S&P Global: Global defaults are still high despite dipping in March

Global defaults in March slowed to eight, from 15 in February, but remain above the 10-year average across regions, S&P Global Ratings said in a report published today (see Global Defaults Are Still High Despite Dipping In March). Globally, corporate defaults are now at 37, three fewer than at this time last year but still well above the 10-year average of 27.

The slowdown in March came from the U.S., other developed regions, and the emerging markets--all of which are now below their previous year tallies. European monthly default numbers are similar to ones in February with three defaulted entities. Europe is the only region in which year-to-date defaults are above the 2023 year-to-date tally--increasing to 11 from seven on a quarterly basis and having reached their highest year-to-date tally since 2008.

"The quarterly rise primarily reflects companies needing to restructure their debt obligations, with the media and entertainment and consumer product sectors accounting for about 36% of total European defaults," said S&P Global Ratings credit analyst Ekaterina Tolstova. We expect the European trailing-12-month speculative-grade corporate default rate to go down to 3.5% by December 2024, the same as in December 2023, indicating a stabilization after an expected modest increase over the summer (see "European Speculative-Grade Default Rate To Stabilize At 3.5% By December 2024," published Feb. 15, 2024).

Although Europe has seen elevated defaults in first-quarter 2024, the amount of debt issuers have defaulted on remains low at US$1.5 billion compared to US$4.0 billion for the same period last year, a 63% decrease. Most defaulted debt remains concentrated in the U.S. where it has reached US$33.2 billion in first-quarter 2024, up 53% from the same quarter in 2023. This was primarily driven by telecommunication defaults, which have added US$12.8 billion to the volume of defaulted debt in March.