This reflects our forward-looking opinion post the reduction in outstanding gross debt by approximately $127 million. ROYAL CARIBBEAN CRUISES LTD . Nick W Kraemer, FRM, New York+ 1 (212) 438 1698; Nivritti Mishra Richhariya, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai, Sundaram Iyer, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Lyndon Fernandes, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Abinash Meher, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, Shripati Pranshu, CRISIL Global Analytical Center, an S&P affiliate, Mumbai, APAC, United States of America, Latin America, Canada, EMEA, APAC. On July 17, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Noble to 'D' from 'CCC-' as the company skipped the interest payment on its 7.75% senior notes due 2024. The pandemic, low demand, and oil prices crisis pushed the company into a weaker liquidity position, making it difficult for the company to repay the amount. Note: Descriptive statistics for regions other than U.S. calculated from 1996 to 2020 due to sample size considerations. On Feb. 4, 2020, S&P Global Ratings lowered its ratings on Lecta S.A. to 'D' from 'SD', on completion of restructuring of its debt obligation, and subsequently withdrew the ratings. Of the 226 corporate defaults in 2020, the majority (146) were from companies in the U.S. and associated tax havens (Bermuda and the Cayman Islands). On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Alta-based frac sand producer and supplier Source Energy Services Ltd. to 'D' from 'CCC-' after the issuer missed the interest payment due on June 15, and we believed the company was unlikely to make the interest payment within the 60-day grace period. This is followed by a rating withdrawal in 1990 and a default in 1993. In other words, the Gini coefficient captures the extent to which actual ratings accuracy diverges from the random scenario and aspires to the ideal scenario. The decision to miss interest payments of about US$15.5 million was based on prioritization of liquidity toward its operations. The new approval includes transfer of ownership to Alloy Topco Ltd. On Oct. 26, 2020, S&P Global Ratings withdrew its ratings on the issuer. On July 20, 2020, we withdrew the ratings on the issuer. In turn, this can result in a relatively fast descent into default (see chart 11). On April 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Australia-based airline company Virgin Australia Holdings Ltd. to 'D' from 'CC' after the company filed for Chapter 15 bankruptcy and announced it would not pay the coupon on its US$425 million senior unsecured notes because of a moratorium on all creditor payments. On July 5, 2019, we removed the 'R' symbol from all rating scales. The proposed reorganization involves the company eliminating more than half of its debt and transferring up to 97% of its equity to lenders. In 2020, speculative-grade rating categories had higher default rates than in 2019, with an increase in the 'BB' category to 0.93% from 0.00%, 'B' category to 3.5% from 1.5%, and 'CCC'/'C' category to 47.5% from 29.8% (see table 3). On May 11, 2020, S&P Global Ratings lowered its issuer credit rating on Colombia-based air transportation company Avianca Holdings S.A. to 'D' from 'CCC-' after the issuer and its subsidiaries and affiliates voluntarily filed for bankruptcy under Chapter 11 in New York to preserve its business structure amid the severe impact of COVID-19 on the global air transportation industry. For the purposes of this study, a corporate rating may also be withdrawn as a result of mergers and acquisitions. The fixed rate loan and the floating rates loans were repurchased at 85% and 84.875% of the original price, respectively. On April 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on New Zealand-based nonbank financier FE Investments Ltd. to 'D' from 'CCC'. On Dec. 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pennsylvania-based high-availability infrastructure and disaster recovery services provider Sungard AS New Holdings LLC to 'SD' from 'B-'. Distressed exchanges (which are typically selective defaults) accounted for 37.6% of all defaults, the same as missed interest or principal payments (37.6%). Earlier on Feb. 13, 2020, we withdrew the ratings at the issuer's request. Consider the following example: An issuer is originally rated 'BB' in mid-1986 and is downgraded to 'B' in 1988. At times, however, some of these subsidiaries might not yet have been covered by a parent's guarantee, or the relationship that combines the default risk of parent and subsidiary might have come to an end or might not have begun. An obligor rated 'SD' (selective default) or 'D' (default) is in default on one or more of its financial obligations, including rated and unrated financial obligations but excluding hybrid instruments classified as regulatory capital or in nonpayment according to terms. On May 25, 2020, S&P Global Ratings withdrew its credit ratings on the issuer. On Feb. 18, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based home dcor and furniture retailer Pier 1 Imports Inc. to 'D' from 'CCC-' after the issuer filed for Chapter 11 bankruptcy. The proportion of defaulters with confidential ratings in 2020 (11.5%) held steady relative to 11% in 2019. On Sept. 14, 2020, we withdrew our ratings on the company. That is, when default pressure is high, economic conditions are such that the likelihood of companies from across the rating spectrum suffering a more rapid deterioration of credit quality is higher. The transaction reduced the company's annual interest payments by about US$19.25 million. We held over 13,000 customer engagement meetings, a 12% increase over 2020. Reduced EBITDA amid the pandemic and oil price crisis in early 2020 stressed the operating performance of the issuer. On June 26, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Irving, Texas-based CEC Entertainment Inc. to 'D' from 'CC' as the company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On June 17, 2020, we withdrew the ratings on the issuer. On June 3, 2020, S&P Global Ratings lowered its issuer credit rating on U.K.-based offshore drilling contractor Valaris PLC to 'D' from 'CCC-' because the company did not paid the June 1 interest payments on its senior notes due 2022 and 2042, and the company continued to discuss the terms of a comprehensive debt restructuring with its debtholders. On May 22, 2020, S&P Global Ratings lowered its long-term issuer credit rating on California-based Guitar Center Inc. to 'SD' from 'CCC'. Conversely, among nonfinancial entities, willingness to operate with higher leverage to fund share buybacks, expand businesses, or finance acquisitions has gradually increased. This appendix provides summaries of the events leading up to each default and, in some cases, events following the default. On June 16, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-based natural gas compression services and equipment provider CSI Compressco L.P. to 'SD' from 'CC'. On April 1, 2020, we raised the issuer credit rating on Yida to CCC-' from 'SD' on a reassessment of the company's credit profile. For this study, 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 arranged by rating. This influx of new speculative-grade issuers has contributed to the growing share of speculative-grade ratings globally, with the U.S. and European regions accounting for roughly two-thirds of the total since 2010. This study limits the reporting of default rates to the 15-year time horizon. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com. The shareholder made an offer to purchase the remaining 2023 notes. Even with a 60-day grace period, we did not expect payments. On April 24, 2020, S&P Global Ratings withdrew its ratings at the issuer's request. The issuer has long struggled to adapt to the business model in a challenging domestic department store space, which shrank further because of the coronavirus pandemic. Given this track record, monitoring the trends of newly assigned ratings could prove useful in anticipating future default activity, based on the observation that years with high numbers of new 'B-' and lower ratings will likely be followed by increased default risk. As an example, the standard deviation applied to the seven-year weighted average global Gini ratio in table 2 (5.3%) was calculated from the time series of all available seven-year Gini ratios by cohort. On April 6, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Texas-headquartered home health provider BW Homecare Holdings LLC to 'SD' from 'CCC'. Various forms of bankruptcy accounted for just over 24% of all defaults. For instance, 92.9% of issuers rated 'A' at the beginning of 2020 were still rated 'A' by Dec. 31, 2020, whereas the comparable share for issuers rated 'B' was only 72%. Moody's Corporation reported revenue of $1.5 billion for the three months ended March 31, 2022, down 5% from the prior-year period. CEC expects to achieve a balance sheet restructuring that supports its reopenings and long-term strategic plans. On Feb. 28, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Pennsylvania-based pet food distributor PFS Holding Corp. (PFS) to 'SD' from 'CCC-' after the issuer missed interest payments on its US$ 280 million first-lien bank loan due on Feb. 18, 2020. The company's new credit group includes wholly owned subsidiary Rocky Mountain Structures Inc. Excludes downgrades to 'D', shown separately in the default column. This scheme was expected to save about 7.6 million per year in cash, but the company was still facing an interest payment of about 35 million and huge rent payments. On July 30, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based oil and gas company Nostrum Oil and Gas PLC to 'SD' from 'CCC-' after the issuer announced nonpayment of interest on 2022 notes and 2025 notes and would likely use the grace period. An 'SD' rating is assigned when S&P Global Ratings believes that the obligor has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner. All companies included in the study are assigned to one or more static pools. The issuer reached an agreement with 78% of its intellectual property notes lender and 71% of its term loan lenders to exchange around US$1.65 billion of debt for equity. The issuer announced a restructuring agreement as well as filed petitions under Chapter 11. Earlier, on Feb. 9, 2020, we lowered the issuer credit rating on Speedcast to 'CCC' from 'B-' after the issuer announced lower 2019 earnings, which intensified pressure on the group's liquidity. This usually leads to shorter time frames from which to calculate default statistics. Multiplying 96.29% by 96.39% results in a 92.81% survival rate to the end of the second year, which leads to a two-year average cumulative default rate of 7.19%. While the one-year default rate for nonfinancial companies has climbed above 3.5% in four cyclical peaks (1991, 2001-2002, 2009, and 2020), the annual default rate for financial services has remained below 2% since 1990 and below 1% for the past 11 years (see chart 18). For example, leisure and media has a much higher proportion of speculative-grade ratings than financial institutions or insurance (see chart 20). On Oct. 8, 2020, S&P Global Ratings lowered its long-term issuer credit rating on Oklahoma-based oil and gas exploration and production company Ascent Resources Utica Holdings LLC to 'SD' from 'CC' after the issuer announced the expiration of its offer to exchange its 2022 senior notes for a combination of a new second-lien term loan due 2025 and new senior notes due 2027. Multiyear transitions. The analysis excludes public information ("pi") ratings and ratings based on the guarantee of another company or government entity. On Nov. 9, 2020, we withdrew the issuer credit ratings on the company at its request. S&P Global Ratings lowered its oil and natural gas price assumptions and forecasted that Brent crude would average $30 per barrel while West Texas Intermediate (WTI) averages $25 per barrel for the remainder of 2020. The rating action followed the issuer's completed exchange of its unsecured notes of cash and PIK. For example, 'AA+' rated issuers were still rated 'AA+' one year later 79.3% of the time, and 'AA' rated issuers were still rated 'AA' one year later 80.9% of the time. On Aug. 26, 2020, S&P Global Ratings raised the issuer credit rating to 'B-' from 'SD'. Of the 198 companies that defaulted in 2020 that were rated at the start of the year, all but 12 were in the 'B' category or lower, and 57% were in the 'CCC'/'C' category, leading to a one-year global Gini ratio of 86.1%. Earlier, on Dec. 30, 2019, S&P Global Ratings lowered its long-term issuer credit rating on Constellis to 'CC' from 'CCC+' after the company entered into a new $110 million priority first-lien term loan. The Default & Recovery Database is part of Moody's Analytics broader Default Suite of products. On Oct. 1, 2020, S&P Global Ratings lowered its long-term issuer credit rating on U.K.-based transportation company Toro Private Holdings I Ltd. to 'SD' from 'CC' after the company completed the announced debt exchange and restructuring, which we view as distressed and tantamount to default, as lenders receive less than the original promise of the debt instruments.