Global corporate defaults hit 150 for 2016, most since financial crisis

LONDON (Reuters) - The number of firms worldwide that have defaulted this year has reached 150, up more than 40 percent year-on-year, making 2016 the worst year for corporate stress since the height of the global financial crisis, ratings firm Standard and Poor’s said.

Pedestrians walk through the Canary Wharf business district in London, Britain, September 12, 2011. REUTERS/Suzanne Plunkett/File Photo

S&P data showed that two defaults last week by U.S.-based firms had brought up the milestone and taken the U.S.-only count to 99, or two-thirds of the overall total.

Just over 40 percent, or 63, had been by oil and gas firms, with 50 of those also in the United States. Emerging markets had accounted for 28 defaults overall, followed by Europe on 12.

“The default count has already surpassed the total number of defaults recorded in full-year 2015 (113) and is almost 42 percent higher than the count at this time in 2015,” S&P said.

“The last time the global tally was higher at this point in the year was in 2009, when it reached 265 during the financial crisis.”

Of the 150 defaulters so far in 2016, 56 issuers defaulted because of missed principal/interest/coupon payments, 40 due to distressed debt exchanges and 18 upon bankruptcy filings, while 14 were for ‘confidential’ reasons.

A further seven came after debt exchanges, six were de facto restructurings, three due to deferred interest payments, two due to debt moratoriums, and one each because of debt acceleration, distressed restructuring, judicial reorganization and regulatory intervention.

The default trend is likely to continue next year, although there could be some moderation.

S&P said it expects the U.S. corporate trailing-12-month speculative-grade default rate to rise to 5.1 percent by September 2017 from 5.0 percent in September 2016.

It said it also expected the ‘speculative-grade’ company default rate to “continue rising with temporary fluctuations through early 2017, then levelling off toward the end of the first half of the year with declines afterward.”

Oil and gas firms could see the recent pressure ease as production costs have come down since the early part of 2016, S&P added.

Reporting by Marc Jones; Editing by Mark Trevelyan