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Economy

Review of Credit and Solvency Trends in 2020

Source: https://www.creditbenchmark.com/the-covid-year-review-of-credit-and-solvency-trends-in-2020/

  • Global corporate credit risk increased nearly 20% in 2020. Global Financials credit risk increased nearly 10%.
  • The global percentage of investment grade corporates dropped from 50% to 46%.
  • The proportion in category c has more than doubled.
  • North American credit risk rose 24%. Sovereign risk has risen by 5%.
  • Fallen Angels: nearly half of the Travel and Leisure sector dropped from investment grade to high yield. The average across all sectors is 14%, compared with 8% for the same period in 2019.
  • Rising Stars: nearly 20% of the Aerospace and Defense sector moved from high yield to investment grade, but more than a quarter of the same sector are Fallen Angels – showing how Covid is disrupting traditional business classifications.
  • A number of global industries saw credit risk increase by more than 30%. In some global sectors, credit risk increased by as much as 70%. Regional increases have been even higher: US Hotel credit risk rose by a staggering 340%. Airlines globally deteriorated 160%, equivalent to two notches in the 21-category credit scale. UK Aerospace insolvency risk rose 56% and is still deteriorating.
  • Global leveraged loan private issuer credit quality deteriorated more than 60%; public issuers by about 40%.


Figure 1.1 shows the cumulative increase in Fallen Angels, with each layer showing the cumulative % total of the respective industry universe, by December from a March start date corresponding to the onset of the pandemic.

The 2020 pandemic brought various forms of disruption, hardship and human tragedy. Governments and businesses around the world had to rely on trial and error to find the best response.

There have been some high-profile corporate winners – companies that support home working, online delivery and logistics providers, packaging firms, some pharmaceuticals. But Covid has highlighted economic and social inequalities, and added “health poverty” to the lexicon.

There have also been many losers, with almost entire industries being downgraded to junk. But default rates have been low, due to massive government support programs, and a wave of mergers and acquisitions as larger firms with strong balance sheets swallow their struggling competitors. Good news for investment banks, who along with insurance companies have weathered the crisis well.

To learn more about the data behind this article and what Credit Benchmark has to offer, visit https://www.creditbenchmark.com/.

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ForwardKeys is one of the leading travel analytics firms that provides investment firms with alternative and predictive data on the travel industry. Data is offered both on the demand and the offer-side of the aviation market.

Actual Air Reservations is an aggregation of flight bookings made via the Global Distribution Systems. Exclusive agreements make that global travel data is available, including regions that are generally difficult to track. This data contains valuable insights into the profile, behaviour, and impact of events on past, present and future air travellers.

Seat Capacity provides insights into the scheduled flights from 99% of global commercial airlines.

Financial institutions use this data for artificial intelligence and predictive models to forecast the performances of businesses. Combined, the datasets can provide insights into the financial health of businesses operating in the travel and tourism industry. This list contains companies like airlines, airplane leasing companies, oil companies, hotels and travel agencies.

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Data is changing the speed of business. Investors, Corporations, and Governments are buying new, differentiated data to gain visibility make better decisions. Don't fall behind. Let us help.

DATA PROVIDER SPOTLIGHT

ForwardKeys

ForwardKeys is one of the leading travel analytics firms that provides investment firms with alternative and predictive data on the travel industry. Data is offered both on the demand and the offer-side of the aviation market.

Actual Air Reservations is an aggregation of flight bookings made via the Global Distribution Systems. Exclusive agreements make that global travel data is available, including regions that are generally difficult to track. This data contains valuable insights into the profile, behaviour, and impact of events on past, present and future air travellers.

Seat Capacity provides insights into the scheduled flights from 99% of global commercial airlines.

Financial institutions use this data for artificial intelligence and predictive models to forecast the performances of businesses. Combined, the datasets can provide insights into the financial health of businesses operating in the travel and tourism industry. This list contains companies like airlines, airplane leasing companies, oil companies, hotels and travel agencies.