Credit Markets Update Europe - Q4 2021 - S&P Global
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Credit Markets Update Europe
Q4 2021
Sept. 29, 2021
Sarah Limbach Sudeep Kesh This report does not constitute a rating action.
Economist, Credit Markets Research Head of Credit Markets Research
sarah.limbach@spglobal.com sudeep.kesh@spglobal.com
Lyndon Fernandes Evan Gunter
Analyst, Research Director, Ratings Performance Analytics
lyndon.fernandes@spglobal.com evan.gunter@spglobal.comContents Key Takeaways 3 Financing Conditions Highlights 4 Ratings Trends And Outlooks Summary 14 Ratings Actions And Defaults Summary 28 Ratings Additional Details 32 Related Research 37
Key Takeaways – Nonfinancial corporate issuance in Europe over the year to end-August stood nearly 30% below the same period last year, due to weak investment-grade volumes, with speculative-grade issuance up 70%. Meanwhile, financial issuance remained broadly stable from 2020. – €2.01 trillion in European nonfinancial debt matures through 2026, of which €127 billion matures in 2021, on robust issuance volumes. – Transportation is the sector with the highest negative rating bias (54%), followed by media and entertainment, including lodging (37%). This illustrates the persistent vulnerability of sectors hardest hit by pandemic-related restrictions. – Across sectors, the negative rating bias among European corporates declined again over last quarter to 18% from 24% a quarter earlier, pointing to ongoing recovery. – The default rate declined to 4.3% in April, from its peak at 6.1% in March.
Financing Conditions Highlights
Europe Financing | Spreads Are Tight, But Markets Are Fragile
Secondary Market Credit Spreads
– Speculative-grade spreads tightened
GFC median GFC high COVID high Beginning of 2021 Most recent further over the third quarter. Meanwhile,
2,500 European investment-grade spreads
2326
remained stable at 76 basis points. This
indicates further easing of volatility in
2,000 European secondary markets.
– The European Central Bank’s recently
1,500
announced moderate reduction in monthly
net purchases, as part of the pandemic
bps
emergency purchase program (PEPP), does
1,000
984 not represent a stop to QE. The central bank’s
866
asset purchases will continue to support
market liquidity and help contain spreads.
500 355
302 293
237
132 85 76
0
Europe investment-grade Europe speculative-grade
GFC--Great financial crisis. Note: Data as of Sept. 14, 2021. Europe: Andorra, Austria, Belgium, Bulgaria, Czech Republic, Croatia, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Latvia, Liechtenstein, Lithuania, Slovenia, Luxembourg, San Marino, Monaco, Malta, Norway, Netherlands, Poland, Portugal, Romania, Spain, Slovak Republic, Sweden, Switzerland, U.K. Sources: S&P Global Ratings, S&P
Dow Jones Indices, U.S. Federal Reserve Bank of St. Louis, Bank of America Merrill Lynch.
5Europe | Corporate Issuance
– European nonfinancial corporate issuance for 2021 stood nearly 30% below 2020 levels as of Aug. 31.
– By end-August, year-to-date investment-grade issuance stood at about €119 billion, 49% below its August 2020 level. Meanwhile,
speculative-grade issuance was €76 billion, up 71%.
New Nonfinancial Bond Issuance Europe New Bond Issuance By Category
2020, investment-grade 2020, speculative-grade Europe - overall Financial Non-financials
2021, investment-grade 2021, speculative-grade Investment-grade Speculative-grade
400 1,000
900
800
300
700
600
Bil. €
Bil. €
200 500
400
300
100
200
100
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 2019 2020 2021*
Data as of Aug. 31, 2021. Sources: S&P Global Ratings, Refinitiv. Data as of Aug. 31, 2021. *Year to date as of Aug. 31, 2020. Data including both financial and nonfinancial
corporates. Sources: S&P Global Ratings, Refinitiv.
6Europe | Corporate Issuance Regional
Eurozone – In the eurozone, investment-grade nonfinancial issuance was
about one-half its level through August 2021 year on year and
2020, Investment-grade 2020, Speculative-grade
speculative-grade issuance doubled.
2021, Investment-grade 2021, Speculative-grade
300 – Meanwhile, in the Nordic region, investment-grade issuance
200
was only one-third the year-earlier amount, with speculative-
grade issuance nearly doubling.
Bil. €
100
– And in the U.K., investment-grade issuance stood at one-half
0 the year-earlier amount and speculative-grade issuance was
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
at 90% of last year’s level.
Nordic Region U.K.
2020, Investment-grade 2020, Speculative-grade 2020, Investment-grade 2020, Speculative-grade
2021, Investment-grade 2021, Speculative-grade 2021, Investment-grade 2021, Speculative-grade
25 80
20 60
15
Bil. €
Bil. €
40
10
20
5
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Data as of Aug. 31, 2021. Data includes both financials and nonfinancials. Sources: S&P Global Ratings, Refinitiv.
7Europe | Corporate Credit Spread And Yield
Nonfinancial Yields By Rating
9 18
7 14 AA (left scale)
5 10 A (left scale)
bps
bps
3 6 BBB (left scale)
1 2 BB (left scale)
(1) (2) B (right scale)
Data as of Aug. 31, 2020. Data includes both financial and nonfinancial corporates. Sources: S&P Global Ratings, Refinitiv.
Europe Corporate Credit Spread
160 800
Xover five-year (right
120 600 scale)
bps
bps
80 400 Corporate five-year
(left scale)
40 200
Fin. senior five-year
0 0 (left scale)
Data as of Aug. 31, 2021. Data includes both financial and nonfinancial corporates. Sources: S&P Global Ratings, Refinitiv.
8Corporate Issuance | Europe
− Total corporate issuance, including financial and nonfinancial corporates, this year so far stands below last year’s level, but slightly above
2018 and 2019 levels. While nonfinancial corporate issuance declined by a third from 2020, the volume of financial issuance remained
stable.
Europe Cumulative Corporate Bond Issuance
1,000
2009
750
2018
2019
Bil. €
500
2020
250 2021
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Data as of Aug. 31, 2020. Sources: S&P Global Ratings, Refinitv.
9Europe Corporate Issuance | By Market
Europe New Bond Issuance
1,000
800
Europe - overall
600 Financial
Bil. €
400 Non-financials
200 Investment-grade
Speculative-grade
0
2017 2018 2019 2020 2021*
*Denotes YTD data as of Aug. 31, 2020.
Europe New Bond Issuance YTD (Through August)
700
600
500 Europe - overall
400 Financial
Bil. €
300 Non-financials
200 Investment-grade
100 Speculative-grade
0
2016 YTD 2017 YTD 2018 YTD 2019 YTD 2020 YTD 2021 YTD
YTD--Year to end-August for all years. Sources: S&P Global Ratings Research, Refinitiv.
10European Nonfinancials | €2.01 Trillion Matures Through 2026
European Nonfinancial Corporate Maturity Wall
As of 7/1/2020 As of 1/1/2021 As of 7/1/2021
450
400 – Near term: Nonfinancial maturities through
the end of 2022 have fallen to €470 billion on
350
the back of a reduction of 9% over the past
300 year (July 1, 2020-une 30, 2021).
250
Bil. €
– Midterm: Over the past year, annual
200 maturities in 2023-2024 declined a modest
150
3.3% to €728 billion.
100
– Longer term: 2026 saw the largest increase
50 in maturities over the past year, up 20% to
€394 billion.
0
H2 2021 2022 2023 2024 2025 2026
Note: Includes bonds, loans, and revolving credit facilities that are rated by S&P Global Ratings on the respective report date. Source: S&P Global Ratings Research.
11European Nonfinancials | Companies Reducing Near- And Mid-Term
Speculative-Grade Maturities
European Speculative-Grade Nonfinancial Corporate Maturity Wall
As of 7/1/2020 As of 1/1/2021 As of 7/1/2021
200
180
– Near term: €68 billion in speculative-grade
160 debt matures in second-half 2021 to end-
140
2022, after companies reduced this amount
37% over the past year (July 1, 2020-June
120 30, 2021).
Bil. €
100
80 – Midterm: Debt maturing in 2023-2024 also
fell, 15% over the past year.
60
40
– Longer term: Debt maturities rose to a peak
20
of €190 billion in 2026, a 20% increase over
0 the past year.
H2 2021 2022 2023 2024 2025 2026
Includes bonds, loans, and revolving credit facilities that are rated by S&P Global Ratings on the respective report date. Source: S&P Global Ratings Research.
12European Financial Services | €1.96 Trillion Matures Through 2026
European Financial Services Maturity Wall
As of 7/1/2020 As of 1/1/2021 As of 7/1/2021
500
450 – Near term: Maturities peak in 2022 when
€431 billion is scheduled to mature, 98% of
400
which is investment grade.
350
300 – Midterm: Maturities in 2023-2025 rose 9%
over the past year (July 1, 2020-June 30,
Bil. €
250
2021), spurred by new issuance in 1H2021.
200
150
– Longer term: With new issuance, the
100 steepest increase in maturities was in 2026,
50
when maturities increased 26% to €292
billion.
0
H2 2021 2022 2023 2024 2025 2026
Data as of July 1, 2021. Includes bonds, loans, and revolving credit facilities that are rated by S&P Global Ratings on the respective report date. Source: S&P Global Ratings Research.
13Ratings Trends and Outlooks Summary
Europe | Total Rating Actions
– Between February and December 2020, credit quality deteriorated significantly, as downgrades outnumbered upgrades by over 10
times.
– This year through end-August, there were 84 upgrades and 59 downgrades. Over the same period, S&P Global Ratings took 4.5 times
more positive outlook and CreditWatch revisions than negative ones, suggesting future credit improvement.
Total Rating Actions Per Month
100
Negative outlook/
50 CreditWatch revisions
Number of issuers
0 Downgrade
(50)
Upgrade
(100)
(150) Positive outlook/
CreditWatch revisions
(200)
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept
2020 2021
Note: Data includes sovereigns. Data from Feb. 3, 2020, to Sept. 3, 2021. Source: S&P Global Ratings.
15Europe | Total Rating Actions By Sector
– Retail had the highest number of downgrades at 29, compared with eight upgrades. Since February 2020, across sectors, downgrades
outpaced upgrades 3 to 1.
Total Rating Actions Per Sector
60
40 Negative outlook/
Number of issuers
20 CreditWatch revisions
0
Downgrade
(20)
(40)
(60) Upgrade
(80)
(100) Positive outlook/
CreditWatch revisions
(120)
Note: Data includes sovereigns. Data from Feb. 3, 2020, to Sept. 3, 2021. BCS--Business and consumer services. CPS--Commercial and professional services. NBFI--Nonbank financial institutions. Source: S&P Global
Ratings.
16Europe | Total Rating Actions By Country
U.K. issuers faced the highest number of rating actions, with 81 downgrades and 17 upgrades, respectively.
Total Rating Actions Per Country
100
50 Negative outlook/
CreditWatch revisions
Number of issuers
0 Downgrade
(50) Upgrade
(100) Positive outlook/
CreditWatch revisions
(150)
Note: Data includes Sovereign. Data from Feb. 3, 2020, to Sept. 3, 2021. Source: S&P Global Ratings.
17Europe | Rating Distribution
Ratings Distribution Across Sectors
AAA AA A BBB BB B CCC and lower – Just above half of the European rated
0% 20% 40% 60% 80% 100% universe is speculative grade, broadly
Consumer products (136) unchanged from a quarter ago.
Bank (102)
Utility (94) – The increasing number of positive outlook or
Health Care (81) CreditWatch revisions, and the resulting
Media and entertainment (79)
Capital goods (61) decline in negative bias, points to positive
Insurance (61) future trends in rating distribution.
Chemicals, packaging, and environmental services (58)
Homebuilders/real estate Co. (58) – The sectors that have the highest count of
High technology (56) issuers with speculative-grade ratings are
Non-bank financial institutions (44)
Forest products and building materials (43)
consumer products (92 out of 136 issuers),
Telecommunications (42) media and entertainment (68 out of 79), and
Sovereign (38) health care (59 out of 81).
Oil and gas (35)
Retail/restaurants (32)
Transportation (28)
Automotive (27)
Metals, mining, and steel (23)
Aerospace and defense (10)
Data as of Aug. 31, 2021. Media and entertainment includes subsectors media, leisure, lodging, and entertainment. Source: S&P Global Ratings.
18Europe | Downgrade Potential By Sector
Transportation, Leisure, Lodging, And Entertainment Are The Sectors With The Highest Downgrade Potential In Europe, Reflecting The
Persistent Impact From The Pandemic
Current negative bias Five-year average – Transportation, and media and
60 53.6 entertainment (which includes leisure and
50 lodging) are the sectors that have been hurt
Negative bias (%)
31.4
40 36.7 the most by the shocks related to the
21.9
22.7
pandemic and the measures to contain it.
30 25.5 24.1 14.7 13.0
21.3 20.0 12.5 11.9
11.1
– Negative bias in the transportation sector
20 14.8
11.5 9.8 2.6 barely decreased over the past quarter, and
10 5.2 4.7 the difference between the current negative
0 bias and the five year-average highlights the
sector’s vulnerability to the current crisis.
– Meanwhile, the negative bias in the media
and entertainment sector decreased 14
percentage points to 34% as of Aug. 31,
illustrating the sector’s recovery.
Data as of Aug. 31, 2021.Includes sectors that have more than five issuers. CPES--Chemicals, packaging, and environmental services. Source: S&P Global Ratings Research.
19Europe | Downgrade Potential
Share Of Negative Outlooks And CreditWatch Placements Highlights Sectors Most Vulnerable To Downgrades
Negative CreditWatch Negative outlook
60
– Transportation is the sector with the
Percentage of rated universe
highest negative bias, with more than half of
50 rated issuers carrying either a negative
40 outlook or a CreditWatch placement with
30 negative implications.
20 – It is also the sector with the most
immediate downgrade potential, with 3.6%
10
of ratings placed on CreditWatch with
0 negative implications.
– CreditWatch placements indicate higher
short-term vulnerability to rating actions as
they are acted on within a shorter timeframe
than outlooks.
Data as of Aug. 31, 2021. Media and entertainment includes subsectors media, leisure, lodging, and entertainment. CPES--Chemicals, packaging, and environmental services. Source: S&P Global Ratings Research.
20Europe | Outlook And CreditWatch Distribution
– The sectors with the highest downgrade potential today show a much lower long-term downgrade potential, illustrating that their
vulnerability largely stems from the COVID-19’s economic consequences. Downgrade potential and thus vulnerability is decreasing across
sectors.
– The level of debt issued, especially among the lowest rated issuers, who are also those facing the most elevated risk of downgrade, is an
element to watch closely.
Current Versus Historical Average Negative Bias By Sector Total Debt Of Issuers Rated ‘B-’ And Below, By Sector
60
Neg/Negative Stable Positive
Transportation 60
Number of issuers
50 50
Media and 40
entertainment
30
Current negative bias in %
40
Utility 20
Non-bank financial 10
30 Homebuilders/real Oil and gas institutions
estate Co. Consumer 0
products
Bank Aerospace and
20 Retail/restaurants defense
Telecommunications Automotive Metals, mining and
Health care steel
Chemicals,
10 High technology packaging, and
Insurance environmental
Forest products and services
Capital goods building materials
0 Sovereign
0 20 10
30 40 50 60
Long-term negative bias in %
Data as of Aug. 31, 2021. Media and entertainment includes the subsectors media, leisure, lodging, and entertainment. CPES--Chemicals, packaging, and environmental services. Source: S&P Global Ratings.
21Europe | Outlook And CreditWatch Distribution
– About 22% of speculative-grade issuers face downgrade risks, while 31% of risky credits (issuers rated ‘B-’ and below) are vulnerable
to credit deterioration.
– Leisure, media and entertainment, and consumer products are the sectors with the highest number of negative outlooks and ratings on
CreditWatch with negative implications.
Distribution By Ratings Distribution By Sectors
Outlook negative or Creditwatch negative Stable Outlook positive or Creditwatch positive CreditWatch negative Negative outlook Stable Positive outlook CreditWatch positive
Riskiest Consumer products
200
issuers Bank
Utility
180
Health care
160 Media and entertainment
Insurance
140 Capital goods
Number of issuers
CPES
120 Homebuilders/real estate Co.
High technology
100 Non-bank financial institutions
Forest products and building materials
80 Telecommunications
Sovereign
60 Oil and gas
Retail/restaurants
40 Transportation
Automotive
20
Metals, mining, and steel
Aerospace and defense
0
0 50 100 150
Number of issuers
Data as of Aug. 31, 2021. Media and entertainment includes the subsectors media, leisure, lodging, and entertainment. CPES--Chemicals, packaging, and environmental services. Source: S&P Global Ratings.
22Ratings Action | Fallen Angels And Potential Fallen Angels
– In 2021 so far, there has been only one European fallen angel, TechnipFMC based in the U.K., with outstanding debt of about €2.6 billion
on Feb. 17, 2021, the date of the rating action. The total count last year was 14 fallen angels.
– The count of potential fallen angels decreased to 20 as of end-August, representing €66 billion of total debt affected.
– For more information, see “'BBB' Pulse: Two Fallen Angels Were Downgraded In July Amid A Lull In Rising Stars,” published Aug. 25, 2021.
Fallen Angels And Average Potential Fallen Angels By Year Potential Fallen Angels
Fallen angels Average potential fallen angel Potential fallen angels count (left scale) Debt amount affected (right scale)
35 7 21
6 18
Number of issuers
30 5 15
4 12
Bil €
25
3 9
Number of issuers
2 6
20
1 3
15 0 0
10
5
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
*Data as of Aug. 31, 2021. Source: S&P Global Ratings Research. Fallen angels are issuers downgraded to Data as of Aug. 31, 2021. Media and entertainment includes subsectors media, leisure, lodging, and
speculative grade, 'BB+' or below, from investment grade, 'BBB-' or above. entertainment. Source: S&P Global Ratings Research.
23Rating Actions | Corporate Fallen Angels With Highest Debt
Rating date Issuer To From Sector Country Rated debt amount (mil. $)
4/9/2020 Renault S.A. BB+ BBB- Automotive France $24,979
1/13/2020 Atlantia SpA BB- BBB- Utility Italy $16,297
7/20/2020 IHO Verwaltungs GmbH BB+ BBB- Automotive Germany $8,608
4/3/2020 ZF Friedrichshafen AG BB+ BBB- Automotive Germany $7,027
8/17/2020 Accor S.A. BB+ BBB- Media and entertainment France $5,490
7/31/2020 Valeo S.A. BB+ BBB- Automotive France $4,108
Rolls-Royce PLC (Rolls-Royce
5/28/2020 BB BBB- Aerospace & defense U.K. $3,996
Holdings PLC)
Oil and gas exploration and
2/17/2021 TechnipFMC PLC BB+ BBB+ U.K. $2,572
production
Marks & Spencer PLC (Marks
3/26/2020 BB+ BBB- Retail/restaurants U.K. $2,068
& Spencer Group PLC)
3/27/2020 Esselunga SpA BB+ BBB- Retail/restaurants Italy $1,105
International Consolidated
5/20/2020 BB BBB- Transportation Spain $1,086
Airlines Group S.A.
5/20/2020 Deutsche Lufthansa AG BB+ BBB- Transportation Germany $1,086
12/22/2020 GKN Holdings Ltd. BB+ BBB- Automotive U.K. $1,012
Immobiliare Grande
3/23/2020 BB+ BBB- Homebuilders/real estate Italy $855
Distribuzione SIIQ SpA
5/20/2020 British Airways PLC BB BBB- Transportation U.K. $806
Data as of Aug 31, 2021. Source: S&P Global Ratings Research.
24Ratings Action | Rating Changes From 'B-' To 'CCC’ Top 20 Last Year
Rating date Issuer Country Sector Rating to Rating from Debt outstanding (mil. $)
9/2/2021 Endo International PLC Ireland Health care CCC+ B- $33,358
Oil and gas exploration and
3/15/2021 CGG France CCC+ B- $2,286
production
Mitel Networks (International)
4/9/2021 U.K. High technology CCC+ B- $1,380
Ltd.
4/16/2021 Ellaktor S.A. Greece Utility CCC+ B- $802
2/24/2021 Arvos LuxCo S.a.r.l. Luxembourg Capital goods CCC B- $591
Altisource Portfolio Solutions
4/2/2021 Luxembourg Finance Co. CCC+ B- $412
S.A.
Debt volume includes subsidiaries. Data as of Aug. 31, 2021. Includes sovereigns. Source: S&P Global Ratings Research.
25Ratings Action | Defaults in 2021
Rating date Issuer Country Sector Rating to Rating from Reason
Promotora de
1/6/2021 Spain Media and entertainment SD CC Distressed exchange
Informaciones S.A.
2/11/2021 Vallourec France Oil and gas SD CC Missed principal payments
CatLuxe Sarl (CatLuxe
2/22/2021 Luxembourg Consumer products SD CCC+ Distressed exchange
Acquistion Sarl)
3/23/2021 Al Mistral Holdco Ltd. U.K. Transportation SD CCC+ Distressed exchange
3/26/2021 Avation PLC U.K. Transportation SD CC Distressed exchange
4/30/2021 Codere S.A. Spain Media and entertainment SD CC Distressed exchange
5/10/2021 Gategroup Holding AG Switzerland Transportation SD CCC Distressed exchange
7/9/2021 Joye Media SLU Spain Media and entertainment D CCC- Missed interest payments
7/30/2021 Comdata SpA Italy Media and entertainment SD CC Distressed Exchange
Debt volume includes subsidiaries. Data as of Aug. 31, 2021. Source: S&P Global Ratings Research.
26Ratings Summary | Sovereigns In August 2021
Rating Outlook 5-year credit default spread Median rating financials Median rating nonfinancials
Austria AA+ Stable 10.2354 A A-
Belgium AA Stable 12.5381 AA BBB
Bulgaria BBB Stable 45.3023 BB-
Czech Republic AA- Stable 30.941 BBB-
Denmark AAA Stable 8.0152 BBB
Estonia AA- Positive 62.0969 BBB-
Finland AA+ Stable 9.652 A- BBB
France AA Stable 19.5592 A BB
Germany AAA Stable 9.8041 A+ BB+
Greece BB Positive 75.0031 B
Iceland A Stable 0 BBB
Ireland AA- Stable 16.1969 A- BBB-
Italy BBB Stable 74.0144 BBB BB
Jersey AA- Stable B
Latvia A+ Stable 49.5361 BB
Liechtenstein AAA Stable A
Lithuania A+ Stable 48.3875 BB+
Montserrat BBB- Stable
Netherlands AAA Stable 10.0717 BBB+ BB
Norway AAA Stable 10.3854 A BBB-
Poland A- Stable 49.6092 A- BB
Romania BBB- Stable 88.0873
Slovenia AA- Stable 68.1232 BBB-
Spain A Negative 30.1518 A- BB+
Sweden AAA Stable 9.1754 A- BBB+
Switzerland AAA Stable 6.1849 A BBB+
U.K. AA Stable 9.8343 A B+
Debt volume includes subsidiaries. Note: Pink indicates a speculative-grade rating. Data as of Aug. 31, 2021. Source: S&P Global Ratings Research.
27Ratings Actions And Defaults Summary
Ratings Actions | Weakest Links And Default Rates
Weakest Links Decreased For The 13th Consecutive Month In August, And The Default Rate Dropped For The Fourth Time In July
Weakest links counts (left) – The number of European issuers classified
Weakest links share of speculative-grade population (right) as weakest links has fallen to 58, from a
120
Europe 12-month trailing speculative-grade default rate (right)
25%
peak of 100 in June 2020. This represents
10% of the speculative-grade rated
100
population. Weakest links are issuers rated
20% ‘B-’ and below with a negative outlook or on
CreditWatch with negative implications; they
Number of issuers
80
15% typically have a default rate 8x speculative-
60
grade issuers.
%
10% – The default rate declined to 4.3% in July,
40 from a peak of 6.1% in March.
5% – For more information, see "Global Weakest
20
Links Fall Despite A Rising Speculative-
Grade Population,“ published Aug. 3, 2021.
0 0%
Data as of Aug. 31, 2021. Source: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®.
29Rating Actions | Corporate Defaults By Reason And Default Rate Trend
– The number of defaults reached a record high in 2020. Nevertheless, the default rate was lower than that in 2009.
– This year so far 13 corporates defaulted in Europe.
– For more information, see “The 2021 Global Corporate Default Tally Remains At 59,” published on Sept. 10, 2021.
Corporate Defaults By Reason European Defaults And Default Rate
Missed principal/interest payments Bankruptcy-related Default tally (left scale)
Regulatory intervention Distressed exchanges / restructuring Europe 12-month trailing speculative-grade default rate (right scalet)
Confidential 45 9
100%
40 8
90%
35 7
80%
Number of issuers
70% 30 6
60% 25 5
%
50% 20 4
40% 15 3
30%
10 2
20%
5 1
10%
0 0
0%
2013 2014 2015 2016 2017 2018 2019 2020 2021*
*Default tally data as of Aug. 31, 2021. Default rates as of July 2021. Source: S&P Global Ratings and S&P Global Market Intelligence’s CreditPro®.
30Ratings Transitions | Transition Rates
– Ratings stability. Issuers rated ‘BBB-’ and below were more stable over the 12 months to July 2021, compared with the historical average.
This highlights the relative stability of credit over the past 12 months, compared with crisis periods like the 2009 financial crisis or the first
half of 2020.
– Defaults of ‘CCC/C’ rated companies stood at 29%, just below the long-term average.
One-Year Transitions, July 2020 To July 2021 One-Year Transitions Since 1981
BBB- BB+ BB BB- B+ B B- CCC/C D BBB- BB+ BB BB- B+ B B- CCC/C D
BBB- 68.39 6.55 1.89 0.63 0.13 0.25 0.00 0.19 0.13 BBB- 76.70 5.83 0.00 0.00 0.00 0.00 0.00 0.00 0.00
BB+ 12.13 60.84 9.87 2.67 1.13 0.51 0.10 0.21 0.00 BB+ 8.33 76.39 4.17 1.39 0.00 0.00 0.00 0.00 0.00
BB 1.43 11.26 60.78 7.63 2.29 0.67 0.10 0.67 0.19 BB 0.00 14.71 60.29 13.24 0.00 0.00 0.00 0.00 0.00
BB- 0.39 1.16 10.64 58.03 11.80 3.19 0.58 0.29 0.87 BB- 0.00 1.47 8.82 64.71 13.24 1.47 0.00 0.00 1.47
B+ 0.14 0.65 2.16 9.16 56.42 12.70 2.53 1.66 0.94 B+ 0.00 0.00 3.90 7.79 66.23 9.09 3.90 0.00 0.00
B 0.11 0.11 0.16 1.22 6.08 60.68 10.78 3.59 1.74 B 0.00 0.00 0.00 0.99 3.45 74.38 8.87 1.48 0.49
B- 0.00 0.00 0.00 0.52 1.04 9.53 52.35 16.32 5.35 B- 0.00 0.00 0.00 0.68 2.05 8.90 60.96 13.01 2.74
CCC/C 0.00 0.00 0.00 0.00 0.25 1.49 10.64 40.10 28.71 CCC/C 0.00 0.00 0.00 0.00 0.00 2.33 12.79 46.51 29.07
Transition rates as of July 31, 2021. Source: S&P Global Market Intelligence’s CreditPro®.
31Ratings Additional Details
Issuance | Sovereign Top 20 Deals In 2021 By Debt Amount
Sovereign rating (as of Oct.
Issue date Issuer Country Marketplace Issue rating Security description Currency Issuance (mil. $)
31, 2020)
1/5/2021 Republic of Italy Italy EURO/144A NR BBB 0.950% Sr Unsecurd Nts due '37 EUR $12,221
6/8/2021 Republic of Italy Italy Euro Public NR BBB 0.950% Sr Unsecurd Nts due '31 EUR $12,161
2/16/2021 Republic of Italy Italy EURO/144A NR BBB 0.600% Sr Unsecurd Nts due '31 EUR $12,100
3/3/2021 Republic of Italy Italy EURO/144A NR BBB 1.500% Fxd/Straight Bd due '45 EUR $10,167
6/22/2021 Kingdom of Spain Spain EURO/144A A A 0.500% Sr Unsecurd Nts due '31 EUR $9,510
1/12/2021 Kingdom of Belgium Belgium EURO/144A NR AA Zero Cpn Zero Cpn Sr Nts due '31 EUR $7,496
6/24/2021 Republic of Italy Italy EURO/144A BBB BBB Sr Flt Notes due '29 EUR $7,135
4/13/2021 Kingdom of Spain Spain EURO/144A NR A 0.850% Sr Unsecurd Nts due '37 EUR $7,127
1/5/2021 Natl Treasury Mgmt Agcy Ireland Euro Public NR AA- Zero Cpn Zero Coupon Bnd due '31 EUR $6,951
4/23/2021 Republic of Italy Italy Euro Private BBB BBB Sr Step-Up Note due '37 EUR $6,626
2/9/2021 Kingdom of Spain Spain EURO/144A NR A 1.450% Fxd/Straight Bd due '71 EUR $6,041
2/2/2021 Kingdom of Belgium Belgium EURO/144A NR AA 0.650% Sr Unsecurd Nts due '71 EUR $5,918
4/7/2021 Republic of Italy Italy EURO/144A BBB BBB 2.150% Sr Unsecurd Nts due '72 EUR $5,903
4/13/2021 Austria Austria EURO/144A NR AA+ Zero Cpn Zero Cpn MTNs due '25 EUR $5,500
1/27/2021 Austria Austria EURO/144A NR AA+ Zero Cpn Zero Cpn Sr Nts due '31 EUR $5,007
2/16/2021 Republic of Italy Italy EURO/144A NR BBB 0.150% Sr Unsecurd Nts due '51 EUR $4,803
4/7/2021 Republic of Portugal Portugal EURO/144A NR BBB 0.300% Fxd/Straight Bd due '31 EUR $4,726
4/15/2021 Natl Treasury Mgmt Agcy Ireland Euro Public AA- AA- 0.550% Sr Unsecurd Nts due '41 EUR $4,160
8/24/2021 Finland Finland EURO/144A NR AA+ Sr Unsecurd Nts due '26 EUR $3,639
5/19/2021 Finland Finland EURO/144A AA+ AA+ 0.125% Sr Unsecurd Nts due '31 EUR $3,637
Data as of year to Aug. 31, 2021. Includes local and foreign currencies. Blue means investment-grade rating, and grey means not rated. Source: S&P Global Ratings Research.
33Issuance | Financial And Nonfinancial Top 20 Deals
Sovereign rating (as of
Issue Date Issuer Country Marketplace Issue rating Security description Currency Issuance (mil. $)
Aug. 31, 2021)
4/12/2021 EFSF Luxembourg Euro Public NR AAA Zero Cpn Zero Coupon Bnd due '26 EUR 4,866
1/11/2021 EFSF Luxembourg Euro Public NR AAA Zero Cpn Zero Coupon Bnd due '31 EUR 3,762
4/21/2021 Credit Agricole Corporate & France Euro Private NR AA Zero Cpn Zero Coupon Bnd due '26 TL 3,301
5/10/2021 Credit Suisse Grp Ag Switzerland EURO/144A BBB+ AAA Fix/Flt Rte Nts due '32 USD 3,250
2/10/2021 Bellis Acquisition Co PLC U.K. EURO/144A NR AA 3.250% Sr Secured Nts due '26 STG 3,111
6/7/2021 EFSF Luxembourg Euro Public AA AAA Sr Unsecurd Nts due '24 EUR 3,089
5/17/2021 HSBC Holdings PLC U.K. U.S. Public A- AA Global Notes due '32 USD 3,000
2/23/2021 America Movil Bv Netherlands Euro Public BBB+ AAA Zero Cpn Gtd Exch Bonds due '24 EUR 2,668
4/13/2021 Altice France SA France EURO/144A B AA 5.125% Gtd Sen Sec Nts due '29 USD 2,500
3/24/2021 IsDB Trust Services No.2 SARL Luxembourg Euro Public AAA AAA 1.262% Islamic Finance due '26 USD 2,500
2/1/2021 EFSF Luxembourg Euro Public AA AAA Zero Cpn Zero Coupon Bnd due '27 EUR 2,488
1/11/2021 EFSF Luxembourg Euro Public NR AAA 0.050% Fxd/Straight Bd due '52 EUR 2,373
7/5/2021 EFSF Luxembourg Euro Public NR AAA Zero Cpn Zero Coupon Bnd due '31 EUR 2,369
4/12/2021 BNP Paribas SA France EURO/144A A- AA Senior Notes due '32 USD 2,250
1/6/2021 BNP Paribas SA France EURO/144A A- AA Fix/Flt Bond due '27 USD 2,250
2/9/2021 Project Galaxy Jersey EURO/144A NR AA- 2.940% Sr Secured Nts due '40 USD 2,170
8/24/2021 Credit Suisse London Branch U.K. Euro Public NR AA Sr Flt Rt MTN due '23 EUR 2,086
8/3/2021 UBS Group AG Switzerland EURO/144A A- AAA Sr Unsecurd Nts due '27 USD 2,000
8/10/2021 HSBC Holdings PLC U.K. U.S. Public A- AA Global Notes due '29 USD 2,000
2/2/2021 UBS AG London U.K. U.S. Private A+ AA 2.095% Sr Unsecurd Nts due '32 USD 2,000
Data as of year to Aug. 31, 2021. Red means speculative-grade rating , blue means investment-grade rating, and grey means not rated. Source: S&P Global Ratings Research.
34Ratings Action | Top 20 By Debt Amount (YTD)
Rating date Issuer Country Sector Rating to Rating from Action type Debt amount (mil. $)
2/18/2021 Royal Dutch Shell PLC U.K. Integrated oil and gas A+ AA- Downgrade $89,396
6/24/2021 BPCE France Bank A A+ Downgrade $86,961
7/27/2021 Daimler AG Germany Automotive A- BBB+ Upgrade $76,196
DZ BANK AG Deutsche Zentral-Genossenschaftsbank
6/24/2021 Germany Bank A+ AA- Downgrade $67,229
(Cooperative Banking Sector Germany)
2/18/2021 Total SE France Integrated oil and gas A A+ Downgrade $65,554
3/2/2021 National Grid PLC U.K. Utility BBB+ A- Downgrade $39,007
6/21/2021 Endo International PLC Ireland Health care B- B Downgrade $33,358
9/2/2021 Endo International PLC Ireland Health care CCC+ B- Downgrade $33,358
7/21/2021 AstraZeneca PLC U.K. Health care A- BBB+ Upgrade $26,366
1/8/2021 Fiat Chrysler Automobiles N.V. Netherlands Automotive BBB- BB+ Upgrade $25,561
6/22/2021 Atlantia SpA Italy Utility BB BB- Upgrade $19,630
6/24/2021 RCI Banque (Renault S.A.) France Bank BBB- BBB Downgrade $17,698
3/15/2021 Zurich Insurance Co. Ltd. (Zurich Insurance Group) Switzerland Insurance AA AA- Upgrade $15,637
3/16/2021 EDP - Energias de Portugal S.A. Portugal Utility BBB BBB- Upgrade $14,903
5/12/2021 Sigma HoldCo BV Netherlands Consumer products B B+ Downgrade $13,697
6/24/2021 Banco de Sabadell S.A. Spain Bank BBB- BBB Downgrade $10,651
5/5/2021 Jazz Pharmaceuticals PLC Ireland Health care BB- BB Downgrade $10,097
7/7/2021 Transocean Ltd. Switzerland Oil and gas exploration and production CCC CCC- Upgrade $9,734
4/15/2021 HeidelbergCement AG Germany Forest products and building materials BBB BBB- Upgrade $9,126
6/21/2021 TK Elevator Topco GmbH Germany Capital goods B B- Upgrade $8,751
Data as of Aug. 31, 2021. Excludes sovereigns, includes only latest rating changes. Pink means speculative-grade rating , blue means investment-grade rating, and grey means not rated. Source: S&P Global Ratings
Research.
35Maturing Debt | Europe Financial And Nonfinancial
Top 25 Deals Set To Mature Through December 2021
Issue date Maturity date Issuer Country Sector Marketplace Issue rating Security description Currency Issuance (mil. $)
11/7/2011 2/4/2022 EFSF Luxembourg Finance company Euro Public AAA 3.500% Medium-Term Nts due '22 EUR $4,099
9/19/2016 9/23/2021 Shire Acqs Invests Ireland DAC Ireland Finance company U.S. Public BBB- 2.400% Gtd Global Nts due '21 USD $3,296
10/7/2016 10/14/2021 Deutsche Bank AG Germany Banks U.S. Private BBB 4.250% Senior Notes due '21 USD $2,999
2/1/2012 2/8/2022 Rabobank Netherlands Banks U.S. Public AA 3.875% Gtd Global Nts due '22 USD $2,976
1/10/2012 1/18/2022 Electricite De France S.A. France Utility Euro Public AA- 3.875% Medium-Term Nts due '22 EUR $2,530
1/8/2019 1/14/2022 Unicredit SpA Italy Banks EURO/144A BBB- 6.572% Senior Notes due '22 USD $2,500
9/28/2016 1/5/2022 HSBC Holdings PLC U.K. Banks U.S. Public A 2.650% Global Notes due '22 USD $2,497
1/10/2012 1/15/2022 SABMiller Holdings Ltd. U.K. Broker EURO/144A BBB+ 3.750% Gtd Sr Unsec Nt due '22 USD $2,488
9/11/2018 1/18/2022 Societe Generale S.A. France Banks Euro Public A 0.250% Medium-Term Nts due '22 EUR $2,312
2/14/2012 2/21/2022 ING Bank NV Netherlands Banks Euro Public A+ 4.500% Medium-Term Nts due '22 EUR $2,297
9/1/2014 9/8/2021 Deutsche Bank AG Germany Banks Euro Public A 1.250% Fxd/Straight Bd due '21 EUR $2,284
1/4/2012 1/11/2022 Rabobank Netherlands Banks Euro Public AA 4.000% Medium-Term Nts due '22 EUR $2,244
9/24/2014 1/31/2022 Credit Suisse London Branch U.K. Broker Euro Public A 1.375% Fxd/Straight Bd due '22 EUR $2,236
8/30/2019 9/6/2021 Societe Generale S.A. France Banks Euro Public A Mdm-Trm Fl Nts due '21 EUR $2,216
9/1/2011 9/8/2021 FMS Wertmanagement Germany Broker Euro Public AAA 3.000% Gtd Mdm-Trm Nts due '21 EUR $2,131
1/4/2017 1/11/2022 DNB Boligkreditt AS Norway Broker Euro Public AAA 0.050% Fxd/Straight Bd due '22 EUR $2,092
1/13/2015 1/21/2022 Dexia Credit Local SA France Banks Euro Public AA 0.625% Gtd Mdm-Trm Nts due '22 EUR $2,054
8/28/2018 9/4/2021 HSBC France SA France Banks Euro Public AA- 0.200% Medium-Term Nts due '21 EUR $2,043
8/9/2012 9/8/2021 FMS Wertmanagement Germany Broker Euro Public AAA 3.000% Medium-Term Nts due '21 EUR $2,010
2/15/2012 2/22/2022 UBS-Jersey Branch Jersey Banks Euro Public BBB- Subord Bonds due '22 USD $2,000
1/9/2017 1/17/2022 Petrobras Global Finance BV Netherlands Integrated oil and gas U.S. Public B+ 6.125% Gtd Global Nts due '22 USD $2,000
9/5/2018 9/11/2021 HSBC Holdings PLC U.K. Banks U.S. Public A Global FRNs due '21 USD $2,000
1/30/2020 2/4/2022 Credit Suisse AG Switzerland Broker U.S. Public A+ Sr Unsecurd Nts due '22 USD $2,000
11/4/2019 11/12/2021 Credit Suisse Grp AG Switzerland Banks U.S. Public A+ 2.100% Senior Notes due '21 USD $1,999
8/3/2016 2/1/2022 UBS Group Funding (Jersey) Ltd. Switzerland Broker EURO/144A A- 2.650% Gtd Sr Notes due '22 USD $1,998
Data as of Aug. 31, 2021. Excludes sovereigns. Pink means speculative-grade rating , blue means investment-grade rating, and grey means not rated. Source: S&P Global Ratings Research.
36Related Research
– The 2021 Global Corporate Default Tally Remains At 59, Sept. 10, 2021
– U.S. Distress Ratio Rises Slightly To 2.6% After 16-Month Decline, Aug. 5, 2021
– Global Weakest Links Fall Despite A Rising Speculative-Grade Population, Aug. 3, 2021
– Risky Credits: Europe's 'CCC' And Below Corporate Ratings Tally Remains Elevated, Aug. 2, 2021
– Global Financing Conditions: Bond Issuance Remains Strong Despite An Expected Modest Contraction, July 26, 2021
– Global State Of Play 2021: Low Interest Rates Have Fueled A Rise In Credit Market Debt, June 11, 2021
– No Tantrum Yet As Global Growth Gains Momentum, March 11, 2021
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