Default, Transition, and Recovery: 2023 Annual Global Corporate Default And Rating Transition Study

The number of defaults nearly doubled in 2023, rising to 153 (from 85) as inflation and higher interest rates squeezed some issuers' cash flows. Furthermore, financing conditions were challenging for the lowest-rated borrowers and funding liquidity was tight. These conditions heightened the credit stress on the lowest-rated issuers, and the global speculative-grade ('BB+' or lower) default rate rose to 3.7% in 2023 from 1.9% in 2022 (see chart 1 and table 1). With sectors exposed to consumer spending challenged by shifting demand, the consumer/service sector had the most defaults globally (39), while the leisure time/media sector had the highest default rate (5.38%). The U.S. region led defaults (accounting for 96), followed by Europe (30), emerging markets (19), and the other

...- The number of global corporate defaults nearly doubled to 153 in 2023 from 85 in 2022, as higher interest rates added to pressure on the lowest-rated issuers. - The consumer/services sector led the global default tally for a third straight year, accounting for 25% of defaults. - Of the defaulters that were rated at the start of the year, all but two were speculative grade: Silicon Valley Bank and its parent SVB Financial Group, which we rated in the '###' category at the start of 2023. - Even as defaults rose, credit quality broadly improved. We upgraded more issuers (8.8%) than we downgraded (7.4%), and the one-year global Gini ratio (a measure of ratings performance) rose by 7.6 percentage points to 90.7%....

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