S&P global speculative-grade default rate climbs to 2.39% in September

By Caroline Salls

Pittsburgh, Nov. 9 – Standard & Poor’s trailing 12-month global speculative-grade default increased to 2.39% in September from 2.32% in August, according to a report released Monday.

S&P said the U.S. corporate speculative-grade default rate expanded to 2.51% in September from 2.48% in August. The European speculative-grade default rate decreased to 1.88% from 2.05%, and the emerging markets default rate increased to 2.42% from 2.06%.

Through Oct. 26, S&P said 90 issuers had defaulted so far in 2015. These defaulted issuers have outstanding debt worth $88.4 billion.

The ratings agency said 11 non-confidential entities have defaulted since its last report, including PrivatBank, Edcon Holdings Ltd., Floworks International LLC, Dex Media Inc., MMM Holdings Inc., American Apparel Inc., SandRidge Energy Inc., Nota Bank, Logan’s Roadhouse Inc., EXCO Resources, Inc. and NYDJ Apparel LLC.

Weakest links increase

S&P said the number of global weakest links increased to 178 as of Oct. 26. The 178 weakest links account for a total of $219 billion of debt.

Weakest links have either negative outlooks or ratings on CreditWatch with negative implications.

Since the most recent report, S&P said it removed 11 entities from the list of weakest links and added 22.

Of the 11 issuers removed, six are in the United States, including Bermuda and the Cayman Islands, three are in Eastern Europe and Middle East Africa (EEMEA) and one each is in Asia Pacific and Europe. Of the 22 issuers added this month, 10 are in the United States, five issuers are in EEMEA, three are in Europe, two are in Canada, and one each in Asia Pacific and Latin America.

The issuers removed from the list included:

• Edcon, SandRidge, Dex and Logan’s were removed because of selective defaults;

• UCI Holdings Ltd., Barminco Holdings Pty Ltd. and Hyva Global BV were removed because their outlooks were revised to stable;

• American Apparel was removed because it defaulted;

• Ukrainian Agrarian Investments SA and MHP SA were removed because they were upgraded and their outlooks revised to stable; and

• DynCorp International Inc. was removed, because it was downgraded and its outlook revised to developing.

The issuers added to the list included:

• Clayton Williams Energy Inc., International Bank of Saint-Petersburg, Kazkommertsbank JSC, PJSC – Bank Uralsib, Elizabeth Arden Inc., USJ Acucar e Alcool S/A and B&N Bank PJSC were added because they were downgraded;

• EDU UK BondCo plc, United Distribution Group Inc., Southcross Holdings Borrower LP, Nesco LLC, FTS International Inc., ProPetro Services Inc., Ural Bank for Reconstruction and Development, Lightstream Resources Ltd. and Nyrstar NV were added because their outlooks were revised to negative;

• Abaco Energy Technologies LLC, Harvest Operations Corp., Templar Energy LLC and Triangle USA Petroleum Corp. were added because they were downgraded and their outlooks were revised to negative;

• Bulgarian Telecommunications Co. AD was added because its CreditWatch status was revised to negative; and

• China Fishery Group Ltd. was added because it was downgraded and its CreditWatch status revised to negative.

Sector vulnerability

Based on the number of weakest links, S&P said the financial institutions and oil and gas sectors are the most vulnerable to default. The financial institutions sector has the greatest number of weakest links with 31 issuers, or 17.4% of the total. The oil and gas sector was next with 30 issuers, or 17% of the total.

The ratings agency said U.S.-based issuers account for 54% of the 178 weakest links, partially reflecting the fact that a large proportion of issuers S&P rates are U.S.-based.

By volume, the 97 U.S.-based weakest links account for about $159 billion of debt, which is 72.6% of the $219 billion total for all weakest links.

Leveraged loans

In the leveraged loan segment, S&P said the trailing-12-month institutional loan default rate, which is based on the number of loans, narrowed slightly to 0.77% in September from 0.78% in August.

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