Credit Markets Update Europe - Q2 2021 March 30, 2021 Sarah Limbach - S&P Global
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Sarah Limbach Sudeep Kesh
Credit Markets Update Europe
Economist, Credit Markets Research Head of Credit Markets Research
Sundaram Iyer Evan Gunter
Q2 2021
Senior Analyst, Research Director, Ratings Performance Analytics
March 30, 2021Key Takeaways – Corporate issuance in Europe ran 6% lower in February 2021 than in February 2020. – €1.8 trillion in European nonfinancial debt matures through 2025, of which €290 billion matures in 2021, on robust issuance volumes. – Media and entertainment is the sector with the highest negative rating bias (about 58%), followed by automotive and retail. This illustrates the vulnerability of these sectors to pandemic-related restrictions. – European banking is the sector that has the highest number of pandemic-related negative outlook revisions or CreditWatch placements (67 as of February 2021), but relatively few downgrades (7). – The default rate more than doubled to 5.4% in February 2021, compared with this point last year.
Financing Conditions Highlights
Europe Financing | Spreads Are Tight, But Markets Are Fragile
Secondary Market Credit Spreads
GFC median GFC high COVID high Beginning of 2021 Most recent
– Spreads tightened from the beginning of the
year, despite some volatility following the
2,500
2326 surge in U.S. Treasury yields. The impact has
so far subsided, but it underscores the
underlying fragility of credit markets.
2,000
– Nevertheless, the European Central Bank’s
(ECB) commitment to support the eurozone’s
1,500 economic recovery, notably its recent
announcement that it would step up the
bps
984 pace of bond purchases within its pandemic
1,000 866 emergency purchase program (PEPP)
framework, should continue to keep
European spreads contained.
500 355
302 322
237
132 85 81
0
Europe investment-grade Europe speculative-grade
GFC---Great financial crisis. bps--Basis points. Note: Data as of Feb. 28, 2021. “Europe” includes the following countries: 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, Slovakia, 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.
4Europe | Corporate Issuance
– European issuance for 2021 so far stands slightly below 2020 levels.
– By end-February, investment-grade issuance stood at about €33 billion, 7% below its February 2020 level, and speculative-grade
issuance at €18 billion, 4% lower than a year earlier.
New Non-Financial Bond Issuance Europe Regional New Bond Issuance
2020, Investment-grade 2020, Speculative-grade Europe - Overall Financial Nonfinancials Investment-grade Speculative-grade
2021, Investment-grade 2021, Speculative-grade
400 1,000
300 800
200 600
Bil. €
Bil. €
100 400
0 200
(100) 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 2019 2020 2021*
Data as of Feb. 28, 2021. Sources: S&P Global Ratings, Refinitiv. *Denotes YTD data as of Feb. 28 2020. Data as of Feb. 28, 2021, including both financials and
nonfinancials. Sources: S&P Global Ratings, Refinitiv.
5Europe | Corporate Issuance Regional
Eurozone – In the eurozone, investment-grade nonfinancial issuance this
2020, Investment-grade 2020, Speculative-grade year through February was 17% lower than in February last
2021, Investment-grade 2021, Speculative-grade
year, and 9% lower for speculative grade.
300
– In the Nordic region, investment-grade issuance was only 35%
200
of the amount issued a year earlier, while speculative-grade
Bil. €
issuance was 1.6x above last year’s level.
100 – In the U.K., investment-grade issuance stood at six times the
very low February 2020 levels, while speculative-grade was
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
only half of last year’s.
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
Bil. €
Bil. €
15
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 Feb. 28, 2021. Data including both financials and nonfinancials. Sources: S&P Global Ratings, Refinitiv.
6Europe | Corporate Credit Spread And Yield
Nonfinancial Yields By Ratings
AA A BBB BB B (right scale)
6 20
4 15
2 10
%
%
0 5
-2 0
Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021 Feb 2021
Data as of Feb. 28, 2021. Data including both financials and nonfinancials. Sources: S&P Global Ratings, Refinitiv.
Europe Corporate Credit Spread
Xover 5yr (right scale) 5yr Corp (left scale) 5yr Fin Snr (left scale)
200 800
150 600
bps
bps
100 400
50 200
0 0
Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021 Feb 2021
Data as of Feb. 28, 2021. Data including both financials and nonfinancials. Sources: S&P Global Ratings, Refinitiv.
7Europe | Corporate Issuance
– Total corporate issuance this year so far stands slightly above the levels of the past three years.
Europe Cumulative Corporate Bond Issuance
1,000 2009
2018
2019
800
2020
2021
600
Bil. €
400
200
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Data as of Feb. 28, 2020. Sources: S&P Global Ratings, Refinitv.
8Europe Corporate Issuance| By Market
Europe Regional New Bond Issuance
1,000
Europe - overall
800 Financial
600 Nonfinancials
Bil. €
Investment-grade
400
Speculative-grade
200
0
2017 2018 2019 2020 2021*
*As of Feb. 28, 2021
Europe New Bond Issuance YTD (Through Feb.)
200 Europe - overall
Financial
150
Nonfinancials
Investment-grade
Bil. €
100
Speculative-grade
50
0
2016 YTD 2017 YTD 2018 YTD 2019 YTD 2020 YTD 2021 YTD
YTD—Year to end-February for all years. Sources: S&P Global Ratings Research, Refinitiv.
9European Nonfinancials | €1.8 Trillion In Debt Matures Through 2025
European Nonfinancial Corporate Maturity Wall
As of 1/1/2020 As of 7/1/2020 As of 1/1/2021 – Near term: 2021 maturities fell by 9% during
450 2020, to €290 billion.
400
– Midterm: Annual maturities for 2022-2024
350
were relatively unchanged over the past year,
300 averaging €366 billion a year.
250
Bil. €
– Longer term: Maturities peak in 2025, when
200 €403 billion falls due; issuance over the past
150
year lifted 2025 maturities by 17%.
100
50
0
2021 2022 2023 2024 2025
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.
10European Nonfinancials | €575 Billion In Speculative-Grade
Corporate Debt Due By 2025
European Speculative-Grade Nonfinancial Corporate Maturity Wall
As of 1/1/2020 As of 7/1/2020 As of 1/1/2021 – Near term: Companies reduced speculative-
200 grade debt maturing in 2021 by 12% to €48
180
billion over the past year.
160
– Midterm: Companies lengthened maturities,
140 reducing debt due in 2022-2024 by 13% over
120 the past year.
100
Bil. €
80
– Longer term: Recent surge in issuance
helped lift 2025 debt maturities by 9% to
60 €174 billion.
40
20
0
2021 2022 2023 2024 2025
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 Financial Services | €1.84 Trillion Matures Through 2025
European Financial Services Maturity Wall
As of 1/1/2020 As of 7/1/2020 As of 1/1/2021 – Near term: Maturities in 2021 have been
500 reduced by 5% to €384 billion over the past
450
year.
400
– Midterm: Maturities peak in 2022, when
350 €433 billion is scheduled to mature.
300
Bil. €
250 – Longer term: 2025 maturities increased by
200
30% to €309 billion, boosted by 2020
issuance volumes.
150
100
50
0
2021 2022 2023 2024 2025
Data as of Jan. 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.
12Ratings Trends And Outlooks Summary
Europe| Total Rating Actions
– Between February and December 2020, downgrades outnumbered upgrades by 10, resulting in significant credit deterioration.
– Through mid-March 2021, upgrades and downgrades were balanced at 13 and 14, respectively. Over the same period, we took four times
as many positive outlook and CreditWatch revisions than negative, suggesting future credit improvement.
Total Rating Actions Per Month
50 Upgrade
0 Positive outlook/CreditWatch
revisions
50 Downgrade
100 Negative outlook/CreditWatch
revisions
150
200
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021
Note: Data includes sovereigns. Data from Feb. 3, 2020 to March 11, 2021. Source: S&P Global Ratings.
14Europe| Total Rating Actions
– The sectors that saw the largest credit deterioration in 2020 are those that took a hit from the economic consequences of the spread of
the pandemic, and those that suffered from the drop in oil prices.
– 80% of European downgrades in 2020 were related to COVID-19 or oil prices.
Total Rating Actions Per Month
Homebuilders and developers
Upgrade
Insurance
Utilities Positive outlook/CreditWatch revisions
Transportation infra
CPS Downgrade
Telecom
Sovereign Negative outlook/CreditWatch revisions
Aerospace and defense
Metals and Mining
Hotels and gaming
Building materials
Technology
Real Estate
Chemicals
Health care
NBFI
BCS
Consumer products
Energy
Automotive
Transportation
Media and Entertainment
Retailing
Capital Goods
Banks
90 75 60 45 30 15 0 15 30
Note: Data includes sovereigns. Data from Feb. 3, 2020 to March 11, 2021. BCS--Business and consumer services. CPS--Commercial and professional services. NBFI--Nonbank financial institutions. Source: S&P Global
Ratings.
15Europe| COVID-19 And Oil-Related Rating Actions
– The number of pandemic-related rating actions declined markedly over the past 12 months, to 10 in 2021 (as of Feb. 22).
– Downgrades represented 60% of the rating actions in the first two months of 2021, similar to the latter part of 2020, when the impact of
COVID-19 on markets stabilized and outlook revisions or CreditWatch placements were resolved with downgrades.
COVID-19 And Oil Price-Related Rating Actions By Week
60 CreditWatch Negative
50 Outlook change
40
Downgrade + CreditWatch
change
30
Downgrade
20
10
0
Note: Data includes sovereigns. Number of negative rating actions by week since Feb. 3, 2020. Data as of Feb. 22, 2021. Source: S&P Global Ratings.
16Europe| COVID-19 And Oil-Related Rating Actions By Sector
Share Of Speculative Grade In Total COVID-19 And Oil-Related Rating Actions
Outlook / CreditWatch revisions Downgrades
– Speculative-grade dominated. 60% of the
Aerospace & defense (7) 40%
Automotive (29) 33%
50%
60% rating actions in Europe that were linked to
Banks (74) 0% 19% the pandemic or oil prices have been on
Building materials (13) 75%
BCS (18) 83%
89%
92% speculative-grade issuers.
Capital goods (49) 85%
Chemicals (20)
48%
75% 92% – In the sectors hotels and gaming, health care,
CPS (4) 0%
88%
100%
metals and mining, telecom, and
Consumer products (27) 30%
Energy (18) 60% 92% transportation infrastructure, all COVID-19/
Health care (11)
82%
100% oil-related downgrades have taken place on
Hotels & gaming (13) 100%
Insurance (3) 0%
0% speculative-grade rates issuers.
Media & entertainment (31) 67% 86%
Metals & mining (6) 100% – Insurance is the only sector that didn’t see
NBFI (20) 89%
Real estate (17) 17% 40%
82%
any rating actions in the speculative-grade
Retailing (35) 80% 92%
space, owing to the tiny number of
Sovereign (11) 0%
Technology (14)
27%
71% 86%
speculative-grade issuers.
Telecom (5) 50% 100%
Transportation (34) 55%
57%
Transportation infra (5) 25% 100%
Utilities (9) 0% 50%
0% 20% 40% 60% 80% 100%
Note: Number in parentheses refers to total number of negative rating actions in the sector since Feb. 3, 2020. Media and entertainment excludes entities within hotels and gaming. NBFI--Nonbank financial institutions;
CPS--Commercial and professional services; BCS--Business and consumer services. Data as of Feb. 22, 2021. Source: S&P Global Ratings.
17Europe | COVID-19 And Oil-Related Rating Actions
COVID-19 And Oil Price Rating Actions By Sector
Count of outlook / CreditWatch revisions Count of downgrades – European banking, as a sector, saw the
80
highest number of COVID-19-related
70 outlook revisions or CreditWatch
60
placements (67 as of Feb. 22) but relatively
few downgrades (7). We attribute this to the
50 sector’s indirect exposure to the pandemic’s
40 economic impact, via its exposure to
30
vulnerable sectors.
20
10
0
NBFI--Nonbank financial institutions. Note: Data include sovereigns. Data from Feb. 3, 2020 to Feb 22, 2021. Source: S&P Global Ratings.
18Europe | COVID-19 And Oil-Related Rating Actions
– In 2021, 10 negative rating actions in Europe were driven by the pandemic or oil prices, six of which were downgrades.
– The U.K . (106) and France (62) are the European countries where the pandemic has caused the most rating actions since March 2020. In
both countries, we had taken two rating actions this year by Feb. 22, and we had taken the same number in each of Spain and Luxembourg.
Meanwhile, the Netherlands and Germany saw a single COVID-19-related rating action over the same period.
COVID-19 And Oil Price Rating Actions By Month COVID-19 And Oil Price Rating Actions By Most Affected Countries
Downgrade Downgrade + CW Change OL Change CreditWatch Negative February March April May June July
August September October November December 2021 YTD
120
U.K.
France
100
Netherlands
80 Germany
Luxembourg
60 Spain
Italy
40 Sweden
Switzerland
20
Ireland
Norway
0
Jersey
0 20 40 60 80 100
Note: Data includes sovereigns. The breakdown per country only includes countries with ten rating actions or above. Therefore, total counts don’t tally with rating actions per month. Data from Feb. 3, 2020 to Feb. 22, 2021.
Source: S&P Global Ratings.
19Europe | COVID-19 And Oil-Related Rating Actions
– Of the total number of COVID-19 and oil-related rating actions in Europe, 340 (83%) were on European nonfinancial corporates in 2020,
and all 10 rating actions in 2021.
– The U.K . (90) and France (52) also lead the pack in rating actions on nonfinancial corporates.
COVID-19 And Oil Price Rating Actions On NFCs By Most Affected
COVID-19 And Oil Price Rating Actions On NFCs By Month
Countries
Downgrade Downgrade + CW Change OL Change CreditWatch Negative February March April May June July
August September October November December 2021 YTD
120
U.K.
France
100
Netherlands
Germany
80
Luxembourg
60 Spain
Italy
40 Sweden
Switzerland
20 Ireland
Norway
0 Jersey
0 20 40 60 80 100
Note: The breakdown per country includes only those countries with 10 rating actions or more. Therefore, total counts don’t tally with rating actions per month. Data from Feb. 3, 2020 to Feb. 22, 2021. Source: S&P Global
Ratings. NFC--Nonfinancial corporate.
20Europe | Rating Distribution
Ratings Distribution Across Sectors
AAA AA A BBB BB B CCC & Lower
– Half of the nonfinancial corporates in
Consumer products (130) Europe have a speculative-grade rating. The
Bank (107)
Utilities (92) sectors that have the highest count of
Media & entertainment (76) issuers with speculative-grade ratings are
Health care (74) consumer products (85 issuers), media (64),
Insurance (60)
Capital goods (59)
and entertainment (53).
Chemicals/ packaging (54)
High technology (52)
Homebuilders/real estate (52)
Telecommunications (44)
Non-bank financial institutions (43)
Forest products & building materials (39)
Sovereign (38)
Oil & gas (34)
Retail/restaurants (30)
Transportation (30)
Automotive (28)
Metals, mining & steel (22)
Aerospace & defense (10)
0% 20% 40% 60% 80% 100%
Note: Number in parentheses refers to total number of ratings/issuers per sector. Data as of Feb. 28, 2021. Media and entertainment includes subsectors media, leisure, lodging, and entertainment. Source: S&P Global
Ratings.
21Europe | Downgrade Potential By Sector
Automotive, Leisure, Lodging And Entertainment, Retail And Transportation Sectors
Have The Highest Downgrade Potential In Europe
Current negative bias 5-Year Averages – Media and entertainment, automotive,
70% transportation, retail, and media and
60% 58% entertainment (which includes leisure and
54% 53%
lodging) are the sectors that have been hurt
50% 47% 47%
the most by the shocks related to the
40%
40% 37% 36% pandemic and the measures to contain it.
33% 32% 32%
30%
30% – The sectors’ vulnerability to the current
22% 21% 20%
18% 18%
crisis is clear when comparing the high
20% negative bias with the five year-average.
11% 10%
10% 8%
0%
Note: Number in parentheses refers to total number of ratings/issuers per sector. Data as of Feb. 28, 2021 and only includes sectors that have more than five issuers; excludes sovereigns. Media and entertainment excludes
entities within hotels and gaming. Source: S&P Global Ratings Research.
22Europe | Downgrade Potential
Negative Outlook and CreditWatch Placements
Negative bias by sector highlights sectors vulnerable to downgrades
Negative CreditWatch Negative outlook – The media and lodging sector has the
Media/lodging (76) highest negative bias (about 58% of rated
issuers), followed by automotive and
Transportation (30)
transportation.
Retail (30) – The sector with the most immediate
Bank (107) downgrade potential is transportation,
where about 7% of ratings are on
Home/real estate (52)
CreditWatch with negative implications.
Utilities (92)
– CreditWatch placements indicate higher
CP&ES (54) short-term vulnerability to rating actions as
they are acted on within a shorter timeframe
Health Care (74)
than outlooks.
FP&BM (39)
Insurance (60)
0 10 20 30 40 50 60 70
Percentage of rated universe
Note: Number in parentheses refers to total number of ratings/issuers per sector. Data as of Feb. 28, 2021. Media and entertainment includes subsectors media, leisure, lodging, and entertainment. Source: S&P Global
Ratings Research.
23Europe | Current Versus Historical Downgrade Potential
The sectors with the highest downgrade potential today show a much lower long-term downgrade potential, illustrating that their
vulnerability largely stems from the economic consequences of COVID-19.
90
80
70
Current negative bias (%)
60 Med&Ent
Transp Auto
50 OilG
Ret/Res
40 Bank Aer&D
CapGds
ConsPrd
Utils
30 HomeRE
CP&ES NonBankFinInst
20 Hcare
MM&S
HiTech
FP&BM
10 Teleco
Ins
Sov
0
0 10 20 30 40 50 60 70 80 90
Long-term negative bias (%)
Med&Ent--Media & entertainment. Auto—Automotive. MM&S--Metals, mining, & steel. ConsPrd--Consumer products. Ret/Res--Retail/restaurants. FP&BM--Forest products & building materials. HiTech--High technology.
Transp--Transportation. CapGds--Capital goods. Utils—Utilities. Aer&D--Aerospace & defense. FinInst--Financial institutions. Teleco—Telecommunications. Div—Diversified. CP&ES--Chemicals, packaging, and
environmental services. OilG--Oil & gas. Hcare--Health care. Ins—Insurance. HomeRE--Homebuilders/real estate cos. Sov--Sovereign. Data as of Feb. 28, 2021. Source: S&P Global Ratings.
24Europe | Outlook And CreditWatch Distribution
– About 38% of speculative-grade issuers face downgrade risks, while 41% of risky credits are vulnerable to credit deterioration.
– Leisure, lodging and entertainment, consumer products, and banking have the highest number of negative outlooks and ratings on
CreditWatch negative.
Distribution By Ratings Distribution By Sectors
Outlook positive or CreditWatch positive Stable Outlook negative or CreditWatch negative CreditWatch negative Negative outlook Stable Positive outlook CreditWatch positive
180 Consumer products
Bank
160 Utility
Riskiest Media & entertainment
140 issuers Health care
Insurance
120 Capital goods
Chemicals & packaging
100 High technology
Homebuilders & real estate
80 Telecommunications
Non-bank financial institutions
60 FP& BM
Sovereign
40 Oil & gas
Transportation
20 Retail
Automotive
0 Metals/mining/steel
Aerospace & defense
0 50 100 150
Data as of Feb. 28, 2021. Media and entertainment includes the subsectors media, leisure, lodging, and entertainment. FP&BM--Forest products and building materials. Source: S&P Global Ratings.
25Ratings Action | Fallen Angels And Potential Fallen Angels
– There were 14 fallen angels in Europe at end-2020. In 2021, only one had fallen as of February--TechnipFMC Plc from the U.K., which had
outstanding debt of about €2.6 billion.
– The count of potential fallen angels decreased to 28, representing €140 billion of total debt affected.
– For more information, see “BBB' Pulse: Potential Fallen Angels Continue To Decrease Even As Risks Remain” published Jan. 26, 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 8 40
7 35
30
6 30
25 5 25
Number of issuers
Bil. €
4 20
20 3 15
2 10
15
1 5
10 0 0
5
0
2007 2009 2011 2013 2015 2017 2019 2021*
Data as of Feb. 28, 2021. Media and entertainment includes subsectors media, leisure, lodging, and
*Data as of Feb. 28, 2021. Source: S&P Global Ratings Research. Fallen angels are issuers downgraded to entertainment. Source: S&P Global Ratings Research.
speculative grade, 'BB+' or below, from investment grade, 'BBB-' or above.
26Rating Actions | Corporate Fallen Angels With Highest Debt
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 & Entertainment France $5,490
7/31/2020 Valeo S.A. BB+ BBB- Automotive France $4,108
5/28/2020 Rolls-Royce PLC (Rolls-Royce Holdings PLC) BB BBB- Aerospace & defense United Kingdom $3,996
Oil & gas exploration &
2/17/2021 TechnipFMC Plc BB+ BBB+ United Kingdom $2,572
production
3/26/2020 Marks & Spencer PLC (Marks & Spencer Group PLC) BB+ BBB- Retail/restaurants United Kingdom $2,068
3/27/2020 Esselunga SpA BB+ BBB- Retail/restaurants Italy $1,105
5/20/2020 International Consolidated Airlines Group, S.A. BB BBB- Transportation Spain $1,086
5/20/2020 Deutsche Lufthansa AG BB+ BBB- Transportation Germany $1,086
12/22/2020 GKN Holdings Limited BB+ BBB- Automotive United Kingdom $1,012
3/23/2020 Immobiliare Grande Distribuzione SIIQ S.p.A. BB+ BBB- Homebuilders/real estate Italy $855
5/20/2020 British Airways PLC BB BBB- Transportation United Kingdom $806
Data as of Feb. 28, 2021. Source: S&P Global Ratings Research.
27Ratings Action| Rating Changes From 'B-' To 'CCC’ Top 20 Last Year
Date Issuer Country Sector To From Debt outstanding (mil. $)
6/19/2020 Toro Private Holdings I, Ltd. U.K. Transportation CCC B- $3,300
3/30/2020 HNVR Midco Ltd. U.K. Media & entertainment CCC+ B- $2,670
4/1/2020 Kirk Beauty One GmbH Germany Retail/restaurants CCC+ B- $2,543
4/2/2020 Weatherford International PLC Ireland Oil & gas exploration & production CCC+ B- $2,490
4/20/2020 Diamond (BC) B.V. Netherlands Chemicals, packaging & environmental services CCC+ B- $2,447
3/17/2020 Casablanca Global Intermediate Holdings L.P. British Virgin Islands Media & entertainment CCC+ B- $1,900
4/9/2020 Swissport Group S.a.r.l Luxembourg Transportation CCC B- $1,803
5/28/2020 Europcar Mobility Group S.A. France Media & entertainment CCC+ B- $1,703
4/14/2020 Richmond UK Holdco Ltd. U.K. Media & entertainment CCC+ B- $1,684
3/31/2020 Vallourec France Oil & gas exploration & production CCC+ B- $1,603
11/4/2020 PAX Midco Spain Spain Retail/restaurants CCC+ B- $1,222
9/11/2020 Piolin Bidco S.A.U. Spain Media & entertainment CCC+ B- $1,147
3/20/2020 Hurtigruten Group AS (Silk Holdings Sarl) Norway Media & entertainment CCC+ B- $1,129
5/29/2020 Technicolor S.A. France High technology CCC- B- $1,097
10/22/2020 Joye Media SLU Spain Media & entertainment CCC+ B- $1,089
11/16/2020 Playa Hotels & Resorts N.V. Netherlands Media & entertainment CCC+ B- $1,010
5/18/2020 L1R HB Finance Ltd. U.K. Retail/restaurants CCC+ B- $995
7/9/2020 Casper MidCo SAS France Media & entertainment CCC+ B- $981
9/28/2020 Vue International Bidco PLC U.K. Media & entertainment CCC+ B- $952
11/23/2020 Lernen Bondco PLC U.K. Consumer products CCC+ B- $869
Debt volume includes subsidiaries. Note: Pink means speculative-grade rating. Data as of Feb. 28, 2021; includes sovereigns. Source: S&P Global Ratings Research.
28Ratings Summary| Sovereigns In February 2021
Country Rating Outlook 5-year credit default spread Median rating financials Median rating nonfinancials
Austria AA+ Stable 10.1 A- A
Belgium AA Stable 12.5 A- BBB
Bulgaria BBB Stable 45 BB
Czech Republic AA Stable 35.3 BBB
Denmark AAA Stable 7.9 A BBB-
Estonia AA- Stable 55.9 A-
Finland AA+ Stable 10.5 A- BBB-
France AA Stable 15.4 A BB
Germany AAA Stable 10.2 A+ BB-
Greece BB- Stable 77.4 B B
Iceland A Stable 54.6 BBB BBB+
Ireland AA- Stable 14.3 BBB BBB-
Italy BBB Stable 74.3 BBB BB+
Jersey AA- Stable BB-
Latvia A+ Stable 56.3 BBB+
Liechtenstein AAA Stable A AAA
Lithuania A+ Stable 55.7 BBB+
Montserrat BBB- Stable BBB-
Netherlands AAA Stable 10 A- B+
Norway AAA Stable 8.2 BBB+ BBB+
Poland A Stable 48.5 BBB+ BB+
Romania BBB- Negative 86.4 BB-
Slovenia AA- Stable 67.5 BBB- BBB+
Spain A Negative 35.6 BBB+ BB-
Sweden AAA Stable 10.9 A BBB
Switzerland AAA Stable 7 A BBB
U.K. AA Stable 15.6 A- B+
Debt volume includes subsidiaries. Note: Pink indicates a speculative-grade rating. Data as of Feb. 28, 2021. Source: S&P Global Ratings Research.
29Ratings Actions And Defaults Summary
Ratings Actions | Weakest Links And Default Rates
Europe’s Weakest Links Stay At Near Record Highs, Pointing To Higher Likely Default
Rates In The Near Term
Weakest links counts (left scale)
Weakest links share of speculative-grade population (right scale) – The number of European issuers classified
Europe 12-month trailing speculative-grade default rate (right scale)
as weakest links has fallen to 76,
120 25% comprising 14% of the speculative-grade
rated population since the start of the year.
100 Weakest links are issuers rated ‘B-’ and
20%
below with a negative outlook or on
CreditWatch with negative implications; they
80
typically have a default rate eight times that
15%
of speculative-grade issuers more broadly.
Number
60
– The default rate rose to 5.4% in February
10% 2021.
40
– For more information, see “Revenue
Pressures Continue To Weigh On Consumer-
5%
20 Related Weakest Links”, published Feb. 22,
2021.
0 0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Data as of Feb. 28, 2021. Source: S&P Global Ratings Research and S&P Global Market Intelligence’s CreditPro®.
31Rating Actions | Corporate Defaults By Reason And Default Rate
Trend
– The number of defaults reached an all-time high in 2020. Nevertheless, the default rate was lower than that in 2009.
– For more information, see “European Corporate Defaults Reach Five, Surpassing The First-Quarter 2020 Total,” published on March 12,
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
Confidential Europe 12-month trailing speculative-grade default rate (right scale)
100% 45 10%
90% 40 9%
80% 35 8%
70% 7%
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 Mar. 10, 2021. Default rates as of September 2020. Source: S&P Global Ratings and S&P Global Market Intelligence’s CreditPro®.
32Ratings Transitions | Transition Rates
– Ratings stability. Issuers rated ‘B+’ and below were less stable over the year until September, compared with the historical average. Most
movements were to a lower rating. This reflects the vulnerability in European credit markets, mostly based on the economic impact of
COVID-19.
– Defaults in the ‘CCC/C’ categories are higher than historical averages.
One-Year Transitions, February 2020 To February 2021 One-Year Transitions Since 1981
Rating BBB- BB+ BB BB- B+ B B- CCC/C D Rating BBB- BB+ BB BB- B+ B B- CCC/C D
BBB- 69.52 14.29 0.95 1.90 0.00 0.00 0.00 0.00 0.00 BBB- 68.43 6.54 1.89 0.63 0.13 0.25 0.00 0.19 0.13
BB+ 4.23 64.79 16.90 1.41 1.41 2.82 0.00 0.00 0.00 BB+ 12.00 61.24 9.77 2.64 1.12 0.51 0.10 0.20 0.00
BB 0.00 5.88 58.82 14.71 1.47 1.47 0.00 1.47 0.00 BB 1.43 11.26 60.78 7.63 2.29 0.67 0.10 0.67 0.19
BB- 0.00 1.35 1.35 63.51 14.86 5.41 0.00 2.70 2.70 BB- 0.39 1.17 10.58 57.96 11.84 3.20 0.58 0.29 0.87
B+ 0.00 0.00 0.00 3.16 56.84 22.11 6.32 4.21 2.11 B+ 0.14 0.65 2.17 9.13 56.30 12.75 2.54 1.67 0.94
B 0.00 0.00 0.00 0.40 0.40 57.71 22.53 7.11 2.37 B 0.10 0.10 0.16 1.20 6.02 60.92 10.79 3.56 1.73
B- 0.00 0.00 0.00 0.00 0.00 3.64 51.82 30.00 6.36 B- 0.00 0.00 0.00 0.52 1.04 9.47 52.40 16.34 5.71
CCC/C 0.00 0.00 0.00 0.00 0.00 0.00 9.09 36.36 43.18 CCC/C 0.00 0.00 0.00 0.00 0.25 1.48 10.62 40.25 28.64
Transition rates as of Feb. 2021. Sources: S&P Global Market Intelligence’s CreditPro®.
.
33Ratings Additional Details
Issuance| Sovereign Top 20 Deals In 2021 By Debt Amount
Sovereign rating (as
Issue date Issuer Country Marketplace Issue rating Security description Currency Issuance (mil. $)
of Oct. 31, 2020)
2/16/2021 Republic of Italy Italy EURO/144A NR BBB 0.600% Sr Unsecurd Nts due '31 EUR $24,200.4
1/26/2021 European Union Luxembourg Euro Public AA BBB Zero Cpn Zero Cpn Sr Nts due '28 EUR $12,612.2
1/26/2021 European Union Luxembourg Euro Public AA A Zero Cpn Zero Cpn Sr Nts due '28 EUR $12,612.2
1/5/2021 Republic of Italy Italy EURO/144A NR A 0.950% Sr Unsecurd Nts due '37 EUR $12,221.3
1/13/2021 Kingdom of Spain Spain EURO/144A NR BBB 0.100% Fxd/Straight Bd due '31 EUR $12,139.6
1/27/2021 Austria Austria EURO/144A NR AA Zero Cpn Zero Cpn Sr Nts due '31 EUR $10,014.4
2/16/2021 Republic of Italy Italy EURO/144A NR A 0.150% Sr Unsecurd Nts due '51 EUR $9,606.6
United Kingdom of Great Britain & Northern United
1/19/2021 Euro market public issue NR AA IPG: Gilt + 2.5/3 bps. GBP $8,818.9
Ireland Kingdom
1/19/2021 Republic of France France Euro market public issue NR BBB IPG: +9bps area. EUR $8,451.6
1/12/2021 Kingdom of Belgium Belgium EURO/144A NR AA Zero Cpn Zero Cpn Sr Nts due '31 EUR $7,496.5
2/4/2021 Republic of France France Domestic auction NR A - EUR $7,404.2
1/5/2021 NTMA Ireland-Rep Euro Public NR A Zero Cpn Zero Coupon Bnd due '31 EUR $6,951.6
1/7/2021 EIB Luxembourg Euro Public AAA BBB Zero Cpn Zero Coupon Bnd due '31 EUR $6,351.4
1/7/2021 Republic of France France Domestic auction NR BBB - EUR $6,154.8
1/5/2021 KfW Bankengruppe - KFW Germany Euro market public issue AAA A Short first coupon. EUR $6,132.3
2/9/2021 Kingdom of Spain Spain Euro market public issue NR A Obligaciones del Estado. EUR $6,020.5
1/5/2021 Federal Republic of Germany Germany Domestic auction NR AA EUR $5,934.0
2/2/2021 Kingdom of Belgium Belgium EURO/144A NR AAA 0.650% Sr Unsecurd Nts due '71 EUR $5,918.9
1/7/2021 Bayer AG Germany Euro Public BBB BBB 0.050% Sr Unsecurd Nts due '25 EUR $5,898.4
2/2/2021 Federal Republic of Germany Germany Domestic auction NR AA EUR $5,723.0
Data as of year to Feb. 28, 2021; includes local and foreign currencies. Blue means investment-grade rating, and grey means not rated. Source: S&P Global Ratings Research.
35Issuance| Financial And Nonfinancial Top 20 Deals
Sovereign rating
Issue Date Issuer Country Marketplace Issue rating Security description Currency Issuance (mil. $)
(as of Oct. 31, 2020)
7/7/2020 EFSF Luxembourg Euro Public AA AAA Zero Cpn Zero Cpn Sr Nts due '25 EUR $4,610.2
1/11/2021 EFSF Luxembourg Euro Public NR AAA Zero Cpn Zero Coupon Bnd due '31 EUR $3,762.35
10/6/2020 EFSF Luxembourg Euro Public AA AAA Zero Cpn Zero Coupon Bnd due '27 EUR $3,619.08
4/20/2020 EFSF Luxembourg Euro Public AA AAA Zero Cpn Zero Cpn Sr Nts due '23 EUR $3,280.79
3/27/2020 Credit Suisse Grp Ag Switzerland Euro Public BBB+ AA Medium-Term Nts due '30 US $3,000
2/10/2021 Bellis Acquisition Co PLC United Kingdom EURO/144A NR AA 3.250% Sr Secured Nts due '26 STG $3,111.3
6/17/2020 BP Capital Markets Plc United Kingdom Euro Public BBB BBB Perpetual Gtd Sub Bonds EUR $2,810.75
4/23/2020 Intesa Sanpaolo Spa Italy Euro Public NR BBB Flt Rte Gtd Bds due '35 EUR $2,586.24
4/23/2020 Intesa Sanpaolo Spa Italy Euro Public NR AA Flt Rte Gtd Bds due '35 EUR $2,586.24
3/25/2020 HSBC Holdings PLC United Kingdom U.S. Public A AAA 4.950% Global Notes due '30 US $2,496.88
4/1/2020 L-Bank Germany Euro Public AAA AA 0.625% Guaranteed Bds due '22 US $2,493.95
5/26/2020 Total Capital International France U.S. Public A+ AA 3.127% Gtd Global Nts due '50 US $2,500
4/14/2020 UBS AG London United Kingdom EURO/144A A+ AA 1.750% Sr Unsecurd Nts due '22 US $2,496.73
6/17/2020 BP Capital Markets Plc United Kingdom Euro Public BBB AA Perpetual Gtd Sub Bonds EUR $2,529.68
6/17/2020 BP Capital Markets Plc United Kingdom U.S. Public BBB AA Perpetual Gtd Sub Bonds US $2,500
6/17/2020 BP Capital Markets Plc United Kingdom U.S. Public BBB AAA Perpetual Gtd Sub Bonds US $2,500
2/23/2021 America Movil Bv Netherlands Euro Public BBB+ AAA Zero Cpn Gtd Exch Bonds due '24 EUR $2,668.66
3/10/2020 EFSF Luxembourg Euro Public AA AAA 0.400% Sr Unsecurd Nts due '26 EUR $2,362.21
2/1/2021 EFSF Luxembourg Euro Public AA AA Zero Cpn Zero Coupon Bnd due '27 EUR $2,488.04
4/1/2020 Anheuser-Busch Inbev SA/NV Belgium U.S. Public A- 4.500% Gtd Global Nts due '50 US $2,248.29
AA
Data as of year to Feb. 28, 2021. Blue means investment-grade rating, and grey means not rated. Source: S&P Global Ratings Research.
.
36Ratings 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 United Kingdom Integrated Oil & Gas A+ AA- Downgrade $89,396
2/18/2021 Total SE France Integrated Oil & Gas A A+ Downgrade $65,554
1/8/2021 Fiat Chrysler Automobiles N.V. Netherlands Automotive BBB- BB+ Upgrade $25,561
Chemicals, Packaging &
2/25/2021 Atotech UK Topco Ltd. United Kingdom B+ B Upgrade $6,873
Environmental Services
Chemicals, Packaging &
1/29/2021 Atotech UK Topco Ltd. United Kingdom B B- Upgrade $4,837
Environmental Services
2/15/2021 IGT Holding IV AB Sweden High Technology B B- Upgrade $3,000
2/17/2021 TechnipFMC Plc United Kingdom Oil & Gas Exploration & Production BB+ BBB+ Downgrade $2,572
Chemicals, Packaging &
1/27/2021 Kleopatra Holdings 1 S.C.A. Luxembourg B B- Upgrade $2,193
Environmental Services
2/24/2021 Smurfit Kappa Group PLC Ireland Forest Products & Building Materials BBB- BB+ Upgrade $2,125
2/11/2021 Vallourec France Oil & Gas Exploration & Production SD CC Downgrade $1,754
2/17/2021 Elior Group S.A. France Media & Entertainment BB- BB Downgrade $1,680
Chemicals, Packaging &
2/2/2021 SK Invictus Intermediate II S.a r.l. Luxembourg B B- Upgrade $1,430
Environmental Services
1/25/2021 Horizon Therapeutics plc Ireland Health Care BB BB- Upgrade $1,018
1/26/2021 TalkTalk Telecom Group PLC United Kingdom Telecommunications B+ BB- Downgrade $923
2/9/2021 Cookie Acquisition S.A.S. France Consumer Products B- B Downgrade $721
2/15/2021 DSV Panalpina A/S Denmark Transportation A- BBB+ Upgrade $606
2/24/2021 Arvos LuxCo S.a.r.l. Luxembourg Capital Goods CCC B- Downgrade $591
2/22/2021 CatLuxe Sarl (CatLuxe Acquistion Sarl) Luxembourg Consumer Products SD CCC+ Downgrade $261
2/11/2021 Navico Group AS Norway High Technology CCC+ CCC Upgrade $260
DEPFA Bank PLC (FMS Wertmanagement Anstalt des
2/19/2021 Ireland Bank BBB BBB+ Downgrade $60
oeffentlichen Rechts)
Data as of Feb. 28, 2021, excludes sovereign, and includes only latest rating changes. Pink means speculative-grade rating and blue means investment-grade rating. Source: S&P Global Ratings Research.
.
37Maturing Debt | Europe Financial And Nonfinancial
Top 25 Deals Set To Mature Through May 2021
Issue date Maturity date Issuer Country Sector Marketplace Issue rating Security description Currency Issuance (mil. $)
5/17/2016 5/23/2021 Petrobras Global Finance BV Netherlands Integrated Oil & Gas U.S. Public B+ 8.375% Gtd Global Nts due '21 US $4,950.1
2/21/2017 3/29/2021 EFSF Luxembourg Finance Company Euro Public AA Zero Cpn Zero Coupon Bnd due '21 EUR $4,235.77
5/21/2009 5/15/2021 Barclays Bank PLC United Kingdom Banks Euro Public NR 10.000% Medium-Term Nts due '21 STG $3,168.6
3/1/2016 3/8/2021 HSBC Holdings PLC United Kingdom Banks U.S. Public A 3.400% Global Notes due '21 US $2,993.16
4/8/2014 4/23/2021 Wind Acquisition Finance SA Luxembourg Telecommunications EURO/144A B 7.375% Senior Notes due '21 US $2,800
5/18/2016 5/25/2021 HSBC Holdings PLC United Kingdom Banks U.S. Public A 2.950% Global Notes due '21 US $2,496.88
3/29/2011 4/5/2021 HSBC Bank PLC United Kingdom Banks U.S. Public AA- 5.100% Global Notes due '21 US $2,494.58
4/8/2014 4/23/2021 Wind Acquisition Finance SA Luxembourg Telecommunications EURO/144A B 7.000% Senior Notes due '21 EUR $2,414.79
3/1/2011 3/8/2021 ICO Govt Gtd Spain Finance Company Euro Public AA 6.000% Gtd Mdm-Trm Nts due '21 EUR $2,401.92
3/8/2016 3/16/2021 Dexia Credit Local SA France Banks Euro Public AA 0.200% Gtd Mdm-Trm Nts due '21 EUR $2,198.26
3/24/2014 3/31/2021 Morgan Stanley & Co Intl PLC United Kingdom Broker Euro Public A- 2.375% Fxd/Straight Bd due '21 EUR $2,067.34
3/5/2014 3/17/2021 BPCE SA France Banks Euro Public A+ 2.125% Medium-Term Nts due '21 EUR $2,053.95
5/10/2018 5/18/2021 HSBC Holdings PLC United Kingdom Banks U.S. Public A Global FRNs due '21 US $2,000
UBS Group Funding (Jersey)
3/29/2016 4/15/2021 Switzerland Broker EURO/144A BBB+ 3.000% Gtd Sr Notes due '21 US $1,998.5
Ltd
4/11/2011 4/15/2021 Societe Generale SA France Banks EURO/144A A+ 5.200% Sr Unsecurd Nts due '21 US $1,997.24
3/22/2011 3/29/2021 Sanofi-Aventis SA France Healthcare U.S. Public AA- 4.000% Global Notes due '21 US $1,979.52
11/20/2013 4/27/2021 EDF SA France Utility Euro Public A+ 2.250% Medium-Term Nts due '21 EUR $1,872.96
7/7/2016 5/23/2021 Petrobras Global Finance BV Netherlands Integrated Oil & Gas U.S. Public B+ 8.375% Gtd Global Nts due '21 US $1,784.49
4/21/2011 4/27/2021 ABN AMRO Bank NV Netherlands Banks Euro Public A- 6.375% Subord Bonds due '21 EUR $1,779.73
3/9/2011 3/16/2021 Commerzbank AG Germany Banks Euro Public BBB- 7.750% Senior Sub MTN due '21 EUR $1,738.04
10/11/2010 4/19/2021 Credit Agricole SA France Banks Euro Public A+ 3.900% Mdm-Trm Sub Nts due '21 EUR $1,728.34
2/7/2013 4/15/2021 Lynx I Corp United Kingdom Finance Company EURO/144A BB- 6.000% Sr Secured Nts due '21 STG $1,728.32
3/8/2011 3/15/2021 Terna SpA Italy Utility Euro Public A+ 4.750% Medium-Term Nts due '21 EUR $1,724.44
2/21/2011 3/2/2021 Societe Generale SA France Banks Euro Public A+ 4.750% Medium-Term Nts due '21 EUR $1,703.12
Medtronic Global Holdings
3/4/2019 3/7/2021 Luxembourg Healthcare Euro Public A Zero Cpn Zero Cpn Gtd Bd due '21 EUR $1,698.48
SCA
Data as of Feb. 28, 2021, and excludes sovereigns. Pink means speculative-grade rating , blue means investment-grade rating, and grey means not rated. Table does not include China deals and data is for foreign currency
only without perpetuals. Source: S&P Global Ratings Research.
.
38Related Research
– European Defaults Reach Nearly One-Third Of This Year's Global Tally, March 25, 2021
– Risky Credits: Net Upgrades And Higher Oil Prices Offer Some Relief To The Weakest-Rated Companies In The U.S. And
Canada, March 17, 2021
– No Tantrum Yet As Global Growth Gains Momentum, March 11, 2021
– The U.S. Distress Ratio Is Down Nearly 90% Since March, March 10, 2021
– Revenue Pressures Continue To Weigh On Consumer-Related Weakest Links, Feb. 22, 2021
– Global Financing Conditions: Bond Issuance Could Decline 3% To $8 Trillion In 2021, Jan. 28, 2021
– Credit Conditions Asia-Pacific: The Rebound Has Begun, Dec. 3, 2021
– Global Corporate Debt Market: State Of Play In 2020, June 25, 2020
39Analytical Contacts
Sarah Limbach Sudeep Kesh
Economist, Credit Markets Research Head of Credit Markets Research
sarah.limbach@spglobal.com sudeep.kesh@spglobal.com
Sundaram Iyer Evan Gunter
Senior Analyst, Research Director, Ratings Performance Analytics
sundaram.iyer@spglobal.com evan.gunter@spglobal.com
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