(Bloomberg) -- Distressed exchanges remain the leading cause of defaults this year and are at their highest since 2009, driven partly by companies that have defaulted more than once, according to a report by S&P Global Ratings.
The global year-to-date default tally stood at 87 at the end of July, four fewer than the previous year and just one above the five-year average. In just over half of the cases, the default was triggered by a distressed exchange, according to the report released on Thursday.
Companies typically propose distressed exchanges — a kind of restructuring agreement — to avoid bankruptcy, improve liquidity, reduce debt and manage its maturity dates. Among the distressed exchanges cited in the report were Vue Entertainment International Ltd, Hurtigruten Group AS and Lumen Technologies Inc.
Repeat defaulters accounted for close to one-third of the year-to-date defaults. “The number of repeat defaulters increased in recent years, not least due to the fact that more companies become comfortable with high leverage levels in their capital structures, many of which were set up during—and in anticipation of—sustained periods of low interest rates,” the report stated.
By region, there have been 26 defaults in Europe year-to-July, 86% more than the previous year and the highest since 2008, whereas there have been 52 in the US, down eight compared with 2023.
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