Default, Transition, and Recovery: 2024 Annual U.S. Corporate Default And Rating Transition Study

The number of rated U.S. defaults ticked up to 86 in 2024 from 82 the previous year as stubborn inflation and higher-for-longer interest rates strained cash flows for some issuers. The consumer services sector led defaults (26), followed by health care/chemicals (16), aerospace/automotive/capital goods/metal (14), and leisure time/media (14). Together, these four sectors accounted for 72% of U.S. corporate defaults in 2024. Meanwhile, downgrades decreased from the previous year. Also, upgrades outpaced downgrades, reversing the trend from 2023, when credit quality deteriorated, particularly among speculative-grade-rated issuers. The U.S. speculative-grade default rate rose to 5.13% in 2024--the highest since 2020--from 4.48% the previous year (see chart 1 and table 1). The data included in this study is as of Jan. 1,

...- The number of rated U.S. corporate defaults increased slightly to 86 in 2024 from 82 in 2023, largely as a result of elevated distressed exchanges. - The consumer/service sector had the highest number of defaulted issuers in 2024, with 26, while the telecommunications sector had the highest amount of defaulted debt, at $83.5 billion (including rated and not rated debt as of Jan. 1, 2024). - Of the defaulters that were rated at the start of the year, all were speculative-grade, an improvement from the two investment-grade defaults in 2023. - Despite the uptick in defaults, overall credit quality improved in 2024. The upgrade rate rose to 8.6% from 6.7% the previous year, while the downgrade rate fell to 6.7% from 9.3%....

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