KUALA LUMPUR (June 27): Eighteen companies rated by S&P Global Ratings, including eight confidential issuers, defaulted in Asia in 2022, triple the number of defaults from 2021.
In its "2022 Annual Asia Corporate Default And Rating Transition Study," published on Tuesday (June 207), S&P Global Ratings economist Vince Conti said 2022 was a year of increased uncertainty, both globally and in Asia.
"On one hand, post-pandemic recoveries were driving domestic recoveries in the region, with matching export strength from advanced economies' growth as well.
“On the other hand, cost-push inflation was a major challenge, especially since the onset of the Russia-Ukraine conflict," he said.
S&P said Asia's speculative-grade default rate doubled to 6.4% in 2022, from 3.2% in 2021.
It said that globally, the 2022 speculative-grade default rate was 1.9%, from 1.7% in 2021.
The rating agency said the default rate in the US in 2022 increased to 1.7% from 1.5% the prior year; in Europe to 2.2% from 1.8%; and emerging and frontier markets to 2.4% from 1.9%.
The one-year weighted average Gini coefficient for Asia was 90.2%, the three-year was 84.8%, and the five-year was 79.4%.
Global corporate defaults in 2022 surpassed the 2021 total by 15% (83 in 2022 versus 72 in 2021).
S&P said these defaults reflected regional and sectoral vulnerabilities.
In particular, many Asian defaults reflected signs of stress among homebuilders, particularly due to China's property market slump. In Asia, the number of defaults tripled to 18 — a new historical high, from six last year.
The total number of rated issuers in Asia decreased to 831 by end-2022 from 856 as of end-2021, with 6.43% of the latter seeing ratings withdrawn.
There were 47 newly rated entities over the year, down from 62 in 2021. The distribution of these ratings was broadly steady from last year.