Default, Transition, and Recovery: 2018 Annual Sovereign Default And Rating Transition Study

Just one sovereign rated by S&P Global Ratings defaulted in 2018, marking a dramatic decrease from the high of six defaults among five sovereigns in 2017. The default of Barbados in June made 2018 the seventh straight year with at least one sovereign default--the second-longest streak on record. Rating actions on sovereigns were more positive in 2018 than in 2017, with more upgrades than downgrades for the first time since 2010 and the lowest number of downgrades since 2007. Economic reasons triggered most upgrades, while downgrade causes were more diverse. Regional differences were evident: European sovereigns accounted for most of the upgrades for the year, as they did in 2017, while Latin America had half of the downgrades. The Middle

...- One sovereign defaulted in 2018, which was the lowest number since 2015. It was the seventh straight year with at least one sovereign default but marked a significant decrease from the high of six in 2017. - For the first time in eight years, sovereign upgrades outnumbered downgrades. - The ratio of downgrades to upgrades improved for the second consecutive year. However, the average number of notches for downgrades increased to 1.22 in 2018 from 1.18 in 2017, and the average number of notches for upgrades fell to 1.07 from 1.15. - Of the 130 active sovereign ratings at the end of 2018, 55% were investment grade--an improvement from 53% the previous year. - The Gini coefficients for the one-, three-, five-, and 10-year horizons are 91%, 78%, 73%, and 72%, respectively, suggesting a strong relationship between sovereign ratings and defaults. Just one sovereign rated by S&P Global Ratings defaulted in 2018, marking a dramatic decrease from the high of six defaults among five sovereigns...

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