03 0.00 0.07 0.05 0.10 0.09 0.14 0.48 2.37 10.34 53.90 11.64 6.75 14.01

(0.00) (0.00) (0.00) (0.00) (0.29) (0.29) (0.00) (0.32) (0.18) (0.42) (0.43) (0.85) (0.86) (2.21) (5.07) (6.76) (3.96) (6.16) (4.04)

CCC/C 0.00 0.00 0.00 0.00 0.03 0.00 0.08 0.06 0.08 0.06 0.03 0.17 0.39 1.04 2.60 9.57 43.51 26.89 15.50

(0.00) (0.00) (0.00) (0.00) (0.22) (0.00) (0.37) (0.46) (0.32) (0.37) (0.23) (0.50) (0.75) (1.50) (2.96) (5.50) (8.60) (10.77) (5.21)

Note: Numbers in parentheses are weighted standard deviations, weighted by the issuer base. NR--Not rated. Sources: S&P Global Fixed Income Research and S&P Global MarketIntelligence's CreditPro®.

Over each time span, lower ratings correspond to higher default rates (see table 24 and chart 25).This holds true in every region worldwide (see table 25). The only exceptions occur when thenumber of defaults is low or when the underlying population of issuers is very small--such as atthe rating modifier level among the higher rating categories (see table 26).Investment-grade-rated issuers seldom default, so the number of defaults among these ratingcategories is particularly low. This small sample size can at times result in historical default ratesthat seem counterintuitive. These default rates do not imply, however, that 'AAA' rated companiesare riskier than 'AA+' rated companies, for example, but rather that both are highly unlikely todefault.



Chart 25

Table 24

Global Corporate Average Cumulative Default Rates (1981-2018)

(%) --Time horizon (years)--

Rating 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

AAA 0.00 0.03 0.13 0.24 0.35 0.45 0.51 0.59 0.65 0.70 0.73 0.76 0.79 0.85 0.92

AA 0.02 0.06 0.12 0.22 0.32 0.42 0.51 0.59 0.66 0.73 0.80 0.86 0.92 0.98 1.04

A 0.06 0.14 0.23 0.35 0.49 0.63 0.81 0.96 1.12 1.28 1.43 1.57 1.71 1.83 1.98

BBB 0.17 0.46 0.80 1.22 1.64 2.05 2.41 2.76 3.11 3.44 3.79 4.06 4.32 4.59 4.87

BB 0.65 2.01 3.63 5.25 6.78 8.17 9.36 10.43 11.38 12.22 12.92 13.56 14.13 14.63 15.17

B 3.44 7.94 11.86 14.95 17.33 19.26 20.83 22.07 23.18 24.21 25.08 25.73 26.31 26.87 27.43

CCC/C 26.89 36.27 41.13 43.94 46.06 46.99 48.20 49.04 49.80 50.44 50.96 51.51 52.16 52.72 52.80

Investmentgrade

0.09 0.25 0.43 0.66 0.90 1.14 1.36 1.56 1.77 1.96 2.16 2.32 2.48 2.63 2.80

Speculativegrade

3.66 7.13 10.12 12.56 14.55 16.18 17.55 18.69 19.70 20.62 21.39 22.02 22.60 23.13 23.65

All rated 1.48 2.91 4.16 5.21 6.08 6.82 7.44 7.97 8.44 8.88 9.26 9.58 9.87 10.13 10.41




Table 25

Average Cumulative Default Rates For Corporates By Region (1981-2018)


Rating 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

U.S.

AAA 0.00 0.04 0.17 0.29 0.41 0.54 0.58 0.66 0.75 0.83 0.88 0.92 0.97 1.06 1.16

AA 0.03 0.08 0.17 0.30 0.43 0.58 0.72 0.83 0.92 1.03 1.12 1.20 1.29 1.36 1.45

A 0.07 0.19 0.34 0.52 0.69 0.90 1.12 1.33 1.56 1.78 1.99 2.18 2.37 2.53 2.71

BBB 0.20 0.54 0.92 1.41 1.92 2.44 2.90 3.37 3.82 4.26 4.70 5.02 5.31 5.64 5.97

BB 0.75 2.36 4.28 6.17 7.89 9.54 10.93 12.22 13.36 14.39 15.24 16.02 16.74 17.33 17.95

B 3.63 8.45 12.71 16.08 18.70 20.85 22.60 23.98 25.21 26.36 27.32 28.06 28.73 29.35 29.96

CCC/C 28.89 39.73 45.37 48.83 51.42 52.62 54.10 55.02 55.89 56.58 57.25 57.79 58.36 58.89 58.89

Investmentgrade

0.11 0.30 0.53 0.82 1.12 1.42 1.71 1.99 2.27 2.54 2.80 3.01 3.20 3.40 3.61

Speculativegrade

4.07 8.00 11.43 14.21 16.47 18.35 19.93 21.24 22.41 23.47 24.36 25.10 25.78 26.37 26.95

All rated 1.79 3.54 5.09 6.39 7.47 8.40 9.18 9.85 10.46 11.02 11.51 11.90 12.26 12.59 12.92

Europe

AAA 0.00 0.00 0.00 0.00 0.00 0.00 0.00

AA 0.00 0.03 0.06 0.13 0.20 0.27 0.31

A 0.04 0.08 0.12 0.17 0.26 0.34 0.45

BBB 0.07 0.20 0.33 0.46 0.56 0.76 0.95

BB 0.35 1.15 1.94 2.67 3.71 4.62 5.49

B 2.14 5.38 8.30 10.55 12.43 13.69 14.48

CCC/C 25.47 34.02 37.93 41.52 43.37 43.37 44.23

Investmentgrade

0.04 0.10 0.17 0.25 0.34 0.45 0.56

Speculativegrade

2.61 5.07 7.08 8.68 10.14 11.16 11.99

All rated 0.69 1.34 1.86 2.27 2.62 2.90 3.13

Emerging markets

AAA 0.00 0.00 0.00 0.00 0.00

AA 0.00 0.00 0.00 0.00 0.00

A 0.04 0.04 0.04 0.04 0.04

BBB 0.13 0.56 1.08 1.68 2.24

BB 0.57 1.73 3.00 4.28 5.26

B 3.04 6.36 8.86 10.81 12.10

CCC/C 18.36 22.82 25.17 25.71 26.32

Investmentgrade

0.09 0.37 0.70 1.09 1.45

Speculativegrade

2.64 4.90 6.75 8.27 9.35



Table 25

Average Cumulative Default Rates For Corporates By Region (1981-2018) (cont.)


Rating 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

All rated 1.51 2.89 4.07 5.09 5.87

Note: Figures for Europe and the emerging markets are calculated for the period 1996-2018 due to sample size considerations. Sources: S&PGlobal Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

Table 26

Global Corporate Average Cumulative Default Rates By Rating Modifier (1981-2018)


Rating 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

AAA 0.00 0.03 0.13 0.24 0.35 0.45 0.51 0.59 0.65 0.70 0.73 0.76 0.79 0.85 0.92

AA+ 0.00 0.05 0.05 0.10 0.15 0.21 0.26 0.32 0.38 0.44 0.50 0.56 0.62 0.69 0.76

AA 0.02 0.03 0.08 0.22 0.36 0.48 0.60 0.71 0.80 0.89 0.97 1.03 1.14 1.20 1.27

AA- 0.03 0.08 0.17 0.25 0.32 0.44 0.50 0.55 0.61 0.66 0.72 0.79 0.81 0.85 0.90

A+ 0.05 0.09 0.20 0.33 0.43 0.53 0.64 0.76 0.89 1.03 1.17 1.31 1.47 1.66 1.83

A 0.06 0.14 0.23 0.35 0.48 0.65 0.83 1.00 1.19 1.41 1.59 1.73 1.86 1.95 2.12

A- 0.06 0.16 0.26 0.38 0.54 0.70 0.93 1.10 1.23 1.34 1.45 1.58 1.71 1.83 1.92

BBB+ 0.10 0.29 0.50 0.73 0.97 1.25 1.46 1.68 1.93 2.17 2.41 2.58 2.80 3.07 3.37

BBB 0.16 0.41 0.64 1.01 1.36 1.72 2.04 2.36 2.72 3.08 3.46 3.77 4.01 4.12 4.33

BBB- 0.24 0.73 1.35 2.04 2.77 3.42 4.00 4.55 5.00 5.39 5.83 6.19 6.51 7.00 7.37

BB+ 0.32 1.04 1.91 2.79 3.69 4.56 5.29 5.81 6.42 7.04 7.45 7.95 8.43 8.77 9.27

BB 0.53 1.61 3.19 4.68 6.17 7.35 8.43 9.35 10.22 10.98 11.76 12.39 12.81 13.12 13.53

BB- 0.95 2.98 5.11 7.33 9.27 11.15 12.71 14.21 15.42 16.46 17.28 17.99 18.74 19.48 20.15

B+ 2.01 5.52 8.95 11.88 14.15 15.89 17.54 18.97 20.30 21.49 22.48 23.14 23.80 24.45 25.09

B 3.41 7.84 11.69 14.73 17.09 19.27 20.74 21.77 22.74 23.74 24.48 25.18 25.77 26.30 26.85

B- 6.75 13.73 19.04 22.70 25.43 27.42 29.01 30.11 30.82 31.37 32.13 32.67 32.91 33.18 33.50

CCC/C 26.89 36.27 41.13 43.94 46.06 46.99 48.20 49.04 49.80 50.44 50.96 51.51 52.16 52.72 52.80

Investmentgrade

0.09 0.25 0.43 0.66 0.90 1.14 1.36 1.56 1.77 1.96 2.16 2.32 2.48 2.63 2.80

Speculativegrade

3.66 7.13 10.12 12.56 14.55 16.18 17.55 18.69 19.70 20.62 21.39 22.02 22.60 23.13 23.65

All rated 1.48 2.91 4.16 5.21 6.08 6.82 7.44 7.97 8.44 8.88 9.26 9.58 9.87 10.13 10.41


Gini Ratios And Lorenz Curves

A quantitative analysis of the performance of S&P Global Ratings' corporate credit ratings showsthat they continue to correlate with default risk across several time horizons. As one measure of



ratings performance, the cumulative share of defaulters was plotted against the cumulative shareof issuers by rating in a Lorenz curve to visually render the accuracy of its rank ordering (fordefinitions and methodology, refer to Appendix II). Over the long term, the global weighted-averageGini coefficient was 82.5% over the one-year horizon, 75.2% over three years, 71.5% over fiveyears, and 69.4% over seven years (see table 27).

Table 27

Corporate Gini Coefficients By Region (1981-2018)


Region One-year Three-year Five-year Seven-year

Global


Average 85.31 78.34 74.15 71.04


U.S.


Average 84.34 76.32 72.00 68.83


Europe


Average 91.94 87.89 83.07 76.23


Note: Numbers in parentheses are standard deviations. Average and standard deviation for Europe calculated for the period 1996-2018 due tosample size considerations. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence's CreditPro®.

In line with expectations, the Gini coefficients decline over time because longer time horizonsallow for greater credit degradation among higher-rated entities. In the one-year global Lorenzcurve, for example, 96.2% of defaults occurred in the speculative-grade category, while theseratings constituted only 39% of all corporate ratings (see chart 26). In the seven-year Lorenzcurve, speculative-grade issuers constituted 87.6% of defaulters and only 35.6% of the entiresample (see chart 29). If the rank ordering of ratings had little predictive value, the cumulativeshare of defaulting corporate entities and the cumulative share of all entities at each rating wouldbe nearly the same, producing a Gini ratio of zero.

Table 28

Gini Coefficients For Global Corporates By Broad Sector (1981-2018)



Financial


Average 82.51 75.14 67.09 60.62




Table 28

Gini Coefficients For Global Corporates By Broad Sector (1981-2018) (cont.)



Nonfinancial


Average 84.53 76.76 72.83 70.05


Note: Numbers in parentheses are standard deviations. Sources: S&P Global Fixed Income Research and S&P Global Market Intelligence'sCreditPro®.

Chart 26



Chart 27

Chart 28



Chart 29

One-year Gini coefficients appear to be broadly cyclical and negatively correlated with defaultrates (see chart 30). Trends in the one-year Gini ratio emerge during periods of both high and lowdefault rates, which reflects the natural relationship between the two extremes. In periods of highdefaults, there tends to be greater variation in the distribution of defaults with regard to priorratings, which reduces the Gini. That is, when default pressure is high, economic conditions aresuch that the likelihood of companies from across the rating spectrum suffering a more rapiddeterioration of credit quality is higher.

The experience of 2018 generally coincides with this observation. The one-year Gini ratio in 2018was 93%, alongside a relatively low default rate of 2.1%. This compares with a Gini of 92.7% and adefault rate of 2.5% in 2017.



Chart 30

Appendix I: Methodology And Definitions

This long-term corporate default and rating transition study uses the CreditPro database oflong-term local currency issuer credit ratings. The analysis excludes public information ("pi")ratings and ratings based on the guarantee of another company or government entity. We also donot include short-term issuer ratings. S&P Global Ratings does not require all issuers with debtrated to have an issuer credit rating. Therefore, if an issuer has rated debt but not an issuer creditrating, we assign a proxy rating so that the CreditPro corporate dataset accurately represents thecomplete universe of ratings. The local currency senior unsecured rating is the preferreddebt-level rating used for the proxy because this rating is usually consistent with the issuer creditrating. In a small number of cases, we used the subordinated debt rating or the senior securedrating as the proxy.

An S&P Global Ratings issuer credit rating is a forward-looking opinion about an obligor's overallcreditworthiness. This opinion focuses on the obligor's capacity and willingness to meet itsfinancial commitments as they come due. It does not apply to any specific financial obligationbecause it does not take into account the nature and provisions of any single obligation, itsstanding in bankruptcy or liquidation, statutory preferences, or the legality and enforceability ofthe obligation. Counterparty credit ratings, corporate credit ratings, and sovereign credit ratingsare all forms of issuer credit ratings. Issuer credit ratings can be either long-term or short-term.

Our ongoing enhancement of the database used to generate this study could lead to outcomesthat differ to some degree from those reported in previous studies. However, this poses nocontinuity problem because each study reports statistics back to Dec. 31, 1980. Therefore, eachannual default study is self-contained and effectively supersedes all previous versions.



Issuers included in this study

This study analyzes the rating histories of 20,581 companies that S&P Global Ratings rated as ofDec. 31, 1980, or that were first rated between that date and Dec. 31, 2018. These includeindustrials, utilities, financial institutions, and insurance companies around the world withlong-term local currency ratings. Structured finance vehicles, public-sector issuers, and sovereignissuers are the subjects of separate default and transition studies, and we exclude them from thisstudy.

To avoid overcounting, we exclude subsidiaries with debt that is fully guaranteed by a parent orwith default risk that is considered identical to that of a parent. The latter are companies withobligations that are not legally guaranteed by a parent but that have operating or financingactivities that are so inextricably entwined with those of the parent that it would be impossible toimagine the default of one and not the other. At times, however, some of these subsidiaries mightnot yet have been covered by a parent's guarantee, or the relationship that combines the defaultrisk of parent and subsidiary might have come to an end or might not have begun. We includedsuch subsidiaries for the period during which they had a distinct and separate risk of default.

Issuers with withdrawn ratings

S&P Global Ratings withdraws ratings when an entity's entire debt is paid off or when the programor programs rated are terminated and the relevant debt extinguished. Others are withdrawnbecause of a lack of cooperation, particularly when a company is experiencing financial difficultiesand refuses to provide all the information needed to continue surveillance on the ratings, or at theentity's request. For the purposes of this study, a corporate rating may also be withdrawn as aresult of mergers and acquisitions.

Definition of default

An obligor rated 'SD' (selective default) or 'D' (default) is in default on one or more of its financialobligations, including rated and unrated financial obligations but excluding hybrid instrumentsclassified as regulatory capital or in nonpayment according to terms. An obligor is considered indefault unless S&P Global Ratings believes that such payments will be made within five businessdays of the due date in the absence of a stated grace period, or within the earlier of the statedgrace period or 30 calendar days.

A 'D' rating is assigned when S&P Global Ratings believes that the default will be a general defaultand that the obligor will fail to pay all or substantially all of its obligations as they come due. An'SD' rating is assigned when S&P Global Ratings believes that the obligor has selectively defaultedon a specific issue or class of obligations but will continue to meet its payment obligations onother issues or classes of obligations in a timely manner.

S&P Global Ratings lowers its rating on an obligor to 'D' or 'SD' if the obligor is conducting adistressed exchange offer. 'R' (regulatory intervention) indicates that an obligor is underregulatory supervision owing to its financial condition. This does not necessarily indicate a defaultevent, but during the period of regulatory supervision, the regulators may have the power to favorone class of obligations over others or pay some obligations and not others. Preferred stock is notconsidered a financial obligation; thus, a missed preferred stock dividend is not normally equatedwith default.

We deem 'D', 'SD', and 'R' issuer ratings to be defaults for the purposes of this study. A default is



assumed to take place on the earliest of:

- The date S&P Global Ratings revised the rating(s) to 'D', 'SD', or 'R';

- The date a debt payment was missed;

- The date a distressed exchange offer was announced; or

- The date the debtor filed for, or was forced into, bankruptcy.

When an issuer defaults, it is not uncommon for S&P Global Ratings to subsequently withdraw the'D' rating. For the purposes of this study, if an issuer defaults, we end its rating history at 'D'. If anydefaulting entity reemerges from bankruptcy--or otherwise restructures its defaulted debtinstruments, thereby reestablishing regular, timely payment of all its debts--we reenter thisissuer into the database as a new entity. Its rating history after the default event is included in allcalculations as entirely separate from its experience leading up to its earlier default.

Many practitioners use statistics from this default study to estimate the "probability of default"and "probability of rating transition." It is important to note that S&P Global Ratings' credit ratingsdo not imply a specific probability of default.

Regional definitions

Within this study, tables and charts are often presented using specific geographic regions. Somecountries can be included in multiple regions, and S&P Global Ratings does not have corporateratings within every country. The regions covered in this study are:

U.S. and tax havens: U.S., Bermuda, and the Cayman Islands

Other developed: Australia, Canada, Japan, and New Zealand

Europe: Austria, Belgium, British Virgin Islands, Bulgaria, Channel Islands, Croatia, Cyprus, CzechRepublic, 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 the U.K.

Emerging markets: Angola, Argentina, Armenia, Aruba, Azerbaijan, Bahamas, Bahrain,Bangladesh, Barbados, Belarus, Belize, Bhutan, Bolivia, Bosnia-Herzegovina, Brazil, BruneiDarussalam, Cambodia, Chile, China, Colombia, Costa Rica, Curacao, Dominican Republic, Egypt,El Salvador, Fiji, Gabon, Georgia, Ghana, Grenada, Guatemala, Honduras, Hong Kong, India,Indonesia, Israel, Jamaica, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kuwait, Lebanon,Liberia, Macao, Malaysia, Marshall Islands, Mauritius, Mexico, Mongolia, Morocco, Namibia,Netherlands Antilles, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru,Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Sri Lanka, Syrian Arab Republic,Taiwan, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, Ukraine,United Arab Emirates, Uruguay, Uzbekistan, Venezuela, and Vietnam.

Calculations

Static pool methodology. S&P Global Fixed Income Research conducts its default studies on thebasis of groupings called static pools. For the purposes of this study, we form static pools bygrouping issuers (for example, by rating category) at the beginning of each year, quarter, or monththat the database covers. Each static pool is followed from that point forward. All companies



included in the study are assigned to one or more static pools. When an issuer defaults, we assignthat default back to all of the static pools to which the issuer belonged.

We use the static pool methodology to avoid certain pitfalls in estimating default rates, ensuringthat default rates account for rating migration and allowing for default rates to be calculatedacross multiperiod time horizons. Some methods for calculating default and rating transitionrates might charge defaults against only the initial rating on the issuer, ignoring more recentrating changes that supply more current information. Other methods may calculate default ratesusing only the most recent year's default and rating data, which may yield comparatively lowdefault rates during periods of high rating activity because they ignore prior years' default activity.

The pools are static in the sense that their membership remains constant over time. Each staticpool can be interpreted as a buy-and-hold portfolio. Because errors, if any, are corrected by everynew update and because the criteria for inclusion or exclusion of companies in the default studyare subject to minor revisions as time goes by, it is not possible to compare static pools acrossdifferent studies. Therefore, every new update revises results back to the same starting date ofDec. 31, 1980, so as to avoid continuity problems.

Entities that have had ratings withdrawn--that is, revised to not rated ("NR")--are surveilled withthe aim of capturing a potential default. Because static pools include only entities with activeratings as of the beginning date of a given pool, we exclude companies with withdrawn ratings, aswell as those that have defaulted, from subsequent static pools. If the rating on an entity iswithdrawn after the start date of a particular static pool and the entity subsequently defaults, wewill include the entity in that static pool as a defaulter and categorize it in the rating category ofwhich it was a member at that time.

For instance, the 1981 static pool consists of all companies rated as of 12:00:01 a.m. on Jan. 1,1981. Adding those companies first rated in 1981 to the surviving members of the 1981 static poolforms the 1982 static pool. All rating changes that took place are reflected in the newly formed1982 static pool through the ratings on these entities as of 12:00:01 a.m. on Jan. 1, 1982. We usedthe same method to form static pools for 1983-2018. From Jan. 1, 1981-Dec. 31, 2018, a total of20,581 first-time-rated organizations were added to form new static pools, while we excluded2,754 defaulting companies and 10,548 companies that are no longer assigned ratings ("NR").

Consider the following example: An issuer is originally rated 'BB' in mid-1986 and is downgradedto 'B' in 1988. This is followed by a rating withdrawal in 1990 and a default in 1993. We wouldinclude this hypothetical company in the 1987 and 1988 pools with the 'BB' rating, which was therating on the issuer at the beginning of those years. Likewise, it would be included in the 1989 and1990 pools with the 'B' rating. It would not be part of the 1986 pool because it was not rated as ofthe first day of that year, and it would not be included in any pool after the last day of 1990because the rating had been withdrawn by then. Yet each of the four pools in which this companywas included (1987-1990) would record its 1993 default at the appropriate time horizon.

Default rate calculation. We calculated annual default rates for each static pool, first in units andlater as percentages with respect to the number of issuers in each rating category. We combinedthese percentages to obtain cumulative default rates for the 38 years the study covers (see tables24-26 and 30-32).

Issuer-weighted default rates. All default rates that appear in this study are based on thenumber of issuers rather than the dollar amounts affected by defaults or rating changes. Althoughdollar amounts provide information about the portion of the market that is affected by defaults orrating changes, issuer-weighted averages are more useful measures of the performance ofratings.



Average cumulative default rate calculation. The cumulative default rates in this study averagethe experience of all static pools by first calculating marginal default rates for each possible timehorizon and for each static pool, weight-averaging the marginal default rates conditional onsurvival (survivors being nondefaulters), and accumulating the average conditional marginaldefault rates (see tables 24-26 and 30-32). We calculated conditional default rates by dividing thenumber of issuers in a static pool that default at a specific time horizon by the number of issuersthat survived (did not default) to that point in time. Weights are based on the number of issuers ineach static pool. Cumulative default rates are one minus the product of the proportion of survivors(nondefaulters).

For instance, in table 32, the weighted-average first-year default rate for allspeculative-grade-rated companies for all 38 pools was 3.66%, meaning that an average of96.34% survived one year. Similarly, the second- and third-year conditional marginalaverages--shown in the "Summary statistics" section at the bottom portion of the table--were3.59% for the first 37 pools (96.41% of those companies that did not default in the first yearsurvived the second year) and 3.22% for the first 36 pools (96.78% of those companies that did notdefault by the second year survived the third year), respectively. Multiplying 96.34% by 96.41%results in a 92.87% survival rate to the end of the second year, which is a two-year averagecumulative default rate of 7.13%. Multiplying 92.87% by 96.78% results in an 89.88% survival rateto the end of the third year, which results in a three-year average cumulative default rate of10.12%.

Transition analysis. Transition rates compare issuer ratings at the beginning of a period withratings at the end of the period. To compute one-year rating transition rates by rating category, wecompared the rating on each entity at the end of a particular year with the rating at the beginningof the same year. An issuer that remained rated for more than one year was counted as manytimes as the number of years it was rated. For instance, an issuer continually rated from themiddle of 1984 to the middle of 1991 would appear in the seven consecutive one-year transitionmatrices from 1985-1991. If the rating on the issuer was withdrawn in the middle of 1991, it wouldbe included in the column representing transitions to "NR" in the 1991 transition matrix. Similarly,if it defaulted in the middle of 1991, it would be included in the column representing transitions to'D' in the 1991 one-year transition matrix.

All 1981 static pool members still rated on Jan. 1, 2018, had 38 one-year transitions, whilecompanies first rated on Jan. 1, 2018, had only one. Table 29 displays the summary of one-yeartransitions in the investment-grade and speculative-grade rating categories. Each one-yeartransition matrix displays all rating movements between letter categories from the beginning ofthe year through year-end. For each rating listed in the matrix's leftmost column, there are nineratios listed in the rows, corresponding to the ratings from 'AAA' to 'D', plus an entry for "NR" (seetable 22).

The only ratings considered in these calculations are those on entities at the beginning of eachstatic pool and those at the end. All rating changes that occur in between are ignored. Forexample, if an entity was rated 'A' on Jan. 1, 2018, and was downgraded to 'BBB' in the middle ofthe year and then upgraded to 'A' later in the year (with no other subsequent rating changes), thisentity would be included only in the percentage of issuers that began the year as 'A' that ended theyear as 'A'. This also applies to transition matrices that span longer time horizons. If an issuerdefaults or if the rating on the issuer is withdrawn in the middle of the year, then it would beconsidered rated 'D' or not rated as of Dec. 31 of that particular year.



Table 29

Summary Of One-Year Global Corporate Rating Transitions

--Ratings distribution at year-end--

--Began the year as investment grade-- --Began the year as speculative grade--

Year

Issuercount

as ofJan. 1

Investmentgrade (%)

Speculativegrade (%)*

Defaulted(%)§

Ratingwithdrawn

(%)

Issuercount

as ofJan. 1

Investmentgrade (%)†

Speculativegrade (%)

Defaulted(%)

Ratingwithdrawn

(%)

1981 1,060 97.36 1.42 0.00 1.23 321 4.67 90.03 0.62 4.67

1982 1,089 93.57 3.03 0.18 3.21 340 2.65 80.59 4.41 12.35

1983 1,110 94.14 2.07 0.09 3.69 340 3.24 83.53 2.94 10.29

1984 1,170 95.38 2.22 0.17 2.22 367 4.90 86.92 3.27 4.90

1985 1,208 93.13 3.48 0.00 3.39 416 3.85 85.82 4.33 6.01

1986 1,333 90.10 3.83 0.15 5.93 526 3.04 82.13 5.70 9.13

1987 1,335 90.34 3.00 0.00 6.67 677 3.55 79.47 2.81 14.18

1988 1,349 91.85 2.74 0.00 5.41 752 3.59 79.52 3.86 13.03

1989 1,392 93.10 2.66 0.22 4.02 748 5.21 74.87 4.68 15.24

1990 1,435 94.63 2.09 0.14 3.14 690 3.19 75.07 8.12 13.62

1991 1,472 96.26 1.83 0.14 1.77 588 2.89 78.06 11.05 7.99

1992 1,619 96.42 1.24 0.00 2.35 525 6.29 78.67 6.10 8.95

1993 1,767 92.59 1.53 0.00 5.89 560 4.64 76.79 2.50 16.07

1994 1,847 95.83 0.76 0.05 3.36 711 4.08 85.94 2.11 7.88

1995 2,046 95.50 1.12 0.05 3.32 822 3.77 84.91 3.53 7.79

1996 2,243 94.47 0.62 0.00 4.90 885 4.75 81.02 1.81 12.43

1997 2,490 93.25 1.16 0.08 5.50 997 4.31 80.94 2.01 12.74

1998 2,764 90.41 2.21 0.14 7.24 1,309 2.98 83.88 3.67 9.47

1999 2,870 90.59 1.64 0.17 7.60 1,654 1.63 81.20 5.56 11.61

2000 2,927 91.56 1.78 0.24 6.42 1,750 2.17 83.31 6.23 8.29

2001 2,999 90.63 2.67 0.23 6.47 1,752 1.48 79.22 9.87 9.42

2002 3,108 89.38 3.96 0.42 6.24 1,675 1.79 79.58 9.49 9.13

2003 3,022 92.42 2.51 0.10 4.96 1,757 1.54 82.01 5.07 11.38

2004 3,137 94.10 1.02 0.03 4.85 1,877 2.18 84.55 2.02 11.24

2005 3,247 92.89 1.57 0.03 5.51 2,059 3.06 82.37 1.51 13.06

2006 3,272 93.83 1.41 0.00 4.77 2,192 2.19 81.98 1.19 14.64

2007 3,348 90.14 1.73 0.00 8.12 2,301 3.04 81.79 0.91 14.25

2008 3,327 92.22 1.92 0.42 5.44 2,403 2.12 83.31 3.70 10.86

2009 3,361 89.38 3.36 0.33 6.93 2,254 1.29 77.02 9.94 11.76

2010 3,189 94.73 0.94 0.00 4.33 2,120 2.31 84.91 3.02 9.76

2011 3,238 93.33 1.76 0.03 4.88 2,386 2.35 84.03 1.84 11.78

2012 3,251 93.76 1.72 0.00 4.52 2,551 1.92 85.54 2.59 9.96

2013 3,262 94.97 1.35 0.00 3.68 2,776 2.13 85.27 2.31 10.30



Table 29

Summary Of One-Year Global Corporate Rating Transitions (cont.)

--Ratings distribution at year-end--

--Began the year as investment grade-- --Began the year as speculative grade--

Year

Issuercount

as ofJan. 1

Investmentgrade (%)

Speculativegrade (%)*

Defaulted(%)§

Ratingwithdrawn

(%)

Issuercount

as ofJan. 1

Investmentgrade (%)†

Speculativegrade (%)

Defaulted(%)

Ratingwithdrawn

(%)

2014 3,358 95.71 1.22 0.00 3.07 3,124 1.41 85.60 1.44 11.56

2015 3,513 92.80 2.56 0.00 4.64 3,389 1.36 83.77 2.77 12.10

2016 3,525 93.08 1.76 0.03 5.13 3,382 1.15 82.94 4.23 11.68

2017 3,510 94.22 1.42 0.00 4.36 3,379 1.45 82.12 2.46 13.97

2018 3,532 95.13 0.76 0.00 4.11 3,449 1.57 84.31 2.09 12.03

Weightedaverage

93,725 93.06 1.87 0.09 4.98 59,804 2.26 82.64 3.66 11.44

Median 93.29 1.76 0.03 4.81 2.77 82.25 3.14 11.47

Standarddeviation

2.09 0.86 0.12 1.63 1.29 3.32 2.68 2.71

Minimum 89.38 0.62 0.00 1.23 1.15 74.87 0.62 4.67

Maximum 97.36 3.96 0.42 8.12 6.29 90.03 11.05 16.07

*Fallen angels that survived to Jan. 1 of the year after they were downgraded. §Investment-grade defaulters. †Rising stars. Sources: S&P Global FixedIncome Research and S&P Global Market Intelligence's CreditPro®.

Multiyear transitions. Multiyear transitions were also calculated for periods of two up to 20years. In this case, we compared the rating at the beginning of the multiyear period with the ratingat the end. For example, three-year transition matrices were the result of comparing ratings at thebeginning of the years 1981-2016 with the ratings at the end of the years 1983-2018. Otherwise,the methodology was identical to that used for single-year transitions.

We calculated average transition matrices on the basis of the multiyear matrices just described.These average matrices are a true summary, the ratios of which represent the historical incidenceof the ratings listed in the first column changing to the ones listed in the top row over the course ofthe multiyear period (see tables 33-40). Transition matrices that present averages over multipletime horizons are also calculated as issuer-weighted averages.

Rating modifiers. We use rating modifiers (plus and minus signs) to calculate upgrade anddowngrade percentages, as well as the magnitude of rating changes, throughout this study.However, some transition tables may use full rating categories for practical reasons. In otherwords, the use of a rating category suggests that transitions to, for example, 'AA' from 'AA-' or to'BBB+' from 'BBB-' are not considered to be rating transitions because the rating remained withinthe rating category.

Comparing transition rates with default rates. Rating transition rates may be compared with themarginal and cumulative default rates described in the previous sections. For example, theone-year default rate column of table 24 is equivalent to column 'D' of the average one-yeartransition matrix in table 21, as well as the cumulative average in the "Summary statistics" of theone-year column in table 32.



However, the two-year default rate column in table 24 is not the same as column 'D' of the averagetwo-year transition matrix in table 34. This difference results from the different methods ofcalculating default rates. The default rates in table 34 are calculated as not conditional onsurvival, while those in table 24 are average default rates conditional on survival. The two-yeardefault rates in table 24 are calculated in the same way as those in the cumulative average sectionfor the two-year column in table 32, while those in the 'D' column of table 34 are equivalent toadding up all the defaults behind the two-year column's annual default rates in table 32, dividedby the sum of all the issuers in table 32 for the years 1981-2017.

The links between transition matrices and average cumulative default rates can be bestillustrated through tables 30-32. The default rates in the columns of these tables, associated witheach static pool year, are calculated in the same way as they would be for individual years'one-year transition matrices. Tables 30, 31, and 32 are broken out by the broadest ratingclassifications (all rated, investment grade, and speculative grade). These tables can also beconstructed for each rating category.

As an example, the two-year column of table 32 shows the two-year default rates (not conditionalon survival) for each static pool. These are calculated in the same way as the default column intable 20, though table 20 shows the one-year default rates for each rating category for 2018exclusively. In the summary section at the bottom of tables 30-32, the first row shows theissuer-weighted averages of the marginal default rates. These marginal averages are then used tocalculate the cumulative average default rates in the row directly beneath them, as explained inthe "Average cumulative default rate" section above. These default rates are the same that appearin table 24 and are average cumulative default rates conditional on survival.

Standard deviations. Many of the tables and charts in this study display averages of defaultrates, transition rates, and Gini ratios. Often these are issuer-weighted averages. Prior studieshave shown that fluctuations within default rates and transitions can vary greatly depending onmany circumstances specific to particular time frames, industries, and geographic regions. As asupplement to many of the averages and time series presented in this study, standard deviationsare also shown to provide a gauge of the dispersion of data behind these averages.

For the transition matrices in tables 21-23 and 33-44, the standard deviation for each cell in agiven matrix is a weighted standard deviation, calculated using the data from each of theunderlying cohort years that contribute to the averages, weighted by that cohort year's issuer basefor each rating level. For example, in the average one-year global transition matrix in table 33,each cell's weighted standard deviation is calculated from the series of that particular cell in eachof the 38 cohorts beginning with the 1981 cohort and ending with the 2018 cohort. The squareddifference between each cohort's transition rate and the weighted average--which is the datapoint in each cell--is multiplied by each cohort's weight. These weights are based on each cohort'srating level's contribution to the 38-year total issuer base for each rating level. We then divide thisby the ratio of the total number of nonzero weights minus one and the total number of nonzeroweights.

For the Gini ratios in tables 2, 27, and 28, the standard deviations are derived from the time seriesof Gini ratios for all of their constituent annual cohorts. As an example, the standard deviationapplied to the seven-year weighted-average global Gini ratio in table 2 (5.36) was calculated fromthe time series of all available seven-year Gini ratios by cohort. In this case, these are theseven-year Gini ratios beginning with the 1981 cohort through the 2011 seven-year cohort. Wecalculated standard deviations for Gini ratios in this study as the standard deviations of a sample,and not those of a population.



Time sample. This study limits the reporting of default rates to the 15-year time horizon.However, the data were gathered for 38 years, and all calculations are based on the ratingexperience of that period. In addition, average default statistics become less reliable at longertime horizons as the sample size becomes smaller and the cyclical nature of default rates has abigger effect on averages.

Table 30

Static Pool Cumulative Global Corporate Default Rates Among All Ratings (1981-2018)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1981 1,381 0.14 1.38 2.10 2.90 3.55 4.92 5.36 6.15 6.73 7.82 9.49 9.99 10.50 10.57 10.79

1982 1,429 1.19 1.89 2.73 3.43 4.83 5.18 5.95 6.44 7.56 9.38 9.87 10.43 10.50 10.71 10.71

1983 1,450 0.76 1.59 2.41 4.00 4.41 5.45 5.93 7.03 9.03 9.59 10.14 10.21 10.41 10.41 10.48

1984 1,537 0.91 1.95 3.77 4.23 5.27 5.99 7.16 8.85 9.43 10.02 10.08 10.28 10.28 10.41 10.41

1985 1,624 1.11 3.02 3.57 4.93 5.79 7.08 8.93 9.48 9.98 10.04 10.34 10.34 10.47 10.47 10.78

1986 1,859 1.72 2.31 3.60 4.46 5.86 7.75 8.39 8.93 9.09 9.36 9.47 9.68 9.79 10.06 10.44

1987 2,012 0.94 2.39 3.83 5.67 8.20 9.29 10.04 10.29 10.64 10.79 10.98 11.08 11.38 11.83 12.87

1988 2,101 1.38 3.00 5.14 8.19 9.28 10.04 10.28 10.76 10.90 11.19 11.38 11.71 12.38 13.33 14.28

1989 2,140 1.78 4.35 7.85 9.02 9.81 10.14 10.56 10.70 10.98 11.36 11.68 12.29 13.27 14.16 14.63

1990 2,125 2.73 6.12 7.53 8.33 8.66 9.13 9.22 9.60 10.07 10.45 11.20 12.19 13.18 13.69 13.84

1991 2,060 3.25 4.76 5.29 5.63 6.17 6.26 6.60 7.04 7.43 8.11 9.17 10.24 10.73 10.92 11.07

1992 2,144 1.49 2.01 2.33 2.94 3.08 3.40 3.82 4.15 4.85 5.88 6.95 7.37 7.56 7.70 7.84

1993 2,327 0.60 1.07 1.98 2.19 2.58 3.01 3.44 4.21 5.33 6.45 6.88 7.05 7.22 7.43 7.56

1994 2,558 0.63 1.76 2.15 2.62 3.09 3.95 4.96 6.29 7.47 7.97 8.21 8.37 8.64 8.76 9.34

1995 2,868 1.05 1.53 2.02 2.58 3.56 4.57 6.42 7.78 8.37 8.61 8.82 9.07 9.17 9.69 10.53

1996 3,128 0.51 1.09 1.82 2.97 4.00 5.72 7.23 7.90 8.18 8.41 8.63 8.76 9.30 10.13 10.29

1997 3,487 0.63 1.61 2.93 4.33 6.25 8.00 8.92 9.21 9.44 9.72 9.87 10.47 11.30 11.39 11.50

1998 4,073 1.28 3.24 5.23 7.88 10.09 11.32 11.81 12.13 12.45 12.60 13.23 14.17 14.26 14.39 14.51

1999 4,524 2.14 4.66 8.00 10.90 12.38 12.93 13.28 13.64 13.79 14.59 15.74 15.92 16.05 16.20 16.29

2000 4,677 2.48 6.07 9.24 10.93 11.63 12.08 12.44 12.66 13.53 14.92 15.10 15.27 15.42 15.57 15.63

2001 4,751 3.79 7.37 9.32 10.04 10.57 10.92 11.13 11.98 13.45 13.64 13.81 13.98 14.17 14.23 14.48

2002 4,783 3.60 5.62 6.42 6.88 7.23 7.44 8.38 9.97 10.18 10.35 10.54 10.79 10.85 11.10 11.37

2003 4,779 1.93 2.72 3.22 3.62 3.83 4.81 6.63 6.91 7.07 7.34 7.64 7.72 7.99 8.27 8.54

2004 5,014 0.78 1.32 1.72 1.95 2.99 4.99 5.33 5.54 5.84 6.12 6.20 6.48 6.76 7.04 7.18

2005 5,306 0.60 1.02 1.36 2.56 4.86 5.35 5.65 5.99 6.29 6.43 6.78 7.09 7.33 7.46

2006 5,464 0.48 0.88 2.32 5.03 5.66 6.08 6.57 6.94 7.08 7.47 7.85 8.09 8.24

2007 5,649 0.37 2.04 5.29 6.16 6.62 7.22 7.65 7.82 8.28 8.71 8.96 9.08

2008 5,730 1.80 5.58 6.67 7.12 7.85 8.25 8.52 9.04 9.51 9.77 10.00

2009 5,615 4.19 5.34 5.82 6.57 6.98 7.27 7.80 8.35 8.64 8.87

2010 5,309 1.21 1.90 2.75 3.22 3.62 4.18 4.94 5.29 5.54

2011 5,624 0.80 1.94 2.63 3.11 3.89 4.84 5.23 5.48



Table 30

Static Pool Cumulative Global Corporate Default Rates Among All Ratings (1981-2018)(cont.)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2012 5,802 1.14 2.07 2.57 3.46 4.58 5.12 5.48

2013 6,038 1.06 1.66 2.83 4.22 4.90 5.30

2014 6,482 0.69 1.97 3.58 4.44 5.00

2015 6,902 1.36 3.29 4.26 4.94

2016 6,907 2.08 3.11 3.91

2017 6,889 1.20 2.12

2018 6,981 1.03

Summary statistics

Marginalaverage

1.48 1.45 1.28 1.10 0.92 0.78 0.67 0.57 0.52 0.48 0.42 0.35 0.32 0.30 0.30

Cumulativeaverage

1.48 2.91 4.16 5.21 6.08 6.82 7.44 7.97 8.44 8.88 9.26 9.58 9.87 10.13 10.41

Standarddeviation

0.98 1.71 2.22 2.52 2.65 2.60 2.52 2.47 2.42 2.35 2.39 2.48 2.56 2.60 2.57

Median 1.16 2.07 3.58 4.44 5.46 6.08 7.19 7.90 8.84 9.38 9.87 10.24 10.48 10.57 10.78

Minimum 0.14 0.88 1.36 1.95 2.58 3.01 3.44 4.15 4.85 5.88 6.20 6.48 6.76 7.04 7.18

Maximum 4.19 7.37 9.32 10.93 12.38 12.93 13.28 13.64 13.79 14.92 15.74 15.92 16.05 16.20 16.29


Table 31

Static Pool Cumulative Global Corporate Default Rates Among All Investment-GradeRatings (1981-2018)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1981 1,060 0.00 0.38 0.38 0.47 0.66 1.04 1.32 2.08 2.26 3.02 4.06 4.34 4.53 4.53 4.72

1982 1,089 0.18 0.28 0.37 0.55 1.01 1.29 2.02 2.20 3.03 4.13 4.41 4.68 4.68 4.87 4.87

1983 1,110 0.09 0.36 0.45 0.90 1.08 1.62 1.71 2.52 3.60 3.96 4.23 4.23 4.41 4.41 4.41

1984 1,170 0.17 0.26 0.60 0.77 1.20 1.37 2.05 2.99 3.33 3.59 3.59 3.76 3.76 3.85 3.85

1985 1,208 0.00 0.17 0.25 0.83 0.99 1.74 2.73 3.06 3.31 3.31 3.56 3.56 3.73 3.73 3.89

1986 1,333 0.15 0.15 0.53 0.68 1.20 2.10 2.48 2.63 2.63 2.85 2.85 3.00 3.08 3.23 3.53

1987 1,335 0.00 0.15 0.37 0.82 1.72 2.25 2.40 2.47 2.62 2.62 2.77 2.85 3.00 3.15 3.97

1988 1,349 0.00 0.22 0.37 0.96 1.48 1.63 1.70 1.85 1.85 2.00 2.00 2.15 2.30 2.97 3.71

1989 1,392 0.22 0.36 0.65 1.22 1.36 1.44 1.58 1.58 1.58 1.58 1.80 1.94 2.73 3.38 3.74

1990 1,435 0.14 0.35 0.77 0.98 1.05 1.18 1.18 1.18 1.25 1.53 1.88 2.58 3.14 3.48 3.55

1991 1,472 0.14 0.27 0.41 0.48 0.61 0.61 0.61 0.68 1.02 1.36 2.11 2.65 2.92 2.99 3.06



Table 31

Static Pool Cumulative Global Corporate Default Rates Among All Investment-GradeRatings (1981-2018) (cont.)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1992 1,619 0.00 0.06 0.12 0.25 0.25 0.25 0.31 0.56 0.80 1.36 1.85 2.10 2.16 2.29 2.47

1993 1,767 0.00 0.06 0.17 0.17 0.23 0.40 0.74 1.08 1.70 2.32 2.55 2.55 2.66 2.77 2.83

1994 1,847 0.05 0.16 0.16 0.27 0.38 0.81 1.08 1.68 2.27 2.54 2.60 2.65 2.82 2.87 3.25

1995 2,046 0.05 0.05 0.10 0.20 0.68 0.93 1.66 2.25 2.49 2.54 2.59 2.74 2.79 3.18 3.52

1996 2,243 0.00 0.04 0.09 0.49 0.80 1.52 2.05 2.27 2.36 2.41 2.54 2.54 2.94 3.39 3.43

1997 2,490 0.08 0.16 0.48 0.80 1.37 2.09 2.45 2.53 2.57 2.69 2.69 3.09 3.49 3.53 3.65

1998 2,764 0.14 0.43 0.80 1.37 2.39 2.82 3.00 3.11 3.18 3.18 3.65 4.20 4.27 4.41 4.56

1999 2,870 0.17 0.49 0.91 1.88 2.33 2.47 2.58 2.72 2.72 3.24 3.90 3.97 4.11 4.29 4.32

2000 2,927 0.24 0.58 1.54 2.02 2.12 2.25 2.39 2.39 2.97 3.66 3.72 3.89 4.03 4.07 4.13

2001 2,999 0.23 1.23 1.67 1.83 2.00 2.13 2.13 2.67 3.40 3.43 3.60 3.77 3.83 3.87 4.07

2002 3,108 0.42 0.77 0.90 1.03 1.09 1.09 1.64 2.28 2.32 2.45 2.61 2.70 2.73 2.93 3.02

2003 3,022 0.10 0.20 0.30 0.33 0.33 0.86 1.59 1.62 1.72 1.79 1.89 1.92 2.15 2.25 2.32

2004 3,137 0.03 0.10 0.13 0.13 0.64 1.28 1.34 1.43 1.53 1.63 1.63 1.85 1.94 1.98 2.01

2005 3,247 0.03 0.06 0.06 0.62 1.20 1.29 1.39 1.48 1.57 1.57 1.79 1.88 1.88 1.91

2006 3,272 0.00 0.00 0.49 0.92 1.01 1.10 1.16 1.25 1.25 1.44 1.50 1.50 1.50

2007 3,348 0.00 0.48 0.93 1.11 1.19 1.28 1.34 1.34 1.49 1.55 1.55 1.55

2008 3,327 0.42 0.81 0.96 1.08 1.17 1.23 1.23 1.38 1.50 1.50 1.53

2009 3,361 0.33 0.45 0.54 0.60 0.62 0.62 0.77 0.89 0.89 0.92

2010 3,189 0.00 0.03 0.06 0.09 0.09 0.25 0.38 0.38 0.44

2011 3,238 0.03 0.06 0.06 0.06 0.09 0.25 0.25 0.31

2012 3,251 0.00 0.00 0.00 0.03 0.22 0.22 0.28

2013 3,262 0.00 0.00 0.00 0.15 0.15 0.25

2014 3,358 0.00 0.00 0.15 0.15 0.24

2015 3,513 0.00 0.06 0.06 0.14

2016 3,525 0.03 0.03 0.11

2017 3,510 0.00 0.00

2018 3,532 0.00

Summary statistics

Marginalaverage

0.09 0.16 0.19 0.23 0.24 0.24 0.22 0.21 0.21 0.20 0.20 0.17 0.16 0.16 0.17

Cumulativeaverage

0.09 0.25 0.43 0.66 0.90 1.14 1.36 1.56 1.77 1.96 2.16 2.32 2.48 2.63 2.80

Standarddeviation

0.12 0.27 0.41 0.53 0.64 0.71 0.76 0.81 0.86 0.90 0.92 0.93 0.88 0.80 0.74

Median 0.03 0.16 0.37 0.62 1.01 1.28 1.58 1.85 2.27 2.45 2.59 2.70 2.97 3.38 3.68

Minimum 0.00 0.00 0.00 0.03 0.09 0.22 0.25 0.31 0.44 0.92 1.50 1.50 1.50 1.91 2.01



Table 31

Static Pool Cumulative Global Corporate Default Rates Among All Investment-GradeRatings (1981-2018) (cont.)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Maximum 0.42 1.23 1.67 2.02 2.39 2.82 3.00 3.11 3.60 4.13 4.41 4.68 4.68 4.87 4.87


Table 32

Static Pool Cumulative Global Corporate Default Rates Among All Speculative-Grade Ratings(1981-2018)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1981 321 0.62 4.67 7.79 10.90 13.08 17.76 18.69 19.63 21.50 23.68 27.41 28.66 30.22 30.53 30.84

1982 340 4.41 7.06 10.29 12.65 17.06 17.65 18.53 20.00 22.06 26.18 27.35 28.82 29.12 29.41 29.41

1983 340 2.94 5.59 8.82 14.12 15.29 17.94 19.71 21.76 26.76 27.94 29.41 29.71 30.00 30.00 30.29

1984 367 3.27 7.36 13.90 15.26 18.26 20.71 23.43 27.52 28.88 30.52 30.79 31.06 31.06 31.34 31.34

1985 416 4.33 11.30 13.22 16.83 19.71 22.60 26.92 28.13 29.33 29.57 30.05 30.05 30.05 30.05 30.77

1986 526 5.70 7.79 11.41 14.07 17.68 22.05 23.38 24.90 25.48 25.86 26.24 26.62 26.81 27.38 27.95

1987 677 2.81 6.79 10.64 15.21 20.97 23.19 25.11 25.70 26.44 26.88 27.18 27.33 27.92 28.95 30.43

1988 752 3.86 7.98 13.70 21.14 23.27 25.13 25.66 26.73 27.13 27.66 28.19 28.86 30.45 31.91 33.24

1989 748 4.68 11.76 21.26 23.53 25.53 26.34 27.27 27.67 28.48 29.55 30.08 31.55 32.89 34.22 34.89

1990 690 8.12 18.12 21.59 23.62 24.49 25.65 25.94 27.10 28.41 28.99 30.58 32.17 34.06 34.93 35.22

1991 588 11.05 15.99 17.52 18.54 20.07 20.41 21.60 22.96 23.47 25.00 26.87 29.25 30.27 30.78 31.12

1992 525 6.10 8.00 9.14 11.24 11.81 13.14 14.67 15.24 17.33 19.81 22.67 23.62 24.19 24.38 24.38

1993 560 2.50 4.29 7.68 8.57 10.00 11.25 11.96 14.11 16.79 19.46 20.54 21.25 21.61 22.14 22.50

1994 711 2.11 5.91 7.31 8.72 10.13 12.10 15.05 18.28 20.96 22.08 22.78 23.21 23.77 24.05 25.18

1995 822 3.53 5.23 6.81 8.52 10.71 13.63 18.25 21.53 22.99 23.72 24.33 24.82 25.06 25.91 27.98

1996 885 1.81 3.73 6.21 9.27 12.09 16.38 20.34 22.15 22.94 23.62 24.07 24.52 25.42 27.23 27.68

1997 997 2.01 5.22 9.03 13.14 18.46 22.77 25.08 25.88 26.58 27.28 27.78 28.89 30.79 30.99 31.09

1998 1,309 3.67 9.17 14.59 21.62 26.36 29.26 30.40 31.17 32.01 32.47 33.46 35.22 35.37 35.45 35.52

1999 1,654 5.56 11.91 20.31 26.54 29.81 31.08 31.86 32.59 33.01 34.28 36.28 36.64 36.76 36.88 37.06

2000 1,750 6.23 15.26 22.11 25.83 27.54 28.51 29.26 29.83 31.20 33.77 34.11 34.29 34.46 34.80 34.86

2001 1,752 9.87 17.87 22.43 24.09 25.23 25.97 26.54 27.91 30.65 31.11 31.28 31.45 31.85 31.96 32.31

2002 1,675 9.49 14.63 16.66 17.73 18.63 19.22 20.90 24.24 24.78 25.01 25.25 25.79 25.91 26.27 26.87

2003 1,757 5.07 7.06 8.25 9.28 9.85 11.61 15.31 15.99 16.28 16.90 17.53 17.70 18.04 18.61 19.24

2004 1,877 2.02 3.36 4.37 5.01 6.93 11.19 11.99 12.41 13.05 13.64 13.85 14.22 14.81 15.50 15.82

2005 2,059 1.51 2.53 3.40 5.63 10.64 11.75 12.38 13.11 13.74 14.08 14.67 15.30 15.93 16.22

2006 2,192 1.19 2.19 5.06 11.18 12.59 13.50 14.64 15.42 15.78 16.47 17.34 17.93 18.29



Table 32

Static Pool Cumulative Global Corporate Default Rates Among All Speculative-Grade Ratings(1981-2018) (cont.)


Year Issuers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

2007 2,301 0.91 4.30 11.65 13.52 14.52 15.86 16.82 17.25 18.17 19.12 19.73 20.03

2008 2,403 3.70 12.19 14.57 15.48 17.10 17.98 18.60 19.64 20.60 21.22 21.72

2009 2,254 9.94 12.64 13.71 15.48 16.46 17.17 18.28 19.48 20.19 20.72

2010 2,120 3.02 4.72 6.79 7.92 8.92 10.09 11.79 12.69 13.21

2011 2,386 1.84 4.48 6.12 7.25 9.05 11.06 11.99 12.49

2012 2,551 2.59 4.70 5.84 7.84 10.15 11.37 12.11

2013 2,776 2.31 3.60 6.16 9.01 10.48 11.24

2014 3,124 1.44 4.10 7.27 9.06 10.12

2015 3,389 2.77 6.64 8.62 9.91

2016 3,382 4.23 6.33 7.87

2017 3,379 2.46 4.32

2018 3,449 2.09

Summary statistics

Marginalaverage

3.66 3.59 3.22 2.72 2.27 1.91 1.64 1.38 1.25 1.14 0.97 0.80 0.74 0.68 0.68

Cumulativeaverage

3.66 7.13 10.12 12.56 14.55 16.18 17.55 18.69 19.70 20.62 21.39 22.02 22.60 23.13 23.65

Standarddeviation

2.68 4.40 5.45 6.04 6.30 6.19 6.04 5.99 5.86 5.65 5.76 5.94 5.97 5.75 5.19

Median 3.14 6.64 9.08 13.14 15.88 17.76 19.20 21.76 23.23 25.01 27.02 28.66 29.56 30.00 30.60

Minimum 0.62 2.19 3.40 5.01 6.93 10.09 11.79 12.41 13.05 13.64 13.85 14.22 14.81 15.50 15.82

Maximum 11.05 18.12 22.43 26.54 29.81 31.08 31.86 32.59 33.01 34.28 36.28 36.64 36.76 36.88 37.06


Table 33

Average One-Year Global Corporate Transition Matrix (1981-2018)

(%)


AAA 86.99 9.12 0.53 0.05 0.08 0.03 0.05 0.00 3.15

(7.19) (7.26) (0.82) (0.25) (0.25) (0.17) (0.35) (0.00) (2.43)

AA 0.50 87.06 7.85 0.49 0.05 0.06 0.02 0.02 3.94

(0.53) (5.24) (4.15) (0.68) (0.19) (0.20) (0.07) (0.08) (1.86)

A 0.03 1.69 88.17 5.16 0.29 0.12 0.02 0.06 4.48

(0.09) (1.03) (3.65) (2.13) (0.38) (0.26) (0.06) (0.11) (1.72)

BBB 0.01 0.09 3.42 86.04 3.62 0.46 0.11 0.17 6.10



Table 33

Average One-Year Global Corporate Transition Matrix (1981-2018) (cont.)

(%)


(0.04) (0.15) (1.59) (3.83) (1.55) (0.67) (0.21) (0.25) (1.56)

BB 0.01 0.03 0.11 4.83 77.50 6.65 0.55 0.65 9.67

(0.06) (0.09) (0.25) (1.83) (4.45) (3.06) (0.74) (0.83) (2.26)

B 0.00 0.02 0.08 0.17 4.93 74.53 4.42 3.44 12.41

(0.00) (0.08) (0.20) (0.22) (2.02) (4.08) (2.06) (3.19) (2.26)

CCC/C 0.00 0.00 0.11 0.20 0.59 13.21 43.51 26.89 15.50

(0.00) (0.00) (0.42) (0.65) (0.92) (7.62) (8.60) (10.77) (5.21)


Table 34

Average Two-Year Global Corporate Transition Matrix (1981-2018)

(%)


AAA 75.60 16.27 1.43 0.11 0.19 0.05 0.11 0.03 6.23

(10.15) (10.65) (1.47) (0.30) (0.39) (0.23) (0.41) (0.17) (4.26)

AA 0.88 75.89 13.91 1.25 0.18 0.14 0.02 0.06 7.66

(0.69) (8.16) (5.95) (1.09) (0.33) (0.29) (0.06) (0.12) (2.97)

A 0.04 3.03 77.92 8.96 0.74 0.27 0.04 0.14 8.87

(0.07) (1.67) (5.65) (2.83) (0.78) (0.43) (0.11) (0.20) (2.71)

BBB 0.02 0.18 6.24 74.43 5.81 1.05 0.21 0.47 11.59

(0.08) (0.23) (2.50) (5.92) (1.91) (1.07) (0.30) (0.64) (2.51)

BB 0.01 0.04 0.28 8.56 60.24 9.97 1.02 2.05 17.83

(0.06) (0.10) (0.50) (2.76) (6.30) (2.75) (0.90) (2.21) (3.16)

B 0.00 0.03 0.14 0.41 8.31 55.43 5.15 8.09 22.45

(0.00) (0.11) (0.29) (0.44) (3.04) (5.06) (1.89) (5.75) (3.75)

CCC/C 0.00 0.00 0.15 0.50 1.04 17.28 20.78 36.25 24.00

(0.00) (0.00) (0.48) (1.17) (1.16) (7.57) (7.68) (12.15) (7.22)


Table 35

Average Three-Year Global Corporate Transition Matrix (1981-2018)

(%)


AAA 65.40 22.21 2.34 0.32 0.19 0.08 0.11 0.13 9.23



Table 35

Average Three-Year Global Corporate Transition Matrix (1981-2018) (cont.)

(%)


(11.54) (12.26) (1.73) (0.76) (0.45) (0.29) (0.42) (0.37) (5.24)

AA 1.18 66.47 18.38 2.01 0.34 0.22 0.03 0.12 11.25

(0.83) (9.51) (6.17) (1.39) (0.50) (0.44) (0.07) (0.18) (4.08)

A 0.06 3.96 69.34 11.56 1.23 0.43 0.09 0.24 13.10

(0.09) (2.10) (6.61) (2.78) (1.00) (0.61) (0.13) (0.28) (3.44)

BBB 0.02 0.27 8.31 65.13 7.01 1.57 0.28 0.84 16.58

(0.06) (0.39) (2.98) (6.94) (1.94) (1.28) (0.36) (0.93) (3.24)

BB 0.01 0.05 0.48 10.99 47.56 11.40 1.22 3.78 24.50

(0.05) (0.13) (0.69) (3.20) (7.21) (2.65) (0.90) (3.44) (3.89)

B 0.00 0.03 0.19 0.73 10.01 41.60 4.68 12.34 30.42

(0.05) (0.11) (0.41) (0.77) (3.20) (5.35) (1.60) (7.15) (4.81)

CCC/C 0.00 0.00 0.13 0.61 1.59 17.28 10.11 40.99 29.30

(0.00) (0.00) (0.50) (1.19) (1.66) (6.82) (6.05) (12.08) (8.61)


Table 36

Average Five-Year Global Corporate Transition Matrix (1981-2018)

(%)


AAA 49.48 28.68 4.80 0.80 0.24 0.16 0.08 0.35 15.40

(11.88) (13.38) (2.70) (1.53) (0.47) (0.40) (0.28) (0.60) (6.51)

AA 1.46 51.37 24.34 3.56 0.57 0.37 0.04 0.33 17.96

(0.94) (9.05) (5.14) (1.75) (0.63) (0.59) (0.10) (0.38) (4.64)

A 0.07 5.05 56.08 14.79 1.99 0.67 0.14 0.52 20.68

(0.10) (2.30) (7.35) (2.41) (1.15) (0.85) (0.18) (0.44) (4.01)

BBB 0.02 0.42 10.48 52.12 7.58 2.14 0.38 1.76 25.09

(0.07) (0.53) (3.09) (7.64) (1.63) (1.41) (0.38) (1.46) (4.39)

BB 0.01 0.08 0.98 12.68 32.02 11.00 1.20 7.29 34.74

(0.06) (0.17) (0.97) (3.09) (7.32) (2.11) (0.92) (4.85) (4.30)

B 0.01 0.03 0.24 1.50 10.30 25.35 2.93 18.33 41.32

(0.10) (0.09) (0.54) (1.17) (2.62) (5.23) (0.97) (8.53) (5.53)

CCC/C 0.00 0.00 0.11 0.68 2.81 12.47 2.49 45.85 35.58

(0.00) (0.00) (0.48) (1.75) (2.01) (4.70) (3.57) (12.13) (9.21)




Table 37

Average Seven-Year Global Corporate Transition Matrix (1981-2018)

(%)


AAA 37.96 32.37 6.89 1.47 0.30 0.19 0.11 0.52 20.19

(11.06) (13.70) (2.93) (1.88) (0.53) (0.43) (0.31) (0.74) (6.73)

AA 1.52 39.98 27.80 4.74 0.75 0.38 0.03 0.54 24.28

(0.92) (5.75) (3.80) (1.68) (0.60) (0.50) (0.08) (0.53) (4.29)

A 0.07 5.39 46.60 16.55 2.47 0.82 0.14 0.90 27.07

(0.12) (1.78) (6.55) (1.53) (1.21) (0.90) (0.17) (0.55) (3.82)

BBB 0.03 0.55 11.07 43.37 7.29 2.32 0.37 2.72 32.27

(0.11) (0.59) (2.77) (7.17) (0.89) (1.15) (0.32) (1.75) (4.39)

BB 0.00 0.08 1.34 12.69 23.17 9.75 0.96 10.48 41.53

(0.00) (0.18) (1.06) (3.11) (6.56) (2.13) (0.68) (5.33) (3.83)

B 0.01 0.02 0.33 2.03 9.08 16.47 1.71 22.79 47.58

(0.08) (0.08) (0.58) (1.43) (1.92) (4.52) (0.58) (8.39) (5.05)

CCC/C 0.00 0.00 0.20 0.98 3.68 7.76 1.43 49.04 36.90

(0.00) (0.00) (0.58) (2.05) (1.96) (3.88) (1.96) (11.44) (9.00)


Table 38

Average 10-Year Global Corporate Transition Matrix (1981-2018)

(%)


AAA 25.20 33.59 9.54 2.82 0.17 0.20 0.06 0.73 27.69

(9.01) (12.89) (2.95) (2.20) (0.33) (0.47) (0.23) (0.76) (6.44)

AA 1.26 28.27 29.42 6.71 0.97 0.42 0.02 0.81 32.12

(0.76) (3.74) (3.54) (1.68) (0.69) (0.35) (0.08) (0.58) (3.68)

A 0.10 5.25 36.27 17.54 2.76 0.95 0.13 1.52 35.48

(0.16) (1.51) (5.02) (2.01) (0.74) (0.65) (0.16) (0.75) (3.97)

BBB 0.02 0.66 11.00 33.96 6.70 2.29 0.29 4.22 40.86

(0.09) (0.66) (2.97) (6.17) (1.15) (1.07) (0.22) (2.07) (3.78)

BB 0.01 0.07 1.69 11.26 15.74 7.84 0.66 14.52 48.20

(0.07) (0.13) (1.07) (2.78) (4.98) (2.21) (0.38) (5.77) (3.06)

B 0.00 0.03 0.38 2.38 6.84 9.17 0.87 28.27 52.06

(0.00) (0.07) (0.60) (1.73) (1.64) (3.01) (0.54) (7.96) (4.73)

CCC/C 0.00 0.00 0.15 0.72 3.30 3.91 0.31 52.68 38.93



Table 38

Average 10-Year Global Corporate Transition Matrix (1981-2018) (cont.)

(%)


(0.00) (0.00) (0.56) (0.95) (2.33) (3.27) (0.64) (12.03) (9.82)


Table 39


(%)


AAA 12.74 31.30 14.66 2.85 0.61 0.42 0.03 0.93 36.48

(6.69) (10.39) (2.96) (0.98) (0.43) (0.59) (0.17) (0.82) (4.37)

AA 0.91 16.92 27.70 8.94 1.21 0.63 0.03 1.11 42.55

(0.76) (3.06) (3.68) (2.13) (0.73) (0.45) (0.10) (0.55) (2.74)

A 0.14 4.05 25.40 17.60 3.01 1.11 0.12 2.54 46.03

(0.19) (1.44) (3.46) (1.79) (0.90) (0.50) (0.11) (0.83) (3.86)

BBB 0.00 0.74 9.15 24.29 5.47 2.21 0.25 6.88 51.00

(0.00) (0.48) (2.81) (3.25) (0.72) (1.04) (0.17) (1.92) (2.82)

BB 0.00 0.14 2.04 8.84 8.96 5.26 0.43 20.10 54.24

(0.00) (0.19) (1.08) (2.23) (2.82) (1.78) (0.38) (5.26) (3.23)

B 0.00 0.08 0.53 2.64 4.04 4.24 0.48 34.30 53.69

(0.00) (0.09) (0.47) (1.51) (1.21) (1.55) (0.37) (8.17) (6.05)

CCC/C 0.00 0.00 0.53 1.21 2.64 1.36 0.15 55.51 38.61

(0.00) (0.00) (1.42) (1.25) (2.48) (1.06) (0.76) (11.01) (10.31)


Table 40


(%)


AAA 5.28 25.95 18.20 3.72 0.90 0.82 0.04 1.29 43.80

(3.61) (6.95) (4.47) (1.53) (0.43) (0.68) (0.16) (0.95) (5.06)

AA 0.63 9.51 23.34 11.39 1.43 0.83 0.07 1.78 51.03

(0.68) (1.71) (3.76) (1.95) (0.54) (0.44) (0.15) (0.90) (1.88)

A 0.13 2.66 18.45 15.53 2.95 1.40 0.17 3.83 54.89

(0.18) (0.88) (2.11) (1.06) (0.80) (0.67) (0.16) (1.25) (1.82)

BBB 0.00 0.68 6.96 18.49 4.12 1.70 0.14 9.47 58.45



Table 40

Average 20-Year Global Corporate Transition Matrix (1981-2018) (cont.)

(%)


(0.00) (0.31) (1.04) (1.58) (0.81) (0.80) (0.21) (1.53) (2.16)

BB 0.00 0.08 1.64 6.67 4.76 3.86 0.44 24.87 57.68

(0.00) (0.17) (0.56) (1.51) (1.74) (1.04) (0.42) (3.70) (3.25)

B 0.00 0.11 0.42 2.31 2.49 2.24 0.29 38.51 53.62

(0.00) (0.17) (0.24) (1.12) (0.69) (0.93) (0.25) (5.50) (5.08)

CCC/C 0.00 0.00 0.31 0.76 2.29 0.46 0.00 57.40 38.78

(0.00) (0.00) (0.92) (0.89) (3.24) (0.81) (0.00) (8.75) (9.62)


Table 41

Average Multiyear Global Corporate Transition Matrices (1981-2018): All Financials

(%)


One-year

AAA 87.02 9.57 0.34 0.09 0.09 0.04 0.09 0.00 2.77

(10.12) (9.86) (0.98) (0.37) (0.38) (0.24) (0.48) (0.00) (2.63)

AA 0.47 87.16 8.00 0.35 0.02 0.02 0.03 0.03 3.90

(0.57) (6.36) (5.59) (0.64) (0.08) (0.08) (0.16) (0.12) (1.96)

A 0.02 2.20 88.60 3.82 0.20 0.06 0.01 0.09 5.00

(0.12) (1.70) (4.00) (2.55) (0.47) (0.15) (0.04) (0.19) (2.07)

BBB 0.00 0.22 4.57 83.58 3.43 0.41 0.13 0.26 7.41

(0.00) (0.54) (2.98) (4.32) (2.44) (0.82) (0.27) (0.54) (1.91)

BB 0.00 0.09 0.16 6.12 75.90 4.92 0.71 0.69 11.40

(0.00) (0.28) (0.71) (4.12) (7.01) (2.89) (1.66) (1.26) (5.00)

B 0.00 0.03 0.10 0.41 6.68 75.82 3.02 2.77 11.17

(0.00) (0.22) (0.64) (0.86) (4.44) (7.88) (3.48) (3.59) (4.15)

CCC/C 0.00 0.00 0.00 0.00 1.30 16.88 45.24 17.10 19.48

(0.00) (0.00) (0.00) (0.00) (4.05) (11.94) (18.53) (15.87) (11.95)

Three-year

AAA 64.83 24.16 1.62 0.34 0.21 0.09 0.17 0.21 8.37

(16.44) (16.63) (2.23) (1.13) (0.57) (0.35) (0.60) (0.55) (6.00)

AA 1.14 66.69 18.60 1.67 0.18 0.16 0.04 0.19 11.34

(1.01) (11.04) (8.31) (1.61) (0.34) (0.35) (0.10) (0.29) (4.31)

A 0.04 5.21 70.53 7.86 1.04 0.23 0.10 0.39 14.60



Table 41

Average Multiyear Global Corporate Transition Matrices (1981-2018): All Financials(cont.)

(%)


(0.15) (3.43) (7.43) (2.66) (1.26) (0.46) (0.21) (0.52) (4.80)

BBB 0.00 0.60 10.93 60.25 5.49 1.03 0.33 1.20 20.17

(0.00) (1.17) (6.26) (6.41) (2.79) (1.03) (0.67) (1.39) (4.01)

BB 0.00 0.13 0.74 13.94 45.23 7.76 0.90 2.97 28.33

(0.00) (0.40) (1.61) (6.10) (9.95) (4.10) (1.59) (3.90) (7.30)

B 0.00 0.00 0.34 1.73 13.41 46.46 3.24 8.18 26.64

(0.00) (0.00) (0.99) (2.55) (6.85) (11.12) (2.94) (7.21) (6.56)

CCC/C 0.00 0.00 0.24 0.47 1.66 24.17 10.66 24.41 38.39

(0.00) (0.00) (3.49) (2.81) (3.81) (14.54) (10.17) (16.94) (15.29)

10-year

AAA 22.81 36.93 9.06 2.16 0.14 0.32 0.09 1.04 27.46

(12.12) (15.61) (5.13) (2.73) (0.39) (0.68) (0.33) (1.23) (8.31)

AA 1.08 30.75 29.43 4.86 0.41 0.38 0.03 1.23 31.83

(0.88) (6.07) (5.93) (2.12) (0.37) (0.42) (0.09) (1.16) (5.32)

A 0.09 7.78 38.25 9.24 2.09 0.49 0.15 1.95 39.95

(0.35) (2.94) (4.99) (2.80) (1.10) (0.46) (0.24) (0.97) (5.69)

BBB 0.00 1.75 13.67 26.60 3.20 1.04 0.50 4.90 48.34

(0.00) (3.08) (3.71) (5.98) (1.63) (0.51) (0.64) (1.92) (5.26)

BB 0.00 0.09 3.50 14.69 11.47 5.41 0.09 10.02 54.73

(0.00) (0.37) (3.65) (4.68) (7.72) (3.21) (0.28) (8.86) (7.56)

B 0.00 0.00 1.48 5.41 9.33 12.89 0.59 15.41 54.89

(0.00) (0.00) (2.64) (5.83) (4.44) (8.03) (1.66) (10.89) (10.30)

CCC/C 0.00 0.00 0.39 0.39 3.94 9.06 0.00 31.10 55.12

(0.00) (0.00) (4.51) (1.27) (5.77) (9.38) (0.00) (20.52) (17.87)


Table 42

Average Multiyear Global Corporate Transition Matrices (1981-2018): Insurance

(%)


One-year

AAA 87.68 10.13 0.28 0.00 0.07 0.07 0.14 0.00 1.63

(12.08) (11.60) (1.32) (0.00) (0.32) (0.43) (0.87) (0.00) (2.21)

AA 0.58 87.51 7.48 0.36 0.04 0.04 0.07 0.04 3.87



Table 42

Average Multiyear Global Corporate Transition Matrices (1981-2018):Insurance (cont.)

(%)


(1.02) (6.66) (5.67) (0.94) (0.15) (0.14) (0.48) (0.15) (2.24)

A 0.01 2.42 89.81 3.03 0.19 0.08 0.01 0.11 4.34

(0.07) (2.36) (4.55) (2.58) (0.52) (0.25) (0.06) (0.26) (1.90)

BBB 0.00 0.15 5.91 82.12 2.79 0.36 0.30 0.21 8.15

(0.00) (0.73) (3.34) (4.27) (2.70) (1.05) (0.78) (0.71) (3.01)

BB 0.00 0.11 0.43 8.30 72.77 4.04 1.17 0.64 12.55

(0.00) (0.91) (2.10) (9.17) (12.14) (4.44) (3.17) (2.18) (7.31)

B 0.00 0.17 0.35 0.87 7.29 74.13 2.26 2.26 12.67

(0.00) (1.16) (2.68) (2.95) (7.98) (12.99) (4.36) (5.07) (6.85)

CCC/C 0.00 0.00 0.00 0.00 3.57 13.10 40.48 22.62 20.24

(0.00) (0.00) (0.00) (0.00) (11.62) (22.06) (31.39) (26.58) (28.16)

Three-year

AAA 65.65 26.13 1.84 0.00 0.14 0.14 0.28 0.35 5.45

(18.41) (17.54) (2.76) (0.00) (0.55) (0.62) (1.03) (0.89) (5.81)

AA 1.34 68.06 16.96 1.70 0.19 0.24 0.07 0.28 11.16

(2.05) (11.13) (7.12) (2.14) (0.51) (0.59) (0.20) (0.44) (4.18)

A 0.06 5.53 74.02 5.79 0.72 0.14 0.13 0.49 13.13

(0.16) (4.84) (9.17) (3.11) (1.30) (0.67) (0.24) (0.97) (4.38)

BBB 0.00 0.50 13.92 58.74 4.09 0.91 0.44 1.11 20.30

(0.00) (1.60) (5.99) (6.99) (3.13) (1.00) (1.19) (1.84) (4.30)

BB 0.00 0.12 1.78 16.77 41.38 5.11 1.43 2.50 30.92

(0.00) (0.96) (4.34) (11.82) (14.65) (4.67) (4.27) (5.03) (11.19)

B 0.00 0.00 1.91 3.82 14.23 44.16 1.27 7.22 27.39

(0.00) (0.00) (5.37) (8.00) (10.53) (15.24) (2.65) (9.03) (9.89)

CCC/C 0.00 0.00 1.20 2.41 4.82 18.07 14.46 30.12 28.92

(0.00) (0.00) (11.12) (10.91) (10.46) (22.71) (18.64) (28.87) (29.31)

10-year

AAA 23.22 40.28 9.80 1.67 0.15 0.51 0.15 1.67 22.57

(14.18) (14.82) (6.73) (2.70) (0.49) (1.18) (0.55) (1.81) (10.67)

AA 1.37 32.89 28.24 3.86 0.61 0.61 0.06 1.88 30.49

(1.77) (6.14) (5.48) (2.32) (0.73) (0.75) (0.16) (1.12) (5.37)

A 0.22 7.90 44.27 6.80 1.57 0.40 0.35 2.37 36.12

(1.29) (5.11) (10.20) (2.97) (1.82) (0.41) (0.51) (1.70) (7.00)

BBB 0.00 1.74 17.67 30.00 2.44 0.58 0.23 3.95 43.37

(0.00) (4.54) (6.82) (5.19) (2.43) (0.46) (0.73) (4.68) (4.59)



Table 42

Average Multiyear Global Corporate Transition Matrices (1981-2018):Insurance (cont.)

(%)


BB 0.00 0.40 5.86 16.77 11.31 3.23 0.00 13.74 48.69

(0.00) (1.59) (7.73) (8.29) (7.78) (3.84) (0.00) (15.50) (16.27)

B 0.00 0.00 5.58 11.16 9.56 8.37 0.80 16.33 48.21

(0.00) (0.00) (10.18) (16.93) (9.38) (8.66) (4.84) (12.29) (17.21)

CCC/C 0.00 0.00 1.79 0.00 0.00 0.00 0.00 48.21 50.00

(0.00) (0.00) (13.59) (0.00) (0.00) (0.00) (0.00) (32.94) (32.99)


Table 43

Average Multiyear Global Corporate Transition Matrices (1981-2018): FinancialInstitutions

(%)


One-year

AAA 86.03 8.74 0.43 0.21 0.11 0.00 0.00 0.00 4.48

(13.47) (12.97) (1.30) (0.94) (0.80) (0.00) (0.00) (0.00) (4.52)

AA 0.37 86.79 8.55 0.34 0.00 0.00 0.00 0.02 3.93

(0.64) (7.56) (7.03) (0.72) (0.00) (0.00) (0.00) (0.10) (2.35)

A 0.02 2.01 87.55 4.51 0.21 0.05 0.01 0.07 5.57

(0.19) (2.01) (5.41) (3.73) (0.68) (0.15) (0.06) (0.24) (2.97)

BBB 0.00 0.25 3.93 84.28 3.73 0.44 0.04 0.28 7.05

(0.00) (0.69) (3.47) (5.75) (3.18) (1.06) (0.21) (0.72) (2.38)

BB 0.00 0.09 0.09 5.51 76.77 5.16 0.59 0.70 11.09

(0.00) (0.31) (0.67) (3.86) (7.31) (3.77) (1.57) (1.39) (5.93)

B 0.00 0.00 0.04 0.31 6.54 76.20 3.19 2.88 10.83

(0.00) (0.00) (0.53) (0.90) (4.74) (8.16) (4.15) (4.39) (4.27)

CCC/C 0.00 0.00 0.00 0.00 0.79 17.72 46.30 15.87 19.31

(0.00) (0.00) (0.00) (0.00) (3.73) (12.29) (19.05) (14.75) (11.83)

Three-year

AAA 63.59 21.16 1.29 0.86 0.32 0.00 0.00 0.00 12.78

(19.06) (19.34) (3.04) (2.15) (1.05) (0.00) (0.00) (0.00) (7.87)

AA 0.92 65.29 20.29 1.65 0.17 0.07 0.00 0.10 11.52

(0.94) (12.84) (10.40) (1.96) (0.53) (0.38) (0.00) (0.25) (5.07)

A 0.02 4.95 67.66 9.57 1.30 0.30 0.08 0.31 15.81



Table 43

Average Multiyear Global Corporate Transition Matrices (1981-2018): FinancialInstitutions (cont.)

(%)


(0.20) (3.93) (8.14) (3.98) (2.00) (0.52) (0.26) (0.60) (5.93)

BBB 0.00 0.64 9.47 61.00 6.17 1.09 0.28 1.25 20.10

(0.00) (1.25) (6.99) (7.82) (4.14) (1.44) (0.81) (1.92) (5.21)

BB 0.00 0.14 0.44 13.13 46.33 8.52 0.75 3.10 27.58

(0.00) (0.51) (1.27) (5.63) (10.16) (4.75) (1.79) (4.31) (8.76)

B 0.00 0.00 0.00 1.28 13.24 46.95 3.66 8.38 26.48

(0.00) (0.00) (0.00) (2.10) (7.98) (11.63) (3.81) (8.80) (7.97)

CCC/C 0.00 0.00 0.00 0.00 0.88 25.66 9.73 23.01 40.71

(0.00) (0.00) (0.00) (0.00) (3.93) (15.35) (12.62) (16.33) (16.08)

10-year

AAA 22.14 31.43 7.86 2.98 0.12 0.00 0.00 0.00 35.48

(14.35) (18.84) (5.60) (4.85) (0.60) (0.00) (0.00) (0.00) (10.83)

AA 0.79 28.63 30.62 5.86 0.21 0.15 0.00 0.57 33.16

(0.86) (9.16) (7.94) (3.54) (0.51) (0.30) (0.00) (1.80) (6.93)

A 0.00 7.70 34.18 10.89 2.45 0.56 0.02 1.67 42.55

(0.00) (3.53) (4.45) (5.44) (2.22) (0.64) (0.08) (1.26) (6.13)

BBB 0.00 1.75 11.79 25.01 3.55 1.26 0.63 5.35 50.67

(0.00) (2.92) (4.20) (7.23) (2.48) (0.75) (0.95) (2.11) (6.86)

BB 0.00 0.00 2.79 14.06 11.52 6.06 0.12 8.91 56.55

(0.00) (0.00) (3.02) (5.29) (9.65) (4.06) (0.34) (7.98) (10.51)

B 0.00 0.00 0.55 4.09 9.28 13.92 0.55 15.20 56.41

(0.00) (0.00) (1.60) (4.21) (5.22) (9.02) (0.96) (14.36) (11.80)

CCC/C 0.00 0.00 0.00 0.51 5.05 11.62 0.00 26.26 56.57

(0.00) (0.00) (0.00) (1.69) (7.54) (11.37) (0.00) (19.64) (16.62)


Table 44

Average Multiyear Global Corporate Transition Matrices (1981-2018): Nonfinancials

(%)


One-year

AAA 86.95 8.37 0.84 0.00 0.07 0.00 0.00 0.00 3.77

(8.66) (7.91) (1.67) (0.00) (0.34) (0.00) (0.00) (0.00) (4.20)

AA 0.54 86.94 7.64 0.68 0.09 0.12 0.00 0.00 3.99



Table 44

Average Multiyear Global Corporate Transition Matrices (1981-2018): Nonfinancials(cont.)

(%)


(0.75) (5.65) (3.69) (1.01) (0.31) (0.35) (0.00) (0.00) (2.64)

A 0.03 1.26 87.81 6.29 0.36 0.16 0.02 0.03 4.03

(0.11) (1.22) (4.19) (2.46) (0.49) (0.38) (0.09) (0.08) (2.23)

BBB 0.01 0.05 2.99 86.96 3.69 0.48 0.10 0.13 5.61

(0.05) (0.12) (1.73) (4.53) (1.75) (0.71) (0.23) (0.27) (1.89)

BB 0.01 0.01 0.11 4.56 77.83 7.01 0.52 0.64 9.31

(0.06) (0.09) (0.25) (1.80) (4.78) (3.43) (0.65) (0.87) (2.28)

B 0.00 0.02 0.08 0.14 4.73 74.39 4.57 3.52 12.55

(0.00) (0.09) (0.21) (0.21) (2.01) (3.97) (2.23) (3.31) (2.42)

CCC/C 0.00 0.00 0.13 0.22 0.48 12.66 43.25 28.34 14.91

(0.00) (0.00) (0.48) (0.73) (0.85) (8.01) (8.82) (11.26) (5.33)

Three-year

AAA 66.34 18.98 3.53 0.28 0.14 0.07 0.00 0.00 10.66

(11.62) (10.87) (3.18) (1.30) (0.47) (0.32) (0.00) (0.00) (7.47)

AA 1.24 66.18 18.08 2.46 0.56 0.29 0.02 0.03 11.14

(1.05) (10.06) (5.64) (1.99) (0.78) (0.59) (0.08) (0.11) (5.03)

A 0.07 2.94 68.37 14.57 1.38 0.59 0.08 0.12 11.88

(0.11) (2.47) (6.83) (3.70) (1.12) (0.82) (0.15) (0.19) (3.91)

BBB 0.02 0.15 7.35 66.91 7.56 1.77 0.27 0.70 15.27

(0.08) (0.28) (3.27) (8.26) (2.17) (1.49) (0.35) (1.04) (3.88)

BB 0.01 0.04 0.43 10.40 48.03 12.13 1.29 3.94 23.73

(0.06) (0.14) (0.67) (3.28) (7.59) (3.11) (0.89) (3.60) (4.15)

B 0.00 0.03 0.18 0.62 9.64 41.08 4.84 12.79 30.82

(0.05) (0.12) (0.43) (0.73) (3.07) (5.06) (1.74) (7.37) (5.21)

CCC/C 0.00 0.00 0.11 0.63 1.58 16.21 10.02 43.57 27.88

(0.00) (0.00) (0.40) (1.18) (1.82) (6.65) (6.57) (12.74) (8.62)

10-year

AAA 29.21 28.00 10.34 3.92 0.23 0.00 0.00 0.23 28.08

(9.57) (9.70) (4.09) (3.44) (0.61) (0.00) (0.00) (0.55) (9.28)

AA 1.48 25.45 29.40 8.80 1.60 0.46 0.02 0.34 32.44

(1.04) (7.84) (3.81) (3.85) (1.13) (0.52) (0.10) (0.52) (4.44)

A 0.11 3.58 34.96 23.02 3.21 1.25 0.11 1.24 32.53

(0.16) (2.38) (5.27) (4.18) (1.16) (0.82) (0.18) (0.92) (3.60)

BBB 0.02 0.31 10.16 36.29 7.80 2.69 0.23 4.00 38.50

(0.11) (0.32) (3.86) (7.21) (1.33) (1.38) (0.22) (2.40) (4.37)



Table 44

Average Multiyear Global Corporate Transition Matrices (1981-2018): Nonfinancials(cont.)

(%)


BB 0.02 0.07 1.39 10.69 16.45 8.25 0.75 15.27 47.12

(0.08) (0.15) (1.01) (3.32) (4.90) (2.55) (0.42) (5.86) (3.54)

B 0.00 0.03 0.28 2.11 6.62 8.83 0.89 29.43 51.80

(0.00) (0.07) (0.62) (1.58) (1.61) (2.71) (0.52) (7.89) (4.82)

CCC/C 0.00 0.00 0.12 0.77 3.20 3.14 0.36 55.92 36.49

(0.00) (0.00) (0.39) (1.07) (2.45) (2.95) (0.75) (11.86) (9.80)


Appendix II: Gini Methodology

We utilize the Lorenz curve, a graphical representation of the proportionality of a distribution, asone measure of ratings performance, and we summarize this via the Gini coefficient. For thisstudy, the Lorenz curve is plotted with the x-axis showing the cumulative share of issuers,arranged by rating, while the y-axis represents the cumulative share of defaulters, also arrangedby rating. For both axes of the Lorenz curve, the observations are ordered from the low end of theratings scale ('CCC'/'C') to the high end ('AAA').

As an example, if 'CCC'/'C' rated entities made up 10% of the total population of issuers at thestart of the time frame examined (x-axis) and 50% of the defaulters (y-axis), then the coordinate(10, 50) would be the first point on the curve. If S&P Global Ratings' corporate ratings onlyrandomly approximated default risk, the Lorenz curve would fall along the diagonal. Its Ginicoefficient--which is a summary statistic of the Lorenz curve--would thus be zero. If corporateratings were perfectly rank ordered so that all defaults occurred only among the lowest-ratedentities, the curve would capture all of the area above the diagonal on the graph (the ideal curve),and its Gini coefficient would be 1 (see chart 31).

The procedure for calculating the Gini coefficients is illustrated in chart 31: Area B is bounded bythe random curve and the Lorenz curve, while area A is bounded by the Lorenz curve and the idealcurve. The Gini coefficient is defined as area B divided by the total of area A plus area B. In otherwords, the Gini coefficient captures the extent to which actual ratings accuracy diverges from therandom scenario and aspires to the ideal scenario.



Chart 31

Appendix III: Defaults In Profile

In 2018, there were 82 corporate defaults, including nine from confidential issuers, affectingUS$131.7 billion of debt. This appendix provides summaries of the events leading up to eachdefault and, in some cases, events following the default. We also list each company's defaultinginstruments that S&P Global Ratings rates.

Expro Holdings U.K. 3 Ltd.

- US$1.3 billion term B bank loan due Sept. 2, 2021

- US$175 million revolving credit facility bank loan due Sept. 2, 2019

On Jan. 2, 2018, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-basedoilfield services company Expro Holdings U.K. 3 Ltd. to 'D' from 'CCC+'. The downgrade followedExpro's announcement of submitting a plan to reorganize its debt under Chapter 11 of the U.S.Bankruptcy Code, after reaching an agreement with debtholders and shareholders to convert itsdebt into equity (about $1.4 billion).

On March 13, 2018, the ratings on the issuer were withdrawn.



Table 45

Issuer Credit Rating - Expro Holdings U.K. 3 Ltd.

Date To

13-Mar-2018 NR/--/--

02-Jan-2018 D/--/--

01-Nov-2016 CCC+/Negative/--

28-Oct-2016 SD/NM/--

23-Jun-2016 CCC+/Negative/--

17-Sep-2015 CCC+/Stable/--

03-Jun-2015 B-/Watch Neg/--

22-Jan-2015 B-/Stable/--

12-May-2014 B-/Positive/--

27-Jun-2013 B-/Stable/--

25-Jun-2012 B-/Negative/--

30-Mar-2012 CCC+/Watch Pos/--

05-Apr-2011 CCC+/Negative/--

21-Oct-2010 B-/Negative/--

01-Jun-2010 B/Negative/--

03-Dec-2009 B/Stable/--

Fieldwood Energy LLC

- US$1.375 billion revolver bank loan due Sept. 30, 2018

- US$2.143 billion second-lien term bank loan due Sept. 30, 2020

- US$387.6 million first-lien term bank loan due Aug. 31, 2020

- US$517.5 million first-lien last-out term bank loan due Sept. 30, 2020

- US$900 million first-lien term bank loan due Sept. 30, 2018

- US$200 million first-lien guaranteed senior secured due Sept. 28, 2018

On Jan. 3, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based oil and gasexploration and production company Fieldwood Energy LLC to 'D' from 'CCC'. The downgradereflected Fieldwood Energy's decision to skip the interest payments on its first-lien last-out termloan and second-lien term loan and enter into forbearance agreements with certain lenders of itsterm loans.

On Feb. 15, 2018, Fieldwood filed for Chapter 11 with a prepackaged plan to reduce balance sheetdebt by $1.6 billion and transfer ownership of the reorganized company to the junior debtholders.Additionally, as part of the reorganization, the new equity owners arranged for Fieldwood toacquire drilling fields from Noble Group Inc.

On April 23, 2018, S&P Global Ratings raised its issuer credit rating on Fieldwood Energy LLC to'B-' from 'D'. The rating action followed Fieldwood's emergence from bankruptcy and reflected thenew capital structure, the acquisition of Noble Energy Inc.'s Gulf of Mexico assets, and revised



estimates of the company's operating performance.

Table 46

Issuer Credit Rating - Fieldwood Energy LLC

Date To

23-Apr-2018 B-/Stable/--

03-Jan-2018 D/--/--

16-Jun-2016 CCC/Negative/--

13-Jun-2016 SD/NM/--

06-May-2016 CC/Negative/--

09-Feb-2016 CCC/Negative/--

02-Oct-2015 B/Negative/--

10-Sep-2013 B/Stable/--

Liberty Tire Recycling Holdco LLC

- US$170 million term B bank loan due July 7, 2020

On Jan. 4, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based tire collectionand recycling services provider Liberty Tire Recycling Holdco LLC to 'SD' (selective default) from'CC'. The downgrade followed the close of Liberty's exchange offer wherein it exchanged $175million of its outstanding payment-in-kind (PIK) notes due in 2021 for $60 million of new PIK notesdue in 2023 and equity.

On Jan. 8, 2018, S&P Global Ratings raised its issuer credit rating on the company to 'B-' from 'SD',and the ratings on the issuer were subsequently withdrawn.

Table 47

Issuer Credit Rating - Liberty Tire Recycling Holdco LLC

Date To

08-Jan-2018 NR/--/--


04-Jan-2018 SD/NM/--

04-Dec-2017 CC/Watch Neg/--


05-May-2015 NR/--/--

03-Apr-2015 SD/NM/--

23-Feb-2015 CC/Watch Neg/--

08-Jan-2015 CCC-/Watch Neg/--

23-Jul-2014 B-/Negative/--

24-Jul-2013 B-/Stable/--




BIS Industries Ltd.

- US$250 million 11.50% notes due April 1, 2019

On Jan. 16, 2018, S&P Global Ratings lowered its long-term issuer credit rating on Australia-basedmining-logistics issuer BIS Industries Ltd. to 'D' from 'CC'. The rating action followed thecompletion of BIS' scheme of arrangement to recapitalize the company, which we consider to be adistressed exchange. The issuer credit rating was subsequently withdrawn.

Table 48

Issuer Credit Rating - BIS Industries Ltd.

Date To

15-Jan-2018 NR/--/--

15-Jan-2018 D/--/--

20-Jul-2017 CC/Negative/--

22-Feb-2017 CCC-/Negative/--

13-May-2015 B-/Negative/--

12-Mar-2014 B/Stable/--

RGL Reservoir Management Inc.

- US$301 million first-lien term bank due Aug. 16, 2021

- US$45 million revolving bank loan due Aug. 14, 2019

- US$75 million first-lien guaranteed senior secured due Dec. 21, 2024

On Jan. 18, 2018, S&P Global Ratings lowered its long-term issuer credit rating on Canada-basedRGL Reservoir Management Inc. to 'SD' from 'CCC-'. The downgrade followed RGL'srecapitalization of its balance sheet, which reduced long-term debt by more than 80%. We viewedthe transaction as a distressed exchange.

This debt recapitalization transaction effectively extinguished all of the company's previouslyrated first-lien secured debt. On Jan. 23, 2018, S&P Global Ratings raised its long-term issuercredit rating on the company to 'CCC+' from 'SD' and withdrew the 'CCC+' rating on RGL at thecompany's request.

Table 49

Issuer Credit Rating - RGL Reservoir Management Inc.

Date To

23-Jan-2018 NR/--/--

23-Jan-2018 CCC+/Negative/--

18-Jan-2018 SD/NM/--

19-Jun-2017 CCC-/Negative/--


05-May-2016 SD/NM/--



Table 49

Issuer Credit Rating - RGL Reservoir ManagementInc. (cont.)

Date To


20-May-2015 B/Watch Neg/--

25-Jul-2014 B/Stable/--

Philadelphia Energy Solutions Refining and Marketing LLC

- US$550 million term B bank loan due April 4, 2018

- US$100 million first-lien guaranteed senior secured due Oct. 7, 2019

- US$120 million first-lien superpriority senior secured due Dec. 31, 2022

On Jan. 24, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based oil and gasrefining issuer Philadelphia Energy Solutions Refining and Marketing LLC (PES) to 'D' from 'CCC-'.The rating reflected the Chapter 11 bankruptcy filing by the company and its affiliates on Jan. 21,2018. PES announced that it entered into a restructuring support agreement with the holders ofmore than 90% of its term loan B as well as 100% of the holders of its term loan A (not rated byS&P Global Ratings). The ratings on the issuer were withdrawn on March 12, 2018.

Table 50

Issuer Credit Rating - Philadelphia Energy Solutions Refining And Marketing LLC

Date To

12-Mar-2018 NR/--/--

24-Jan-2018 D/--/--

17-Oct-2017 CCC-/Negative/--

21-Aug-2017 CCC/Negative/--

17-Nov-2016 B/Stable/--

16-May-2016 B+/Negative/--

07-Mar-2013 B+/Stable/--

Hovnanian Enterprises Inc.

- US$141.8 million 5.00% notes due Nov. 1, 2021

- US$150 million 7.00% senior unsecured notes due Jan. 15, 2019

- US$220 million 9.125% second-lien notes due Nov. 15, 2020

- US$250 million 8.00% notes due Nov. 1, 2019

- US$400 million 10.50% senior secured noted due July 15, 2024

- US$440 million 10.00% senior secured notes due July 15, 2022



- US$53.2 million 2.00% notes due Nov. 1, 2021

- US$75 million 10.00% second-lien notes due Oct. 15, 2018

- US$75 million 9.50% first-lien notes due Nov. 15, 2020

- US$75 million superpriority term bank loan due Aug. 8, 2019

- US$140 million 7.625% series A

On Jan. 30, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based residentialhomebuilder Hovnanian Enterprises Inc. to 'SD' from 'CC'. The downgrade followed the disclosurethat Hovnanian completed a debt exchange whereby holders of up to $185 million of the 8% seniornotes received newly issued 3.5% unsecured notes due 2026, 5% unsecured notes due 2040, and$26.5 million in cash. We viewed the exchange as distressed because the new securities'maturities extend beyond the original securities' and because we believed there was a realisticpossibility of a conventional default before the exchange.

Following the transaction, S&P Global Ratings raised its issuer credit rating on the company to'CCC+' from 'SD' on Feb. 6, 2018.

Later, on April 6, 2018, S&P Global Ratings lowered the issuer credit rating on HovnanianEnterprises Inc. to 'CC' from 'CCC+'. The downgrade followed Hovnanian's announcement of aproposed exchange offering that would be outstanding until May 3, 2018, which we would view asa distressed exchange, if completed. The issuer credit rating was subsequently raised to 'CCC+'from 'CC', as the minimum exchange condition to its exchange offer was not satisfied and noexisting notes were accepted in the exchange offer.

Table 51

Issuer Credit Rating - Hovnanian Enterprises Inc.

Date To

06-Jul-2018 CCC+/Negative/--

06-Apr-2018 CC/Negative/--

06-Feb-2018 CCC+/Stable/--

30-Jan-2018 SD/NM/--

08-Jan-2018 CC/Watch Neg/--

03-May-2016 CCC+/Negative/--


05-Nov-2012 CCC+/Stable/--

19-Sep-2012 CCC-/Watch Pos/--

27-Jul-2012 CCC-/Positive/--

03-Nov-2011 CCC-/Negative/--

02-Nov-2011 SD/NM/--

05-Oct-2011 CC/Negative/--


14-Sep-2010 CCC+/Negative/--

05-Oct-2009 CCC+/Developing/--

01-Apr-2009 CCC/Negative/--



Table 51

Issuer Credit Rating - Hovnanian EnterprisesInc. (cont.)

Date To

04-Mar-2009 B-/Watch Neg/--

05-Dec-2008 B-/Negative/--

05-Dec-2008 SD/NM/--

30-Oct-2008 B-/Watch Neg/--

15-Feb-2008 B-/Negative/--

16-Jan-2008 B+/Watch Neg/--

21-Nov-2007 B+/Negative/--

15-Aug-2007 BB-/Negative/--

24-May-2007 BB/Negative/--

10-Nov-2006 BB/Stable/--

28-Apr-2004 BB/Positive/--

01-May-2003 BB/Stable/--

06-Mar-2003 BB-/Positive/--

14-Apr-1998 BB-/Stable/--

03-Apr-1998 BB-/Negative/--

iHeartCommunications Inc.

- US$1 billion 9.00% priority guarantee notes due Sept. 15, 2022

- US$1.2 billion 12.00% senior notes due Feb. 1, 2021

- US$1.3 billion term E bank loan due 2019

- US$1.75 billion 9.00% priority guarantee notes due March 1, 2021

- US$175 million 6.875% senior debentures due June 15, 2018

- US$2 billion 9.00% senior secured notes due Dec. 15, 2019

- US$250 million 5.50% notes due Dec. 15, 2016

- US$300 million 7.25% senior debentures due Oct. 15, 2027

- US$5 billion term D bank loan due Jan. 30, 2019

- US$950 million 10.625% priority guarantee notes due 2023

- US$976.373 million 11.25% priority guarantee senior secured notes due March 1, 2021

- US$1.925 billion 7.625% notes series B due March 15, 2020

- US$1.989 billion 6.5% callable bonds due Nov. 15, 2022

- US$275 million 7.625% notes series A due March 15, 2020

- US$735.75 million 6.50% callable bonds due Nov. 15, 2022



- US$350 million 8.75% senior notes due Dec. 15, 2020

On Feb. 1, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based media companyiHeartCommunications Inc. to 'SD' from 'CC' after the company missed a $106 million net cashinterest payment on its 12%/14% senior notes due 2021. On March 14, 2018, iHeart announcedthat it had filed for Chapter 11 bankruptcy protection in the Southern District of Texas, HoustonDivision.

On March 15, 2018, S&P Global Ratings lowered the issuer credit rating on the company to 'D' from'SD'. The ratings on the issuer were subsequently withdrawn on April 18, 2018.

Table 52

Issuer Credit Rating - iHeartCommunications Inc.

Date To

18-Apr-2018 NR/--/--

15-Mar-2018 D/--/--

01-Feb-2018 SD/NM/--

15-Mar-2017 CC/Negative/--


08-Feb-2017 SD/NM/--

21-Dec-2016 CC/Negative/--

15-Dec-2016 SD/NM/--


08-Mar-2016 CCC/Watch Neg/--

07-Jan-2016 CCC/Negative/--

13-Dec-2011 CCC+/Negative/--

11-Dec-2009 CCC+/Positive/--


28-Aug-2009 SD/NM/--

04-Aug-2009 CC/Negative/--


04-May-2009 B-/Watch Neg/--

05-Mar-2009 B-/Negative/--

20-Feb-2009 B-/Watch Neg/--

13-Feb-2009 B/Watch Neg/--


23-Dec-2008 SD/NM/--


18-Jun-2008 B/Stable/--

19-Apr-2007 B+/Watch Neg/--

16-Nov-2006 BB+/Watch Neg/--

26-Oct-2006 BBB-/Watch Neg/--

29-Apr-2005 BBB-/Negative/--



Table 52

Issuer Credit Rating - iHeartCommunicationsInc. (cont.)

Date To

06-May-2003 BBB-/Stable/--

28-Mar-2002 BBB-/Negative/--

06-Oct-2000 BBB-/Stable/--

31-Aug-2000 BBB-/Positive/--

29-Feb-2000 BBB-/Stable/--

04-Oct-1999 BBB-/Negative/--

15-Mar-1999 BBB-/Stable/--

08-Oct-1998 BBB-/Watch Neg/--

26-Sep-1997 BBB-/Stable/--

Cenveo Inc.

- US$105 million 6.00% senior notes due May 15, 2024

- US$250 million 8.50% second-lien notes due Sept. 15, 2022

- US$540 million 6.00% first-lien notes due Aug. 1, 2019

On Feb. 2, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based printingcompany and envelope manufacturer Cenveo Inc. to 'D' from 'CCC+'. The downgrade followed thecompany's announcement that it had filed for Chapter 11 bankruptcy protection in the SouthernDistrict of New York, White Plains. At the time of the filing, Cenveo's adjusted leverage was above10x, which we viewed as unsustainable, despite the company's leading market position inenvelope and label printing.

The ratings on the issuer were withdrawn on March 26, 2018.

Table 53

Issuer Credit Rating - Cenveo Inc.

Date To

26-Mar-2018 NR/--/--

02-Feb-2018 D/--/--


10-Jun-2016 SD/NM/--

11-May-2016 CC/Negative/--


19-Feb-2014 B-/Stable/--

24-Jan-2014 B-/Watch Neg/--

21-Nov-2013 B-/Negative/--




Table 53

Issuer Credit Rating - CenveoInc. (cont.)

Date To

19-Dec-2012 B/Negative/--

02-Oct-2012 B/Watch Neg/--

26-Mar-2012 B/Negative/--


20-Mar-2009 B+/Negative/--

13-Oct-2008 BB-/Negative/--

04-Dec-2007 BB-/Stable/--

14-Feb-2007 B+/Positive/--

27-Dec-2006 B+/Watch Neg/--

02-Nov-2006 B+/Stable/--

09-Aug-2006 B+/Watch Neg/--

25-May-2006 B+/Positive/--

27-Jan-2006 B+/Negative/--


18-Apr-2005 B+/Watch Dev/--

10-Dec-2004 B+/Stable/--

09-Jul-2002 BB-/Negative/--

14-Jan-2000 BB/Negative/--

20-Jul-1998 BB/Stable/--

24-Nov-1997 BB-/Positive/--

04-Nov-1997 BB-/Watch Pos/--

02-Oct-1997 BB-/Positive/--

BrightHouse Group PLC

- EUR220 million 7.875% notes due May 15, 2018

On Feb. 5, 2018, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-basedrent-to-own provider BrightHouse Group PLC to 'D' from 'CC'. The downgrade followedBrightHouse's announcement on Feb. 2, 2018, that it had completed its debt exchange offer. Weviewed the transaction as a distressed exchange because investors would receive less than whatwas promised on the original securities. We therefore considered the exchange as tantamount to adefault on the company's obligations.

The ratings on the issuer were withdrawn on May 10, 2018.



Table 54

Issuer Credit Rating - BrightHouse Group PLC

Date To

10-May-2018 NR/--/--

05-Feb-2018 D/--/--





27-Mar-2015 B-/Stable/--

13-May-2014 B-/Positive/--


Charlotte Russe Inc.

- US$150 million term B bank loan due May 22, 2019

- US$80 million incremental term bank loan due May 22, 2019

On Feb. 5, 2018, S&P Global Ratings lowered the rating on U.S.-based apparel retailer CharlotteRusse Inc. to 'SD' from 'CC'. The downgrade followed the company's completed restructuringtransaction of its first-lien term loan. Pursuant to the agreement, the outstanding $214 millionterm loan was exchanged for a new $90 million term loan, and the maturity date was extended toFebruary 2023. In exchange, the term loan lenders received 100% of the equity of Charlotte Russe,subject to some dilution from the newly formed management equity incentive plan. We havedetermined that this transaction is a distressed exchange.

Later, on Feb. 23, 2018, we raised the issuer credit rating on the company to 'CCC' from 'SD'following the completed debt restructuring.

Table 55

Issuer Credit Rating - Charlotte Russe Inc.

Date To


05-Feb-2018 SD/NM/--


21-Sep-2017 CCC-/Negative/--

06-Feb-2017 CCC+/Negative/--

25-Apr-2016 B-/Negative/--

01-Oct-2015 B/Stable/--

24-Feb-2015 B+/Stable/--

14-Jul-2014 B/Positive/--

25-Feb-2014 B/Stable/--



Table 55

Issuer Credit Rating - Charlotte RusseInc. (cont.)

Date To

08-May-2013 B-/Stable/--

Remington Outdoor Co. Inc.

- US$250 million 7.875% third-lien notes due May 1, 2020

- US$575 million term loan bank loan due April 19, 2019

On Feb. 13, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based gun andammunitions manufacturer Remington Outdoor Co. Inc. to 'D' from 'CCC-'. We lowered the issuercredit rating to 'D' because the interest payment on the company's term loan B was not madewithin the stated five-day grace period, and we view this as a default.

Table 56

Issuer Credit Rating - Remington Outdoor Co. Inc.

Date To

13-Feb-2018 D/--/--


30-Mar-2017 CCC+/Negative/--

24-Mar-2017 B-/Stable/--

Transworld Systems Inc.

- US$440 million 9.50% second-lien notes due Aug. 8, 2021

On Feb. 16, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based accountsreceivable management and business process outsourcing provider Transworld Systems Inc. to 'D'from 'CCC-'. The downgrade followed Transworld's announcement that it did not make its interestpayment due on Feb. 15, 2018, on its 9.5% secured notes due 2021. We did not expect thecompany to make the payment within the grace period, given the company's heavy debt burden.

The ratings on the issuer were withdrawn on May 29, 2018.

Table 57

Issuer Credit Rating - Transworld Systems Inc.

Date To

29-May-2018 NR/--/--

16-Feb-2018 D/--/--

17-Jan-2018 CCC-/Negative/--

02-Jun-2017 CCC/Developing/--



Table 57

Issuer Credit Rating - Transworld SystemsInc. (cont.)

Date To

13-Dec-2016 CCC/Watch Pos/--


27-Jul-2015 B/Negative/--

Tops Holding II Corp.

- US$560 million 8.00% senior notes due Dec. 31, 2022

- US$67.511 million 9.00% senior notes due March 3, 2021

- US$150 million 8.75% senior notes due June 15, 2018

On Feb. 21, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based retailer TopsHolding II Corp. and subsidiaries Tops Holding LLC and Tops Markets LLC to 'D' from 'CCC'following the company's Chapter 11 bankruptcy filing. The ratings were subsequently withdrawnon March 27, 2018.

Table 58

Issuer Credit Rating - Tops Holding II Corp.

Date To

27-Mar-2018 NR/--/--

21-Feb-2018 D/--/--


15-Aug-2017 CCC+/Negative/--

10-Aug-2017 SD/NM/--




08-May-2013 B/Stable/--

Eletson Holdings Inc.

- US$300 million 9.625% first preferred ship mortgage notes due Jan. 15, 2022

On Feb. 22, 2018, S&P Global Ratings lowered its long-term issuer credit rating onLiberia-registered product tanker and liquefied petroleum gas carrier owner and operator EletsonHoldings Inc. to 'SD' from 'CCC+'. The downgrade followed Eletson's announcement that it enteredinto a forbearance agreement with the holders of its ship mortgage notes. This was to suspendcoupon payments beyond the 30-day contractual grace period under the existing notes' indenture,which expired on Feb. 15.



On Aug. 14, 2018, S&P Global Ratings raised the rating to 'CCC' from 'SD'. The rating actionfollowed the company's completed exchange offer and its agreement with bank lenders to deferprincipal payments and waive the loan-to-value covenants.

Table 59

Issuer Credit Rating - Eletson Holdings Inc.

Date To

14-Aug-2018 CCC/Developing/--

22-Feb-2018 SD/NM/--

27-Oct-2017 CCC+/Negative/--

12-Apr-2017 CCC+/Watch Dev/--


30-Oct-2015 B/Positive/--


11-Dec-2013 B/Positive/--

Iconix Brand Group Inc.

- US$300 million term bank loan due Aug. 2, 2022

- US$125 million 5.75% second-lien due May 15, 2023

- US$400 million 1.50% senior subordinated notes due March 15, 2018

On Feb. 23, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based brandmanagement company Iconix Brand Group Inc. to 'SD' from 'CC'. The rating action followed thecompletion of the exchange offer for a $125 million principal amount of convertible notes due inMarch 2018 for an equal amount of new convertible notes due in August 2023 and cash paymentsrepresenting accrued but unpaid interest. We viewed the transaction as a distressed exchange,tantamount to a default, because we believed the noteholders would receive less value thanoriginally promised, given the five-year maturity extension, the ability of Iconix to force conversionof the new convertible notes, and the substantial decline in potential equity conversion value.

On March 16, 2018, S&P Global Ratings raised the rating to 'CCC' from 'SD'. While the company'scapital structure improved after repaying the 2018 convertibles notes, its operations remainedvulnerable. The retail environment remains challenging, and the company continues to have weakliquidity, including a tight covenant cushion over the next two years.

Table 60

Issuer Credit Rating - Iconix Brand Group Inc.

Date To

16-Mar-2018 CCC/Negative/--

23-Feb-2018 SD/NM/--

12-Feb-2018 CC/Negative/--


01-Nov-2017 CCC/Negative/--



Table 60

Issuer Credit Rating - Iconix Brand GroupInc. (cont.)

Date To

09-Aug-2017 B/Negative/--

27-Apr-2017 B/Watch Neg/--





30-Sep-2011 B+/Positive/--

24-Aug-2009 B+/Stable/--

15-Jun-2007 B+/Negative/--

19-Apr-2007 B+/Stable/--

PaperWorks Industries Holding Corp.

- US$365 million 9.50% senior notes due Aug. 15, 2019

On March 6, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based coatedrecycled paperboard manufacturer PaperWorks Industries Holding Corp. to 'SD' from 'CC'following the close of PaperWorks' restructuring transaction. The company exchanged its $360million secured notes outstanding for a new $45 million term loan (unrated) and majorityownership of the company. We view this as a distressed exchange because the existingnoteholders received significantly less than par value. Later, on March 21, 2018, the rating waswithdrawn.

Table 61

Issuer Credit Rating - PaperWorks Industries Holding Corp.

Date To

21-Mar-2018 NR/--/--

06-Mar-2018 SD/NM/--






06-Feb-2012 B-/Watch Neg/--




HGIM Corp.

- US$300 million revolver bank loan due June 18, 2018

- US$875 million term B bank loan due 2020

- US$150 million first-lien guaranteed senior secured due June 18, 2018




On March 8, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based offshoreservice provider HGIM Corp. to 'D' from 'CCC-'. The rating was lowered after the company'sannouncement that it voluntarily filed a prepackaged Chapter 11 bankruptcy. According to thefilings, the debtors secured support for a prepackaged Chapter 11 plan of reorganization fromholders of senior lenders' claims representing over 94% of holdings. Later, on May 14, 2018, therating was withdrawn.

On July 31, 2018, S&P Global Ratings assigned an issuer credit rating of 'B-' to HGIM Corp. Therating reflected the company's still-elevated debt leverage following its debt restructuring andemergence from Chapter 11.

Table 62

Issuer Credit Rating - HGIM Corp.

Date To


14-May-2018 NR/--/--

08-Mar-2018 D/--/--



08-Dec-2015 B-/Stable/--



EV Energy Partners L.P.

- US$500 million 8.00% senior notes due April 15, 2019

On March 16, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based oil and gasexploration and production company EV Energy Partners L.P. to 'D' from 'CCC+'. The downgradereflected the company's announcement that it entered into a restructuring support agreementwith holders of its senior unsecured notes due 2019 and lenders of its reserve-based lendingfacility. This agreement contemplated a comprehensive restructuring of the company's capitalstructure through a proposed prepackaged reorganization plan. We viewed the proposedprepackaged plan of reorganization as a precursor to bankruptcy and tantamount to default.



On July 19, 2018, the ratings on the issuer were withdrawn.

Table 63

Issuer Credit Rating - EV Energy Partners L.P.

Date To

19-Jul-2018 NR/--/--

16-Mar-2018 D/--/--




Claire's Stores Inc.

- US$1.125 billion 9.00% first-lien notes due March 15, 2019

- US$210 million 6.125% first-lien notes due March 15, 2020


- US$450 million 8.875% senior secured second-lien notes due March 15, 2019

- US$75 million first-lien guaranteed senior secured due Feb. 4, 2019

- US$40 million first-lien guaranteed senior secured due Sept. 20, 2021

On March 19, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based specialtyretailer Claire's Stores Inc. to 'D' from 'CC'. The downgrade followed the company's filing of avoluntary petition under Chapter 11 of the U.S. Bankruptcy Code. The company entered intobankruptcy with a restructuring support agreement with its first-lien creditors, representingabout 72% of Claire's first-lien debt, 8% of its second-lien notes, and 83% of its unsecured notes.Claire's expected to eliminate about $1.9 billion in debt and emerge from Chapter 11 in September2018.

On April 19, 2018, the ratings on the issuer were withdrawn.

Table 64

Issuer Credit Rating - Claire's Stores Inc.

Date To

19-Apr-2018 NR/--/--

19-Mar-2018 D/--/--


21-Sep-2016 SD/NM/--

18-Aug-2016 CC/Watch Neg/--

11-May-2016 CCC-/Negative/--

06-May-2016 SD/NM/--





Table 64

Issuer Credit Rating - Claire's Stores Inc.(cont.)

Date To



03-May-2007 B/Negative/--

Noble Group Ltd.

- US$250 million 6.625% notes due Aug 5, 2020

- US$400 million 3.625% medium-term notes series 2 due March 20, 2018

- US$500 million revolving bank loan

- US$750 million 8.75% notes due March 9, 2022

- US$850 million 6.75% notes due Jan. 29, 2020

- US$400 million 6.00% junior subordinated perpetual notes

- US$1.143 billion unsecured revolver due May 18, 2018

On March 20, 2018, S&P Global Ratings lowered its long-term issuer credit rating on HongKong-based commodity trader Noble Group Ltd. to 'D' from 'CC'. We lowered the ratings becauseNoble missed the principal and coupon payment for its 2018 notes due March 20, 2018. Noble alsomissed the coupon payment on its 2022 notes due March 9, 2018. In addition, the company said itwould not make the payments despite being given 30-day grace periods to meet both obligations.The failure to make these payments would trigger cross-defaults on the company's otherobligations. We did not expect Noble to meet any outstanding obligations as the companypreserved its assets during the restructuring process.

On Dec. 23, 2018, the ratings on the issuer were withdrawn.

Table 65

Issuer Credit Rating - Noble Group Ltd.

Date To

23-Dec-2018 NR/--/--

20-Mar-2018 D/--/--

30-Jan-2018 CC/Negative/--

14-Aug-2017 CCC-/Negative/--



26-Feb-2016 BB-/Negative/--

07-Jan-2016 BB+/Watch Neg/--

23-Nov-2015 BBB-/Watch Neg/--

11-Jun-2015 BBB-/Negative/--



Table 65

Issuer Credit Rating - Noble Group Ltd.(cont.)

Date To

04-Mar-2013 BBB-/Stable/--

27-Feb-2012 BBB-/Negative/--

11-Nov-2011 BBB-/Watch Neg/--

18-Sep-2009 BBB-/Stable/--

17-Aug-2009 BB+/Watch Pos/--

16-Jan-2008 BB+/Positive/--

02-Mar-2005 BB+/Stable/--

Sears, Roebuck and Co.

- US$1.25 billion 6.625% senior secured second-lien notes due Oct. 15, 2018


- US$1 billion 7.00% notes due June 1, 2032

- US$1 billion term bank loan due Jan. 29, 2019

- US$1.5 billion revolver bank loan due July 20, 2020

- US$200 million 6.75% senior notes due Jan. 15, 2028

- US$250 million 7.00% notes due July 15, 2042

- US$250 million 7.40% senior unsecured notes due Feb. 1, 2043

- US$250 million 7.50% notes due Oct. 5, 2027


- US$750 million term bank loan due July 20, 2020

- US$169.824 million 6.625% PIK toggle notes convertible due Oct. 15, 2019

- US$214.018 million 8.00% convertible senior unsecured notes due Dec. 15, 2019

- US$169.824 million 6.625% second-lien convertible notes due Oct. 15, 2019

- US$214.018 million 8.00% senior unsecured notes due Dec. 15, 2019

On March 22, 2018, S&P Global Ratings lowered its issuer credit rating on U.S. retailer SearsHoldings Corp. (SHLD) to 'SD' from 'CC'. The ratings were lowered after the close of SHLD'spreviously announced debt exchange transactions. We believed the transaction constituted adistressed exchange. We based this on our view that the PIK option for all exchanged debt and thematurity extension (in certain cases) differed from the original promise on the debt issues andrepresented a distressed exchange under our criteria.

After the completion of the exchange offer, S&P Global Ratings raised the rating to 'CCC-' from'SD' on April 9, 2018. The rating reflected our view that Sears had addressed most but not all of the2018 maturities and would need to continue to raise capital.



On Oct. 15, 2018, S&P Global Ratings lowered its issuer credit rating to 'D' from 'CCC-' followingSears' Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court for the Southern District of NewYork to address its debt-heavy capital structure and money-losing retail operations.

On Nov. 27, 2018, the ratings on the issuer were withdrawn.

Table 66

Issuer Credit Rating - Sears Holdings Corp.

Date To

27-Nov-2018 NR/--/--

15-Oct-2018 D/--/--

09-Apr-2018 CCC-/Negative/--

22-Mar-2018 SD/NM/--


17-Jan-2018 CCC-/Negative/--

27-Oct-2017 CCC/Negative/--


13-Jan-2014 CCC+/Watch Neg/--

17-Aug-2012 CCC+/Stable/--


28-Dec-2011 B/Watch Neg/--

18-Nov-2011 B/Negative/--


19-Nov-2010 BB-/Negative/--

25-Feb-2010 BB-/Stable/--


05-Feb-2009 BB-/Watch Neg/--

04-Dec-2008 BB-/Negative/--

30-May-2008 BB/Negative/--

05-Dec-2007 BB/Stable/--

10-Jul-2007 BB+/Negative/--

21-Jun-2006 BB+/Stable/--

28-Mar-2005 BB+/Negative/--

BI-LO Holding Finance LLC

- US$475 million 8.625% unsecured PIK toggle notes due Sept. 15, 2018

- US$425 million 9.25% senior secured notes due Feb. 15, 2019

- US$900 million asset-based lending revolver bank loan due May 21, 2019

On March 28, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-basedsupermarket chain BI-LO Holding Finance LLC to 'D' from 'CC' after the company's Chapter 11



bankruptcy filing. The company entered into bankruptcy with a restructuring support agreement inplace with a group of creditors holding 80% of the PIK toggle notes issued by BI-LO HoldingFinance LLC. The company planned to continue to operate more than 580 stores, after closing 85underperforming locations and selling more than 30 stores. Under the terms of the agreement, thecompany would eliminate more than $500 million of debt, with the unsecured noteholdersreceiving 100% of equity in the reorganized company.

On May 31, 2018, the ratings on BI-LO Holding Finance LLC were withdrawn.

Table 67

Issuer Credit Rating - BI-LO Holding Finance LLC

Date To

31-May-2018 NR/--/--

28-Mar-2018 D/--/--

19-Mar-2018 CC/Watch Neg/--




NCSG Crane & Heavy Haul Corp.

- US$305 million 9.50% second-lien notes due Aug. 15, 2019

On March 29, 2018, S&P Global Ratings lowered its long-term issuer credit rating onCanada-based NCSG Crane & Heavy Haul Corp. to 'SD' from 'CCC+'. The downgrade reflected thefact that the company missed the interest payment due Feb. 15, 2018, on its second-lien securednotes due August 2019. The missed payment constituted a default under our criteria. The ratingreflected NCSG continuing to pay the interest expenses on its other existing debt securities.

On July 4, 2018, the ratings on the issuer were withdrawn.

Table 68

Issuer Credit Rating - NCSG Crane & Heavy Haul Corp.

Date To

04-Jul-2018 NR/--/--

29-Mar-2018 SD/NM/--




FirstEnergy Solutions Corp.

- US$43 million exempt facilities revolving bonds (shipping project) non-AMT series 2005A dueDec. 1, 2040

- US$82.8 million pollution control credit tenant lease revolving refunding bonds (FirstEnergy



Nuclear Gen Corp. project) series 2005B due Jan. 1, 2034

- US$72.65 million pollution control credit tenant lease revolving refunding bonds (FirstEnergyNuclear Gen Corp. project) series 2005A due Jan. 1, 2035

- US$7.2 million poll credit tenant lease revolving refunding bonds (First Energy Nuclear GenCorp. project) series 2005B due Jan. 1, 2034

- US$90.14 million pollution control revolving refunding bonds (FirstEnergy Generation project)series 2006A due May 15, 2019

- US$60 million pollution control revolving refunding bonds (FirstEnergy Nuclear Generationproject) series 2006A due Jan. 1, 2035

- US$15.5 million pollution control revolving refunding bonds (FirstEnergy Nuclear Generationproject) series 2006B due Dec. 1, 2033

- US$135.55 million pollution control revolving refunding bonds (FirstEnergy Nuclear GenerationCorp.) series 2006B due Dec. 1, 2033

- US$234.52 million poll credit tenant lease revolving refunding bonds (FirstEnergy Generationproject) series 2006A due Dec. 1, 2023

- US$129.61 million poll credit tenant lease revolving refunding bonds (FirstEnergy Generationproject) series 2006B due Dec. 1, 2041

- US$6.45 million pollution control revolving refunding bonds (FirstEnergy Generation Corp.project) non-AMT series 2007A due Aug. 1, 2029

- US$26 million poll control revolving refunding bonds (FirstEnergy Nuclear Generations Corp.project) (non-AMT) series 2010-B due June. 1, 2033

- US$54.6 million poll control revolving refunding bonds (FirstEnergy Nuclear Generations Corp.project) (non-AMT) series 2010-B due June 1, 2033

- US$98.9 million pollution control revolving refunding (First Energy Generation Corp. project)series 2008A due April 1, 2035

- US$23 million pollution control revolving refunding bonds (FirstEnergy Nuclear GenerationCorp. project) series 2008C due Nov. 1, 2032

- US$33 million pollution control revolving refunding bonds (FirstEnergy Nuclear Generationproject) series 2008C due Nov. 1, 2032

- US$50 million pollution control revolving refunding bonds (FirstEnergy Generation Corp.) series2009-B due March 1, 2023

- US$62.5 million pollution control revolving refunding bonds (FirstEnergy Nuclear Gen Corp.project) series 2009-A (non-AMT) due June 1, 2033

- US$6.45 million poll control revolving refund bonds (FirstEnergy Generation Corp. project)(non-AMT) series 2009A due Aug. 1, 2029

- US$9.1 million pollution control revolving refunding bonds (FirstEnergy Nuclear Generationproject) series 2008-B due Oct. 1, 2033

- US$20.45 million pollution control revolving refunding bonds (FirstEnergy Generation Corp.project) series 2008-B due Oct. 1, 2033

- US$46.3 million poll control revolving refunding bonds (FirstEnergy Generation Corp. project)(non-AMT) series 2008-B due Oct. 1, 2047



- US$8 million poll control revolving refunding bonds (FirstEnergy Nuclear Gen Corp. project)series 2010-A (non-AMT) due July 1, 2033

- US$99.1 million pollution control revolving refunding bonds (FirstEnergy Nuclear Gen Corp.project) series 2010-A (non-AMT) due July 1, 2033

- US$46.5 million pollution control revolving refunding bonds (FirstEnergy Nuclear GenerationCorp.) series 2010-C due June 1, 2033

- US$600 million 6.05% exchange senior notes due Aug. 15, 2021

- US$500 million 6.80% exchange senior notes due Aug. 15, 2039

- US$177 million air quality developing revolving bonds (First Energy Generation Corp. project)(non-AMT) series 2009-A due Aug. 1, 2020

On April 2, 2018, S&P Global Ratings lowered its issuer credit rating on Ohio-based producer anddistributor of electricity FirstEnergy Solutions Corp. (FES) to 'D' from 'CCC-'. Several key factors,including decreasing gas prices and weaker-than-expected demand growth, led to weakeningcash flows. This weaker demand pattern also contributed to a number of unexpectedly weakoutcomes in Pennsylvania-Jersey-Maryland capacity auctions, the most recent of which severelyaffect Regional Transmission Organization, where FES' assets are concentrated.

On May 31, 2018, the ratings on the issuer were withdrawn.

Table 69

Issuer Credit Rating - FirstEnergy Solutions Corp.

Date To

31-May-2018 NR/--/--

02-Apr-2018 D/--/--


10-May-2017 CCC/Negative/--


04-Nov-2016 B/Watch Neg/--

01-Aug-2016 BB-/Stable/--

22-Jul-2016 BBB-/Watch Neg/--

28-Apr-2016 BBB-/Negative/--

11-Feb-2010 BBB-/Stable/--

01-Aug-2008 BBB/Stable/--

18-Oct-2007 BBB/Negative/--

26-Mar-2007 BBB/Stable/--

Nine West Holdings Inc.

- US$250 million 6.125% senior unsecured notes due Nov. 15, 2034

- US$300 million term bank loan due Jan. 8, 2020

- US$424 million senior unsecured notes due March 15, 2019



- US$445 million term bank loan due Oct. 8, 2019

On April 6, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based Nine WestHoldings Inc. to 'D' from 'CCC-'. The downgrade followed Nine West's announcement on April 6,2018, that it had filed for Chapter 11 bankruptcy protection.

On April 23, 2018, S&P Global Ratings withdrew its 'D' ratings on Nine West Holdings Inc. at therequest of the issuer.

Table 70

Issuer Credit Rating - Nine West Holdings Inc.

Date To

23-Apr-2018 NR/--/--

06-Apr-2018 D/--/--






Bertucci's Corp.

On April 15, 2018, U.S.-based Italian restaurant chain Bertucci's Corp. defaulted due to adistressed exchange.

This company has not been rated since June 9, 2005, when S&P Global Ratings withdrew its'CCC+' corporate credit and senior unsecured ratings on Bertucci's Corp. at the request of thecompany.

Table 71

Issuer Credit Rating - Bertucci's Corp.

Date To

09-Jun-2005 NR/--/--


22-Aug-2001 B-/Negative/--


22-Nov-2000 B+/Watch Neg/--

18-Aug-1999 B+/Negative/--

08-Jul-1998 B+/Stable/--

Guitar Center Inc.

- US$7 million 9.625% senior unsecured notes due April 15, 2020



On April 16, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based operatingsubsidiary and borrower Guitar Center Inc. to 'SD' from 'CC'. The downgrade followed GuitarCenter's announcement that it completed an exchange offer for $325 million 9.625% seniorunsecured notes due April 2020. The company exchanged the tendered debt for new $318 millionsenior unsecured notes due 2022 and new warrants to purchase shares of Guitar Center Holdings'common stock at par value $0.01 per share. We viewed the exchange offer as distressed andtantamount to a selective default because the PIK feature and maturity extension constituted lessthan the original promise on the notes.

On April 16, 2018, S&P Global Ratings raised its issuer credit rating on the company to 'CCC+' from'SD'. The rating action followed the completed refinancing of the senior secured notes andrestructuring of the unsecured notes. Guitar Center was able to extend debt maturities by twoyears. The closest maturity is now 2021, when the secured notes come due.

Table 72

Issuer Credit Rating - Guitar Center Inc.

Date To


16-Apr-2018 SD/NM/--

12-Mar-2018 CC/Negative/--


Corporacion Electrica Nacional S.A.


On April 24, 2018, S&P Global Ratings lowered its long-term issuer credit rating forVenezuela-based producer and distributor of electric power Corporacion Electrica Nacional S.A.(Corpoelec) to 'SD' from 'CC' and its senior unsecured debt rating to 'D' from 'CC'. The rating actionreflected Corpoelec's failure to make an interest payment and $650 million coupon payment thatwere due on April 10, 2018.

Table 73

Issuer Credit Rating - Corporacion Electrica Nacional S.A.

Date To

24-Apr-2018 SD/NM/--

29-Jan-2018 CC/Watch Neg/--

10-Nov-2017 SD/NM/--

06-Nov-2017 CC/Watch Neg/--

12-Jul-2017 CCC-/Negative/--




23-Apr-2013 B/Negative/--




Gibson Brands Inc.

- US$375 million 8.875% senior secured notes due Aug. 1, 2018

- US$55 million first-lien guaranteed senior secured asset-based revolver loan due Feb. 15, 2022

- US$77.4 million first-lien guaranteed senior secured term A loan due Feb. 15, 2023

On May 1, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based manufacturer ofmusical instruments Gibson Brands Inc. to 'D' from 'CCC-'. The downgrade followed GibsonBrands' announcement on May 1, 2018, that it filed for Chapter 11 bankruptcy protection.

On May 31, 2018, the ratings on the issuer were withdrawn.

Table 74

Issuer Credit Rating - Gibson Brands Inc.

Date To

31-May-2018 NR/--/--

01-May-2018 D/--/--

21-Feb-2018 CCC-/Negative/--

18-Sep-2017 CCC/Negative/--

23-Feb-2017 CCC/Positive/--

28-Jul-2016 CCC/Negative/--




PT MNC Investama Tbk.

- US$365 million 5.875% notes due May 16, 2018

On May 4, 2018, S&P Global Ratings lowered its long-term issuer credit rating on Indonesia-basedmedia and entertainment company PT MNC Investama Tbk. to 'D' from 'CC'. The downgradefollowed the company's announcement that it formalized an exchange offer for US$365 million5.875% senior secured notes due May 16, 2018. The company exchanged approximately US$186million of the debt for new senior unsecured notes and cash. Separately, US$115 million of theexisting notes were converted into subordinated debt. We viewed the exchange as distressed,tantamount to a default, because the subordinated debt and maturity extension constituted lessthan the promise on the original notes.

On May 11, 2018, S&P Global Ratings raised its long-term issuer credit rating on the company to'B-' from 'D'. The upgrade followed the company's completed exchange and successful placementof its US$231 million 9% senior secured notes.



Table 75

Issuer Credit Rating - PT MNC Investama Tbk.

Date To


04-May-2018 D/--/--


02-Feb-2018 CCC-/Watch Neg/--





16-Jul-2015 B+/Negative/--

14-May-2015 BB-/Watch Neg/--


Bank of Astana JSC

- KZT20 billion 9.50% notes due Jan. 27, 2020

- KZT10 billion 12.00% secured notes due Dec. 21, 2025

On May 4, 2018, S&P Global Ratings lowered its long-term issuer credit rating onKazakhstan-based Bank of Astana to 'D' from 'CCC'. The downgrade followed officialannouncements by the Bank of Astana on May 2 and April 28, 2018, that in our understandingimposed extensive temporary restrictions on cash operations and debit operations on due datesfor both corporate and retail clients. We understood that, because of a low liquidity cushion, thebank was unable to process most of its payments in full and on time, or to pay back the majority ofcorporate clients who have requested payment.

On Nov. 27, 2018, S&P Global Ratings said that it has discontinued its 'D' issuer credit rating onBank of Astana JSC following the National Bank of Kazakhstan's revocation of Bank of Astana'sbanking license on Sept. 19, 2018. We understood that the authorities had started the process ofsettling the bank's obligations to creditors in accordance with bankruptcy law.

Table 76

Issuer Credit Rating - Bank Of Astana JSC

Date To

27-Nov-2018 NR/--/--

04-May-2018 D/--/--

24-Apr-2018 CCC/Watch Neg/--




QGOG Constellation S.A.

- US$604.6 million 9.00% cash/0.500% PIK notes due Nov. 9, 2024

- US$700 million 6.25% senior unsecured notes due Nov. 9, 2019

On May 9, 2018, S&P Global Ratings lowered its issuer credit rating on QGOG Constellation S.A. to'D' from 'B'. The downgrade followed the company's announcement that it would miss cashinterest payments on 2019 and 2024 senior notes due on May 9, 2018. QGOG Constellation woulduse the 30-day grace period defined under the terms of the notes in order to advance ongoingnegotiations with its key lenders to reprofile the group's debt.

Table 77

Issuer Credit Rating - QGOG Constellation S.A.

Date To

09-May-2018 D/--/--


13-Feb-2017 B+/Negative/--



17-Dec-2014 BB/Stable/--

09-Nov-2012 BB+/Stable/--

Northern Oil and Gas Inc.

- US$700 million 8.00% notes due June 1, 2020

- US$344 million 9.5% PIK second-lien notes due May 15, 2023

- US$400 million ICE LIBOR 7.75% first-lien senior secured bank loan due Nov. 1, 2022

On May 16, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based oil and gasexploration and production company Northern Oil and Gas Inc. to 'SD' from 'CC'. The downgradefollowed the announcement by Northern Oil and Gas that it completed an exchange that includedthe exchange of about $500 million in unsecured debt for new second-lien secured notes andequity.

On May 29, 2018, S&P Global Ratings raised its issuer credit rating on the company to 'B-' from'SD'. The upgrade followed the completion of the company's debt exchange, which included about$500 million in unsecured debt in exchange for about $344 million in second-lien secured notesand $155 million in equity. The reduction in debt, along with increases in commodity prices, hasled to a significant improvement in the company's leverage positions.

Table 78

Issuer Credit Rating - Northern Oil And Gas Inc.

Date To

19-Sep-2018 B-/Positive/--



Table 78

Issuer Credit Rating - Northern Oil And GasInc. (cont.)

Date To


16-May-2018 SD/NM/--

05-Feb-2018 CC/Negative/--








GetBack S.A.

- PLN30 million 6.00% unsecured notes due Sept. 16, 2018



- PLN1.52 million 6.00% unsecured notes due Oct. 2, 2018

- PLN10 million 6.00% unsecured notes due Dec. 14, 2018

- PLN9.423 million 5.98% unsecured notes due Dec. 19, 2018

- PLN9.82 million 5.98% unsecured notes due Dec. 29, 2018

- PLN20 million 5.9% unsecured notes due Jan. 29, 2019

- PLN13.503 million 5.72% unsecured notes due Feb. 28, 2019

- PLN20 million 5.84% unsecured notes due Feb. 28, 2019

- PLN6.497 million 5.71% unsecured notes due March 17, 2019

- PLN30 million unsecured notes due April 10, 2019

- PLN3.02 million 5.6% unsecured notes due June 24, 2019

- PLN18.5 million 6.2% secured notes due Aug. 8, 2019

- PLN6.605 million 6.22% secured notes due Sept. 16, 2019


- PLN6 million 5.8% unsecured notes due Oct. 1, 2019





- PLN5 million 5.68% unsecured notes due Oct. 30, 2019

- PLN11.299 million 5.79% unsecured notes due Nov. 27, 2019

- PLN20 million unsecured notes due Dec. 30, 2019

- PLN13.279 million unsecured notes due Jan. 30, 2020

- PLN139.3 million 6.1% senior unsecured notes due May 10, 2020

- PLN40 million 5.9% senior unsecured notes due Dec. 30, 2020

- PLN40 million senior unsecured notes due Feb. 16, 2021

- PLN25 million 5.7% senior unsecured notes due April 30, 2021

- PLN12.1479 million 6.11% senior secured notes due Sept. 14, 2021

On April 24, 2018, S&P Global Ratings suspended its 'B' issuer credit rating on Poland-basedfinancial company GetBack S.A. after it was unable to secure sufficient information to accuratelyassess the ratings on GetBack.

On May 17, 2018, S&P Global Ratings reinstated its 'B' long-term issuer credit ratings on GetBackand lowered the rating to 'D'. The downgrade came after the company stopped servicing interestand principal on all of its financial obligations, beyond any possible grace period, and waspursuing an arrangement with its creditors.

On Aug. 6, 2018, we withdrew our ratings on GetBack S.A. at the issuer's request.

Table 79

Issuer Credit Rating - GetBack S.A.

Date To

06-Aug-2018 NR/--/--

17-May-2018 D/--/--

24-Apr-2018 NR/--/--

18-Apr-2018 B/Watch Neg/--

19-Feb-2018 B/Positive/--


Proserv Group Inc.

- US$115 million second-lien bank loan due Dec. 22, 2022

- US$135 million bank loan due Dec. 22, 2022

- US$230 million bank loan due Dec. 22, 2021

- US$60 million revolving credit facility bank loan due Dec. 22, 2019

On May 21, 2018, S&P Global Ratings lowered its issuer credit rating on U.K.-based oilfieldservices company Proserv Group Inc. to 'SD' from 'CCC-'. The downgrade followed the close ofProserv's restructuring transaction. The company had exchanged most of its debt for equity. Weview this as a distressed exchange because the debtholders received less than the originalpromise.



On Aug. 1, 2018, S&P Global Ratings raised its issuer credit rating on Proserv Group Inc. to 'CCC+'from 'SD' following completion of the capital restructuring, resulting in a largely debt-free balancesheet.

Table 80

Issuer Credit Rating - Proserv Group Inc.

Date To

01-Aug-2018 CCC+/Positive/--

21-May-2018 SD/NM/--



23-Jan-2015 B/Negative/--

Triple Point Group Holdings Inc.

- US$125 million second term bank loan due July 10, 2021

- US$310 million first-lien term bank loan due July 10, 2021

- US$40 million revolving bank loan due July 10, 2018

On May 23, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based commoditymanagement software provider Triple Point Group Holdings Inc. to 'SD' from 'CCC'. The downgradefollowed Triple Point parent Helios Software Holdings Inc.'s purchase of $10 million of itssecond-lien term loan at a value below par. We treat the transaction as equivalent to a default,based on our criteria, because investors received less principal and interest than the securitiespromised.

On May 24, 2018, S&P Global Ratings raised its long-term issuer credit rating on Triple Point to'CCC' from 'SD'. The outlook is negative. The rating action reflected Triple Point's weak liquidity,caused by declining revenue from customer attrition in its maintenance segment without enoughsubscription revenue growth to offset it.

Table 81

Issuer Credit Rating - Triple Point Group Holdings Inc.

Date To


23-May-2018 SD/NM/--


15-Mar-2017 CCC+/Stable/--



10-Dec-2013 B/Negative/--





Grupo Senda Autotransporte S.A. de C.V.

- MXN1.725 billion guaranteed unsecured bank loan due Jan. 26, 2023

- MXN475 million guaranteed unsecured bank loan due Jan. 26, 2024

On May 25, 2018, S&P Global Ratings lowered its global issuer credit rating on Mexico-basedtransportation services provider Grupo Senda Autotransporte S.A. de C.V. (Senda) to 'SD' from 'B-'.The downgrade reflected the fact that Senda missed the principal payment related to its MXN70million short-term unsecured notes due May 24, 2018. The missed payment constitutes a defaultunder our criteria.

On July 30, 2018, S&P Global Ratings lowered its global and national scale issuer credit ratings onSenda to 'D' from 'SD' after the company announced that it would file for bankruptcy protection.

Table 82

Issuer Credit Rating - Grupo Senda Autotransporte S.A. de C.V.

Date To

30-Jul-2018 D/--/--

25-May-2018 SD/NM/--






14-Aug-2013 B/Stable/--

17-Oct-2012 B/Positive/--


13-Sep-2010 B-/Stable/--




27-Sep-2007 B+/Positive/--

30-Nov-2006 NR/--/--

18-Sep-2006 B+/Stable/--

Westmoreland Coal Co.

- US$350 million 8.75% notes due Jan. 1, 2022

- US$425 million term bank loan due 2020

- US$120 million delayed draw bank loan due Dec. 31, 2018

- US$175 million first-lien term bank loan due Dec. 31, 2018



- US$90 million first-lien senior secured bank loan due undisclosed

On May 29, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based coal producerWestmoreland Coal Co. (WCC) to 'SD' from 'CCC-'. The downgrade followed WCC's announcementthat it entered into an agreement with its first-lien lenders and creditors to obtain a $110 millionbridge term loan that subordinates the liens securing the rated debt (formerly first-lien) to theliens securing the bridge term loan financing. We consider this transaction distressed because italters the ranking of the secured lenders to a junior position.

On June 19, 2018, we lowered our long-term issuer credit rating on WCC to 'D' from 'SD'. Thedowngrade considered WCC's forbearance agreement. Under our criteria, forbearanceagreements related to missing payments without appropriate compensation constitute a default.The forbearance agreement, in effect through Sept. 30, 2018, deferred interest or principalpayments on WCC's notes and term loan.

On Sept. 7, 2018, S&P Global Ratings withdrew all its ratings on WCC and its issuing subsidiaryOxford Mining Co. LLC at the issuer's request.

Table 83

Issuer Credit Rating - Westmoreland Coal Co.

Date To

07-Sep-2018 NR/--/--

19-Jun-2018 D/--/--

29-May-2018 SD/NM/--

09-Mar-2018 CCC-/Watch Neg/--

16-Nov-2017 CCC/Negative/--





26-Dec-2013 B-/Watch Dev/--

01-Nov-2012 B-/Stable/--

17-Jan-2012 CCC+/Positive/--


Murray Energy Corp.

- US$1.3 billion 11.25% senior secured notes due April 15, 2021

- US$1.585 billion superpriority first-lien term B-2 bank loan due Oct. 17, 2022

- US$1.7 billion B-2 bank loan due 2020

- US$159 million superpriority first-lien term B-3 bank loan due Oct. 17, 2022

- US$175 million term B-3 bank loan due April 17, 2020

- US$498 million 12.00% 1.5-lien notes due April 30, 2024

- US$170 million revolver bank loan due March 26, 2021



- US$425 million 11.50% second-lien notes due April 1, 2023

- US$825 million first-lien term bank loan due March 28, 2022

- US$400 million 9.5% second-lien notes due Dec. 5, 2020

On June 15, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based coal producerMurray Energy Corp. to 'SD' from 'CC'. The downgrade followed Murray's exchange ofapproximately 71% of its $996 million 11.25% senior secured notes due 2021 for newly issued12% (9% cash and 3% PIK) senior notes due 2024, and the exchange of more than 95% of its $1.8billion outstanding term loans due 2020 for newly issued term loans due 2022. Under our criteria,we considered the exchange as tantamount to a default because investors received less valuethan the promise of the original securities, and the offer, in our view, was distressed, rather thanpurely opportunistic.

On June 18, 2018, S&P Global Ratings raised its long-term issuer credit rating on Murray Energy to'CCC+' from 'SD' following the completion of the exchange.

On July 2, 2018, S&P Global Ratings raised its long-term issuer credit rating on Murray Energy to'B-' from 'CCC+' following Murray's refinancing of its revolving credit facility.

Table 84

Issuer Credit Rating - Murray Energy Corp.

Date To


18-Jun-2018 CCC+/Watch Pos/--

15-Jun-2018 SD/NM/--

06-Jun-2018 CC/Watch Neg/--



29-Jan-2016 SD/NM/--

18-Dec-2015 B/Watch Neg/--

07-Jan-2015 B+/Stable/--


29-Oct-2013 B/Watch Neg/--


Trident Holding Co. LLC

- US$155 million second-lien term bank loan due July 31, 2020

- US$340 million first-lien term bank loan due July 31, 2019

- US$75 million revolver bank loan due July 31, 2018

On June 22, 2018, S&P Global Ratings lowered its issuer credit rating on Maryland-based providerof bedside diagnostic services Trident Holding Co. LLC to 'SD' from 'CCC-'. The rating actionfollowed Trident's refinancing transaction that closed on April 30, 2018. The transaction includedthe amendment of credit agreements on first- and second-lien term loans. This amendment



included the extension of maturities to 2022 from 2019 on the first-lien term loan, the introductionof a partial PIK interest payment feature, and the elimination of financial covenants in both thefirst- and second-lien term loans. Furthermore, the liens securing existing term loans would rankjunior to liens securing the new $216 million term loan.

On June 28, 2018, S&P Global Ratings raised its long-term issuer credit rating on Trident to 'CCC+'from 'SD'. The rating reflected the company's new capital structure following Trident's refinancingtransaction that closed on April 30, 2018. On the same day, we withdrew the ratings on thecompany.

Table 85

Issuer Credit Rating - Trident Holding Co. LLC

Date To

28-Jun-2018 NR/--/--


22-Jun-2018 SD/NM/--

22-Nov-2017 CCC-/Watch Neg/--

21-Aug-2017 CCC+/Watch Neg/--


Community Health Systems Inc.

- US$1.7 billion bank loan due Dec. 31, 2018

- US$1 billion 5.125% senior secured notes due Aug. 1, 2021

- US$1 billion revolving bank loan due Jan. 25, 2019

- US$1 billion term A bank loan due Jan. 27, 2019

- US$1 billion term G bank loan due Dec. 31, 2019

- US$1.2 billion 7.125% senior secured notes due July 15, 2020

- US$2 billion 8.00% senior notes due Nov. 15, 2019

- US$3 billion 6.875% senior unsecured notes due Feb. 1, 2022

- US$3.1 billion 6.25% senior notes due March 31, 2023

- US$3.5 billion term H bank loan due Jan. 27, 2021

On June 26, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based hospitaloperator Community Health Systems Inc. to 'SD' from 'CC'. The downgrade followed thecompletion of the exchange of senior notes pursuant to Community's tender offer for senior notesdue 2019, 2020, and 2022. We viewed the tender on the 6.875% notes due 2022 as distressedbecause investors received a material discount to par on these notes.

On June 28, 2018, we raised our long-term issuer credit rating on Community Health Systems to'CCC+' from 'SD'. This rating action followed the completion of the exchange and the launch of aproposed refinancing. The new rating reflects Community's longer-dated debt maturity scheduleand our view that its efforts to rationalize its hospital portfolio, as well as improve financialperformance and cash flow, should strengthen credit measures over the next 12-18 months.



Table 86

Issuer Credit Rating - Community Health Systems Inc.

Date To


26-Jun-2018 SD/NM/--

21-Jun-2018 CC/Negative/--

09-May-2018 CCC-/Watch Neg/--


04-Aug-2017 B-/Stable/--







20-Mar-2007 BB-/Watch Neg/--

15-Dec-2006 BB-/Stable/--

22-Sep-2005 BB-/Positive/--

20-Jun-2002 BB-/Stable/--


Del Monte Foods Inc.

- US$260 million second-lien term bank loan due Aug. 18, 2021

- US$710 million first-lien term bank loan due Feb. 18, 2021

- US$442.55 million first-lien guaranteed senior secured bank loan due Nov. 20, 2020

On June 28, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based Del MonteFoods Inc. to 'SD' from 'CCC-'. The downgrade followed the completion of a tender offer wherebythe parent, Del Monte Pacific Ltd., repurchased $129 million of Del Monte's $260 millionsecond-lien term loan at a 30% discount.

On July 2, 2018, S&P Global Ratings raised its long-term issuer credit rating on Del Monte Foods to'CCC+' from 'SD'. This rating action reflected our reassessment of Del Monte's liquidity positionand capital structure after the completion of the debt buyback.

Table 87

Issuer Credit Rating - Del Monte Foods Inc.

Date To


28-Jun-2018 SD/NM/--

23-Mar-2018 CCC-/Negative/--



Table 87

Issuer Credit Rating - Del Monte FoodsInc. (cont.)

Date To



18-Sep-2014 B/Negative/--


Intelsat S.A.

- US$2 billion 5.50% senior guaranteed notes due Aug. 1, 2023

- US$1.25 billion senior notes due 2024

- US$490 million 9.50% senior notes due 2022

- US$1 billion 8.125% senior notes due June 1, 2023

- US$2 billion 7.75% senior unsecured notes due June 1, 2021

- US$2 billion term B-3 bank loan due Nov. 27, 2023

- US$395 million term B-4 bank loan due Jan. 2, 2024

- US$700 million term B-5 bank loan due Jan. 2, 2024


- US$1.15 billion 7.50% guaranteed senior notes due April 1, 2021

- US$1.5 billion 9.75% senior notes due July 15, 2025

- US$2.2 billion 7.25% guaranteed notes due Oct. 15, 2020

- US$402.5 million 4.5 senior unsecured due June 15, 2025

On July 13, 2018, S&P Global Ratings lowered its issuer credit rating on Luxembourg-based fixedsatellite service provider Intelsat S.A. to 'SD' from 'CCC+'. The downgrade followed Intelsat'srepurchase of senior notes of its subsidiary Intelsat (Luxembourg) S.A. due 2021 at a discount topar. The notes had a face value of about $600 million. We considered this transaction a defaultbecause the lenders received less value than what was originally promised on the notes.

On July 18, 2018, S&P Global Ratings raised its issuer credit rating on Intelsat S.A. to 'CCC+' from'SD'. The rating action followed our review of Intelsat's repurchase of the senior notes belonging toits subsidiary.

Table 88

Issuer Credit Rating - Intelsat S.A.

Date To


13-Jul-2018 SD/NM/--

19-Jun-2017 CCC+/Stable/--



Table 88

Issuer Credit Rating - IntelsatS.A. (cont.)

Date To

26-Sep-2016 SD/NM/--

30-Aug-2016 CC/Watch Neg/--


12-May-2016 SD/NM/--

01-Mar-2016 CCC/Negative/--

22-Feb-2016 B/Watch Neg/--


19-Feb-2015 B+/Watch Neg/--


21-Nov-2013 B/Watch Pos/--


19-Jun-2007 B+/Watch Neg/--

09-Jun-2006 BB-/Stable/--

29-Aug-2005 BB-/Watch Neg/--

03-Feb-2005 BB-/Negative/--

21-Jan-2005 BB-/Stable/--

28-Apr-2004 BBB+/Watch Neg/--

08-Mar-2004 BBB+/Negative/--

29-Oct-2003 BBB+/Stable/--

16-Jul-2003 BBB+/Negative/--

07-Feb-2003 BBB+/Stable/--

11-Dec-2002 A-/Watch Neg/--

22-Aug-2002 A/Watch Neg/--

07-Nov-2001 A/Negative/--

21-Mar-2001 A/Stable/--

HoldIKKS SAS

- EUR320 million 6.75% notes due July 15, 2021

On July 18, 2018, S&P Global Ratings lowered its issuer credit rating on HoldIKKS SAS, the parentcompany of French premium fashion retailer IKKS Group SAS (collectively IKKS), to 'SD' from'CCC-'. The downgrade followed IKKS' missed coupon payment on its €320 million senior securednotes due 2021. We lowered our issuer credit rating on IKKS to 'SD', rather than 'D', because weunderstood that IKKS remained current on the payment obligations under its superseniorrevolving credit facility.

Earlier, the company had obtained consent from more than half of its bondholders to forbear their



enforcement right until Oct. 20 on the nonpayment of its July coupon; this consent was sufficientto ensure that the bondholders would not accelerate the repayment of the senior secured notes onthe nonpayment of this coupon.

Table 89

Issuer Credit Rating - HoldIKKS SAS

Date To

18-Jul-2018 SD/NM/--

07-Jun-2018 CCC-/Watch Neg/--


25-Jul-2016 B-/Negative/--



House of Fraser (UK & Ireland) Ltd.

- GBP175 million notes due Sept. 15, 2020

On July 30, 2018, S&P Global Ratings lowered its long-term issuer credit rating on U.K.department store retailer House of Fraser (UK & Ireland) Ltd. to 'SD' from 'CCC+'. The downgradefollowed House of Fraser receiving court approval to make certain amendments to the terms ofthe group's existing capital structure. We viewed this as distressed because there was apossibility of payment default and an insolvency event if either the group's creditors or the courtshad not approved the transaction.

On Aug. 3, 2018, S&P Global Ratings raised its long-term issuer credit rating on House of Fraser(UK & Ireland) Ltd. to 'CCC-' from 'SD' after the issuer successfully completed the legal process ofextending the maturities of its debt to October 2020, alleviating some short-term liquiditypressures. However, we also noted that we believed there was an elevated risk that House ofFraser would face a near-term liquidity or insolvency event, unless it was able to find additionalsources of cash.

Later, on Aug. 16, 2018, S&P Global Ratings lowered its long-term issuer credit rating on House ofFraser (UK & Ireland) Ltd. to 'D' from 'CCC-'. The rating action followed the issuer's entering of itsoperating subsidiaries into administration on Aug. 10, 2018. Sports Direct International PLC hasnow acquired the business and assets of House of Fraser from the company's administrators for£90 million. On Sept. 19, 2018, we withdrew all of our ratings on House of Fraser (UK & Ireland)Ltd. and its senior secured notes.

Table 90

Issuer Credit Rating - House Of Fraser (UK & Ireland) Ltd.

Date To

19-Sep-2018 NR/--/--

16-Aug-2018 D/--/--

03-Aug-2018 CCC-/Watch Neg/--

30-Jul-2018 SD/NM/--



Table 90

Issuer Credit Rating - House Of Fraser (UK & Ireland)Ltd. (cont.)

Date To

15-Jun-2018 CCC+/Watch Neg/--


26-Sep-2017 B-/Negative/--


23-Apr-2014 B/Watch Dev/--



19-May-2011 B+/Stable/--

Windstream Holdings Inc.


- US$600 million 8.625% senior first-lien notes due Oct. 31, 2025

- US$832.6 million 8.75% senior notes due Dec. 15, 2024

- US$1.25 billion revolving bank loan due April 24, 2020

- US$1.347 billion term B-6 bank loan due March 29, 2021


- US$580 million term B-7 bank loan due Feb. 17, 2024



- US$700 million 7.75% senior notes due Oct. 15, 2020

- US$950 million 7.75% senior notes due Oct. 1, 2021


On Aug. 3, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-basedtelecommunications provider Windstream Holdings Inc. to 'SD' from 'CC'. The rating actionfollowed the issuer's exchange of about $1 billion in face value of subsidiary Windstream ServicesLLC's 7.75% senior notes due in 2021, 7.5% senior notes due in 2022, 7.5% senior notes due in2023, 6.375% senior notes due in 2023, and 8.75% senior notes due in 2024 at a discount to par.We viewed the completed exchange as tantamount to default because lenders were receiving lessthan the face value of these obligations and the company's long-term business prospectsremained weak.

On Aug. 9, 2018, S&P Global Ratings raised its issuer credit rating on Windstream to 'CCC+' from'SD' following the completion of the exchange.



Table 91

Issuer Credit Rating - Windstream Holdings Inc.

Date To

09-Aug-2018 CCC+/Developing/--

03-Aug-2018 SD/NM/--

19-Jun-2018 CC/Negative/--




06-Aug-2015 BB-/Watch Neg/--

12-Mar-2015 BB-/Negative/--

09-Sep-2013 BB-/Stable/--

Fleetcorp Operasyonel Tasit Kiralama ve Turizm A.S.

On Aug. 9, 2018, S&P Global Ratings lowered its long- and short-term issuer credit ratings onTurkey-based operational car leasing and fleet management company Fleetcorp OperasyonelTasit Kiralama ve Turizm A.S. to 'SD' from 'B/B'. The rating was lowered after we received publicinformation that Fleetcorp had failed to pay at least one of its outstanding debt obligations in fulland on time. At the end of July 2018, Fleetcorp's CEO and its chief financial officer both resigned,and no replacement had been appointed at the time of this rating action.

On Nov. 5, 2018, S&P Global Ratings lowered its global and national scale issuer credit ratings onFleetcorp to 'D' from 'SD'. The rating action followed the issuer's filing for "ordinary concordat"(before bankruptcy), a bankruptcy protection scheme in the Turkish legal system. By this move, webelieved, Fleetcorp had defaulted on the majority of its TRY1.5 billion of debt with suppliers andfinancial institutions.

On Dec. 19, 2018, S&P Global Ratings withdrew its 'D' global and national scale issuer creditratings on Fleetcorp after the court officially declared the issuer as bankrupt on Nov. 6, 2018.

Table 92

Issuer Credit Rating - Fleetcorp Operasyonel Tasit Kiralama Ve Turizm A.S.

Date To

19-Dec-2018 NR/--/--

05-Nov-2018 D/--/--

09-Aug-2018 SD/NM/--

04-Jan-2018 B/Stable/--

American Tire Distributors Inc.

- US$1.05 billion 10.25% senior subordinated notes due March 1, 2022

- US$720 million term bank loan due Sept. 1, 2021



- US$165 million first-lien guaranteed senior secured bank loan due April 1, 2020



On Sept. 5, 2018, S&P Global Ratings lowered its long-term issuer credit rating on U.S.-basedAmerican Tire Distributors Inc. (ATD) to 'SD' from 'CCC'. The rating was lowered after ATD deferredan interest payment of approximately $53.8 million and elected to utilize its 30-day grace periodunder the indenture governing the notes.

On Oct. 4, 2018, S&P Global Ratings lowered its issuer credit rating on ATD to 'D' from 'SD' after theissuer filed for Chapter 11 reorganization in the District of Delaware.

Table 93

Issuer Credit Rating - American Tire Distributors Inc.

Date To

04-Oct-2018 D/--/--

05-Sep-2018 SD/NM/--

28-Jun-2018 CCC/Watch Neg/--

25-Apr-2018 CCC+/Watch Neg/--

19-Oct-2017 B-/Stable/--






26-Apr-2010 B/Watch Dev/--




Derindere Turizm Otomotiv Sanayi ve Ticaret A.S.

- TRY56.22 million unsecured floating notes

On Sept. 5, 2018, S&P Global Ratings lowered its long- and short-term issuer credit ratings onTurkey-based fleet leasing company Derindere Turizm Otomotiv Sanayi ve Ticaret A.S. to 'SD' from'CCC+/C'. The downgrade followed the issuer's failure to redeem its TRY50 million short-termbond due on Aug. 31, 2018.

Derindere's profitability and cash flow generation capacity had been badly hit by the severedeterioration of the economic environment in Turkey and by the unfavorable business andoperating conditions in the Turkish fleet leasing sector. The steady weakening of the Turkish lira,increasing domestic interest rates, and Turkish banks' unwillingness to lend after Fleetcorp'sselective default had increased the refinancing risk in the sector.

On Sept. 28, 2018, we withdrew the ratings at the issuer's request.



Table 94

Issuer Credit Rating - Derindere Turizm Otomotiv Sanayi Ve Ticaret A.S.

Date To

28-Sep-2018 NR/--/--

05-Sep-2018 SD/NM/--



Bellatrix Exploration Ltd.


- CAD50 million 6.75% subordinated convertible notes due Sept. 30, 2021

- CAD75 million first-lien senior secured bank loan due Nov. 26, 2019

On Sept. 13, 2018, S&P Global Ratings lowered its long-term issuer credit rating on Canada-basedBellatrix Exploration Ltd. to 'SD' from 'CC'. The downgrade followed Bellatrix's completion of a debtexchange transaction wherein it swapped a portion of senior unsecured notes due 2020 for newsecond-lien notes due 2023. Because the face value offered on the new notes was about 90% ofthe exchanged notes' original par value, we viewed the transaction as distressed.

Table 95

Issuer Credit Rating - Bellatrix Exploration Ltd.

Date To

13-Sep-2018 SD/NM/--





Legacy Reserves L.P.

- US$300 million 8.00% senior unsecured notes due Dec. 1, 2020


- US$300 million second-lien term bank loan due Aug. 31, 2021

- US$1.5 billion first-lien guaranteed senior secured bank loan due April 1, 2019

On Sept. 21, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based oil and gasexploration and production company Legacy Reserves L.P. to 'SD' from 'CC'. The issuer wasdowngraded after it privately negotiated debt exchanges on a combined $130 million of its 8.0%senior notes due 2020 and 6.625% senior notes due 2021 for $130 million of new 8% convertiblesenior notes due 2023 and equity. The exchange was at nominal par value, but the maturityextension and potential of forced conversion into equity led us to assess the value as less than the



original promise.

Subsequently, on Sept. 28, 2018, we raised our issuer credit rating on Legacy Reserves L.P. to'CCC' from 'SD'.

Table 96

Issuer Credit Rating - Legacy Reserves L.P.

Date To


21-Sep-2018 SD/NM/--

18-Sep-2018 CC/Negative/--




16-Jan-2015 B+/Negative/--



Jupiter Resources Inc.

- US$1.125 billion senior notes due Dec. 31, 2022

- US$425 million first-lien guaranteed senior secured bank loan due Sept. 30, 2019

On Oct. 1, 2018, S&P Global Ratings lowered its issuer credit rating on Canada-based explorationand production company Jupiter Resources Inc. to 'D' from 'CCC+'. The downgrade followedJupiter's decision not to make its interest payment due on Oct. 1, 2018, on its 8.5% seniorunsecured notes due 2022, instead entering a 30-day grace period under the notes' indenture.

Subsequently, on Jan. 15, 2019, S&P Global Ratings discontinued its ratings on the company,including the 'D' issuer credit rating.

Table 97

Issuer Credit Rating - Jupiter Resources Inc.

Date To

15-Jan-2019 NR/--/--

01-Oct-2018 D/--/--








China Huayang Economic and Trade Group Co. Ltd.

- CNY1 billion 7.5% unsecured notes due Oct. 30, 2018

- CNY1 billion 7.5% unsecured notes due Dec. 16, 2018

- CNY1 billion 7% unsecured notes due Jan. 12, 2019

- CNY1 billion 7.5% unsecured notes due Jan. 20, 2019

- CNY1 billion 7.5% unsecured notes due May 7, 2019

- CNY800 million 6.25% unsecured notes due June 16, 2019

- CNY800 million 4.8% unsecured notes due Sept. 30, 2020

- CNY1.498 billion 5% unsecured notes due Nov. 22, 2021

- CNY402 million 5.6% unsecured notes due March 21, 2022

- CNY900 million 5.7% unsecured notes due April 27, 2022

- CNY213 million 7.5% unsecured notes due Nov. 2, 2022

On Oct. 2, 2018, S&P Global Ratings lowered its long-term issuer credit rating on Chinesepetrochemicals company China Huayang Economic and Trade Group Co. Ltd. (Huayang) to 'SD'from 'B+'. We lowered the rating on Huayang because the company did not meet payments on itsChinese renminbi-denominated medium-term notes issued in 2015. The missed interest andprincipal amounted to RMB38.4 million and RMB750 million, respectively, and came due on Sept.30, 2018, after investors exercised put options on the notes.

Later, on Nov. 9, 2018, S&P Global Ratings discontinued its 'SD' long-term issuer credit rating onthe company.

Table 98

Issuer Credit Rating - China Huayang Economic And Trade Group Co. Ltd.

Date To

08-Nov-2018 NR/--/--

02-Oct-2018 SD/NM/--


Astaldi SpA

- EUR750 million 7.125% notes due Dec. 1, 2020

- EUR140 million 4.875% senior unsecured notes due June 21, 2024

- EUR319 million revolver A unsecured bank loan due Nov. 7, 2019

- EUR181 million revolver B unsecured bank loan due Nov. 7, 2019

- EUR50 million revolver guaranteed unsecured bank loan due Dec. 31, 2018

- EUR5 million term unsecured bank loan due June 30, 2019

- EUR45 million term guaranteed unsecured bank loan due Dec. 31, 2018



- EUR30 million term unsecured bank loan due June 7, 2020

- EUR10 million term unsecured bank loan due Dec. 31, 2019

- EUR120 million revolver unsecured bank loan due Oct. 31, 2019

- EUR30 million term unsecured bank loan due Oct. 5, 2019

On Oct. 2, 2018, S&P Global Ratings lowered its issuer credit rating on Italian engineering andconstruction group Astaldi SpA to 'D' from 'CCC-'. The downgrade followed Astaldi'sannouncement on Sept. 28, 2018, that its board of directors had applied in a court in Rome for acomposition with creditors "with reservation," in accordance with Italian insolvency law, and tocontinue operations as a going concern following the stalled sale of its bridge in Turkey. Weconsidered these circumstances to be tantamount to a default because the application foresawthe suspension of payments related to outstanding obligations, unless authorized by the court,during the period related to the process of composition with creditors. As such, we did not expectAstaldi to make regular payments on its outstanding debt.

Table 99

Issuer Credit Rating - Astaldi SpA

Date To

02-Oct-2018 D/--/--

03-Sep-2018 CCC-/Developing/--

22-May-2018 CCC/Developing/--





14-Dec-2015 B+/Negative/--

18-Dec-2014 B+/Positive/--


Mattress Firm Holding Corp.

On Oct. 5, 2018, U.S.-based company Mattress Firm Holding Corp. filed for Chapter 11 bankruptcyprotection.

Previously, on Sept. 27, 2016, the ratings on the issuer had been withdrawn at the company'srequest

Table 100

Issuer Credit Rating - Mattress Firm Holding Corp.

Date To

27-Sep-2016 NR/--/--

08-Aug-2016 B+/Watch Pos/--


01-Dec-2015 B+/Watch Neg/--



Table 100

Issuer Credit Rating - Mattress Firm HoldingCorp. (cont.)

Date To



FR Dixie Acquisition Corp.

- US$24 million revolving bank loan due Dec. 18, 2018

- US$280 million term B bank loan due Dec. 18, 2018

On Oct. 10, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based electricalinfrastructure contractor FR Dixie Acquisition Corp. to 'D' from 'CCC'. The downgrade reflected therecently missed interest and principal payments under the company's credit facility. The companyhad entered into a forbearance agreement with certain lenders. We viewed this as a generaldefault and believed the company would likely elect not to meet its debt obligations with lenderswhile it sought an agreement on a financial restructuring plan with them.

Later, on Nov. 13, 2018, the ratings on the company were withdrawn.

Table 101

Issuer Credit Rating - FR Dixie Acquisition Corp.

Date To

13-Nov-2018 NR/--/--

10-Oct-2018 D/--/--

11-Dec-2017 CCC/Negative/--





David's Bridal Inc.

- US$270 million 7.75% senior unsecured notes due Oct. 15, 2020

- US$520 million term loan B bank loan due Oct. 11, 2019

On Oct. 16, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based bridal gownand related apparel retailer David's Bridal Inc. to 'SD' from 'CCC-'. The downgrade followed David'sBridal's deferred interest payment on its $270 million 7.75% unsecured notes maturing 2020.

On Nov. 19, 2018, S&P Global Ratings lowered its issuer credit rating on David's Bridal Inc. to 'D'from 'SD'. The company announced on Nov. 19, 2018, it had filed a prepackaged Chapter 11 underthe U.S. Bankruptcy Code.



Table 102

Issuer Credit Rating - David's Bridal Inc.

Date To

19-Nov-2018 D/--/--

16-Oct-2018 SD/NM/--






29-Aug-2012 B/Watch Neg/--

08-Jan-2007 B/Stable/--

International Bank of Saint-Petersburg

On Oct. 17, 2018, S&P Global Ratings lowered its long-term issuer credit rating on InternationalBank of Saint-Petersburg (IBSP) to 'D' from 'B-'. The downgrade of IBSP reflected our view of theCentral Bank of Russia's (CBR's) regulatory intervention, which included its appointment of atemporary administration at IBSP on Oct. 15, 2018, and the imposition of a three-month paymentmoratorium on IBSP. In our view, this would prevent IBSP from meeting its obligations over thatperiod.

On Nov. 2, 2018, S&P Global Ratings withdrew its 'D/D' long- and short-term issuer credit ratingson IBSP. This followed the CBR's revocation of IBSP's banking license on Oct. 31, 2018, which wasbased on IBSP's failure to comply with federal laws and due to the decrease in the bank's capitaladequacy ratio below the minimum level of 2% set by the regulator.

Table 103

Issuer Credit Rating - International Bank Of Saint-Petersburg

Date To

02-Nov-2018 NR/--/--

17-Oct-2018 D/--/--



24-Sep-2015 B-/Negative/--



02-Sep-2011 B-/Positive/--




03-Jul-2007 CCC+/Positive/--



Table 103

Issuer Credit Rating - International Bank OfSaint-Petersburg (cont.)

Date To

01-Sep-2005 CCC+/Stable/--

12-Sep-2003 CCC/Stable/--

Gastar Exploration Inc.

On Oct. 31, 2018, U.S.-based energy company Gastar Exploration Inc. filed for Chapter 11bankruptcy protection.

Prior to this bankruptcy, on March 16, 2017, S&P Global Ratings had affirmed the 'CCC-' issuercredit rating on Gastar and subsequently withdrew the ratings at the company's request.

Table 104

Issuer Credit Rating - Gastar Exploration Inc.

Date To

16-Mar-2017 NR/--/--




12-Aug-2009 NR/--/--


02-Jul-2009 CCC/Watch Pos/--

11-Nov-2008 CCC/Developing/--

15-Nov-2007 CCC+/Developing/--

Community Choice Financial Inc.






- US$42 million first-lien guaranteed senior secured bank loan due Sept. 6, 2020

On Nov. 5, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based financialservice provider Community Choice Financial Inc. (CCFI) to 'D' from 'CC'. The rating action followedCCFI's decision to defer a $13.72 million Nov. 1 interest payment on its senior secured notes andenter into a 30-day grace period. The missed payments were on the company's outstanding $247million senior secured notes due May 2019 and $13 million senior secured notes due May 2020.



Any default on the senior secured notes would likely trigger a cross-default provision on CCFI's$42 million first-lien secured revolver.

Subsequently, on Dec. 13, 2018, the ratings were withdrawn.

Table 105

Issuer Credit Rating - Community Choice Financial Inc.

Date To

13-Dec-2018 NR/--/--

05-Nov-2018 D/--/--



22-Apr-2016 SD/NM/--




25-Jul-2012 B-/Positive/--




06-Apr-2006 B/Stable/--

PetroQuest Energy Inc.

- US$251.867 million 10.00% notes due Feb. 15, 2021

- US$14.170 million 10.00% notes due Feb. 15, 2021

On Aug. 2, 2018, S&P Global Ratings lowered its issuer credit on Louisiana-based oil and gascompany PetroQuest Energy Inc. to 'CCC-' from 'CCC+' and withdrew the ratings at the company'srequest after the company announced it retained advisers to help explore alternatives for itscapital structure.

The company subsequently filed for Chapter 11 bankruptcy protection on Nov. 7, 2018.

Table 106

Issuer Credit Rating - PetroQuest Energy Inc.

Date To

02-Aug-2018 NR/--/--




07-Oct-2016 SD/NM/--




Table 106

Issuer Credit Rating - PetroQuest EnergyInc. (cont.)

Date To


18-Feb-2016 SD/NM/--




28-May-2010 B-/Watch Pos/--


26-Jan-2009 B-/Negative/--



20-Apr-2006 CCC+/Positive/--

29-Apr-2005 CCC+/Stable/--

FULLBEAUTY Brands Holdings Corp.

- US$345 million second-lien term bank loan due Oct. 13, 2023

- US$820 million first-lien term bank loan due Oct. 14, 2022

On Nov. 8, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based retailerFULLBEAUTY Brands Holdings Corp. to 'D' from 'CCC-'. The downgrade followed the company'smissed interest payment on its $345 million second-lien term loan maturing 2023. Additionally,the company entered into forbearance agreements with its asset-based and first-lien lenders,and we anticipated that it would engage in an out-of-court restructuring across the capitalstructure before the end of the year.

Table 107

Issuer Credit Rating - FULLBEAUTY Brands Holdings Corp.

Date To

08-Nov-2018 D/--/--





Johnston Press PLC

- £225 million 8.625% notes due June 1, 2019



On Nov. 21, 2018, S&P Global Ratings lowered its long-term issuer credit rating on U.K. publisherJohnston Press PLC to 'D' from 'CCC-'. Johnston Press entered a prepack administration on Nov.17, 2018. The group entered into administration, under which a newly incorporated group, JPIMedia, controlled by the group's noteholders, acquired substantially all of Johnston Press' assets.

Table 108

Issuer Credit Rating - Johnston Press PLC

Date To

21-Nov-2018 D/--/--




11-Jul-2014 B/Negative/--

China Automation Group Ltd.

- US$30 million 8.75% guaranteed notes due Dec. 11, 2018

On Nov. 26, 2018, S&P Global Ratings lowered its long-term issuer credit rating on provider ofsafety and critical control systems China Automation Group Ltd. (CAG) to 'SD' from 'CC'. Thedowngrade followed the completion of Tri-Control's US$10 million debt exchange of its 8.75%senior unsecured notes due December 2018 for new 11% senior unsecured notes due November2019. In our opinion, this exchange was not purely opportunistic because, we believed, CAG'snonpayment and default risk would remain high over the next 12 months even if the exchange wascompleted. This was because of CAG's very tight liquidity and large debt maturities.

On Dec. 7, 2018, S&P Global Ratings raised its long-term issuer credit rating on CAG to 'CCC' from'SD'. This rating action reflected our view that the company's payment risk over the next 12months had been reduced.

Table 109

Issuer Credit Rating - China Automation Group Ltd.

Date To


25-Nov-2018 SD/NM/--

14-Nov-2018 CC/Negative/--




16-Jun-2015 B+/Stable/--





Odebrecht Engenharia e Construcao S.A.



- US$500 million 7.00% bonds due April 21, 2020

- US$550 million 4.375% senior unsecured notes due April 25, 2025

- US$600 million 5.125% senior notes bonds due June 26, 2022

- US$750 million 7.50% perpetual notes


On Nov. 26, 2018, S&P Global Ratings lowered its global scale issuer credit rating on Brazil-basedengineering and construction company Odebrecht Engenharia e Construcao S.A. (OEC) to 'D' from'CC' following the company's announcement that Odebrecht Finance Ltd. would not make the$11.5 million interest payment related to its 2025 notes. OEC fully guarantees those notes. OECalso announced that it intended to engage in an out-of-court restructuring across its capitalstructure in order to pursue a more balanced financial position going forward.

Table 110

Issuer Credit Rating - Odebrecht Engenharia E Construcao S.A.

Date To

26-Nov-2018 D/--/--

26-Oct-2018 CC/Watch Neg/--


26-Apr-2018 CCC-/Negative/--





02-May-2016 B+/Watch Neg/--


29-Mar-2016 BB/Negative/--

17-Feb-2016 BB+/Negative/--

12-Nov-2015 BBB-/Negative/--

10-Sep-2015 BBB-/Watch Neg/--

23-Jun-2015 BBB-/Negative/--

03-Feb-2015 BBB/Negative/--

09-May-2014 BBB/Stable/--

16-May-2013 BBB-/Positive/--

23-May-2012 BBB-/Stable/--

20-Jun-2011 BB+/Stable/--

08-Apr-2010 BB/Positive/--



Table 110

Issuer Credit Rating - Odebrecht Engenharia E ConstrucaoS.A. (cont.)

Date To

03-Oct-2007 BB/Stable/--

02-Jun-2006 BB-/Positive/--

19-Sep-2004 BB-/Stable/--

11-Dec-2003 B+/Positive/--

29-Apr-2003 B+/Stable/--


26-Mar-2002 BB-/Negative/--

LBI Media Inc.

- US$115.2 million PIK toggle second-priority secured notes due April 15, 2020

- US$211.5 million 13.50% PIK toggle notes series II due 2020

- US$4.996 million 13.50% notes due April 15, 2020

On Nov. 27, 2018, S&P Global Ratings lowered its issuer credit rating on U.S.-based owner andoperator of Spanish-language radio and television stations LBI Media Inc. to 'D' from 'CC' followingthe company's Chapter 11 bankruptcy filing to address its debt-heavy capital structure andunsustainable interest burden.

Prior to filing for bankruptcy protection, the company was operating under a 30-day grace periodafter it deferred its Nov. 15 interest payments due on its first- and second-lien notes. Thecompany's radio operations have been challenged because of a secular shift in advertisingspending toward digital platforms, as well as competitive challenges from larger rivals, which weexpected to continue over the next year. We believed the company's inability to sufficiently investin marketing and additional content due to its high interest payments had limited its revenuegrowth and profitability over the past few years.

On Jan. 3, 2019, S&P Global Ratings withdrew the ratings on the company.

Table 111

Issuer Credit Rating - LBI Media Inc.

Date To

03-Jan-2019 NR/--/--

27-Nov-2018 D/--/--


22-May-2018 CC/Watch Neg/--


23-Dec-2014 SD/NM/--

25-Nov-2014 CC/Negative/--




Table 111

Issuer Credit Rating - LBI MediaInc. (cont.)

Date To

29-Aug-2013 SD/NM/--


03-Jan-2013 SD/NM/--


29-Oct-2012 D/--/--







11-Apr-2008 B/Stable/--

25-Jun-2007 B/Positive/--


16-Dec-2004 B+/Negative/--

25-Jun-2002 B+/Stable/--

CMC di Ravenna Societa Cooperativa

- EUR250 million 6.875% callable notes due Aug. 1, 2022

- EUR325 million 6.00% notes due Feb. 15, 2023

- EUR165 million bonds due Dec. 31, 2019

On Dec. 6, 2018, S&P Global Ratings lowered its long-term issuer credit rating on Italianengineering and construction group CMC di Ravenna to 'D' from 'CC'. The downgrade followedCMC's announcement on Dec. 2, 2018, that its board of directors would apply on Dec. 4, 2018, tothe Court of Ravenna for a composition with creditors "with reservation," in accordance withItalian insolvency law.

We considered these circumstances to be tantamount to a default because the applicationforesaw the suspension of payments related to outstanding obligations, unless authorized by thecourt, during the period related to the process of composition with creditors. As such, we did notexpect CMC to make regular payments on its outstanding debt.

Table 112

Issuer Credit Rating - CMC Di Ravenna Societa Cooperativa

Date To

06-Dec-2018 D/--/--



Table 112

Issuer Credit Rating - CMC Di Ravenna SocietaCooperativa (cont.)

Date To

13-Nov-2018 CC/Watch Neg/--


21-Sep-2018 B/Watch Neg/--




Parker Drilling Co.

- US$225 million 7.50% senior unsecured notes due Aug. 1, 2020

- US$360 million 6.75% notes due July 15, 2022

On Dec. 12, 2018, S&P Global Ratings lowered its issuer credit rating on Houston-based oil andgas contract drilling services and rental tools provider Parker Drilling Co. to 'D' from 'B-'. Thedowngrade followed Parker Drilling's announcement that it voluntarily filed for Chapter 11bankruptcy.

Table 113

Issuer Credit Rating - Parker Drilling Co.

Date To

12-Dec-2018 D/--/--



29-Sep-2015 B+/Negative/--

05-Feb-2009 B+/Stable/--

30-Jun-2008 B+/Positive/--

02-Oct-2007 B+/Stable/--






06-Jun-2002 B+/Watch Neg/--

22-Oct-1996 B+/Stable/--



Checkout Holding Corp.

- US$1.05 billion first-lien term bank loan series B due April 9, 2021

- US$100 million revolver bank loan due April 9, 2019

- US$460 million second-lien term bank loan series B due 2022

On Dec. 13, 2018, S&P Global Ratings lowered all of its ratings, including the issuer credit ratingand first- and second-lien issue ratings, on U.S.-based print and digital media solutions providerCheckout Holding Corp. and subsidiary Catalina Marketing Corp. to 'D'. The downgrade followedthe issuer's filing for Chapter 11 protection with the Delaware Bankruptcy Court to address itsdebt-heavy capital structure.

Table 114

Issuer Credit Rating - Checkout Holding Corp.

Date To

13-Dec-2018 D/--/--








Sterling Mid-Holdings Ltd.


- US$745 million 12.00% PIK toggle notes due June 16, 2020

On Dec. 13, 2018, S&P Global Ratings lowered its long-term issuer credit rating on SterlingMid-Holdings Ltd. to 'SD' from 'CCC-'. The rating action followed Sterling's decision to restructureits debt agreements on its $922.8 million PIK toggle notes due 2020 (2016 notes) and its $55million 10.5% cash pay notes due 2020 (2014 notes) so that the company could continue makingPIK interest payments on the notes owned by its financial sponsor, Lone Star.

Table 115

Issuer Credit Rating - Sterling Mid-Holdings Ltd.

Date To

13-Dec-2018 SD/NM/--



27-Nov-2017 SD/NM/--



Table 115

Issuer Credit Rating - Sterling Mid-HoldingsLtd. (cont.)

Date To



18-Aug-2016 SD/NM/--

29-Jun-2016 CC/Watch Neg/--





Related Research

- Amid Growing Challenges, The U.S. Speculative-Grade Corporate Default Rate Is Set To Rise To3.1% By December 2019, Feb. 14, 2019

- U.S. Recovery Study: Shrinking Debt Cushions And Rising Covenant-Lite Issuance Are BeginningTo Weigh On Recoveries, Jan. 8, 2019

The use of the term "methodology" in this article refers to data aggregation and calculation methods used in conductingthe research. It does not relate to S&P Global Ratings' methodologies, which are publicly available criteria used todetermine credit ratings.

This report does not constitute a rating action.



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