Fixed Income Research
wider
Fixed Income
Research
KDN PP 16084/10/2012 (030859)
2016 Annual Corporate Default
and Rating Transitions Study
Fixed Income Research led by:
Nor Zahidi Alias
Chief Economist
+603 2082 2270
[email protected]
www.marc.com.my
1
03 April 2017
2016 Annual Corporate Default and Rating Transitions Study
Please read the disclaimer on the last page of this report
Fixed Income Research
Contents:
Executive Summary
3
Ringgit Corporate Bond Market
4
Introduction to MARC’s Corporate Default Study
Summary of 2016 Experience
Rating Transition
5
6 - 10
11 - 12
Cumulative Accuracy Profile (CAP) and Accuracy Ratio
13
Path to Default from Original Rating and Last Rating
14
Corporates to Maintain Credit-Supportive Corporate Earnings
15
Appendix I: Data and Methodologies
16 - 17
Appendix II: Details of 2016 Rating Migrations
18
Appendix III: 1-year Migrations at Modifier Level
18
List of Exhibits:
2
Distribution of issuers in MARC universe by rating bands, 2016
3
Distribution of issuers in MARC universe by sector, 2016
3
Historical rating migration trend since 2007
3
Historical stability rate
3
Corporate bond issuance trends
4
Corporate bond: Industry and rating distribution
4
Distribution of outstanding issuers by rating band
5
Summary of annual rating actions
6
1-year rating stability by rating band: 1998-2016
7
Rating drift versus real GDP growth in Malaysia
7
Annual corporate downgrade rates by rating band
8
Corporate downgrade rates by industry: long-term average
8
Annual corporate default rates by rating band
9
Corporate default rates by industry: long-term average
9
Cumulative default rates by rating band: 1998 – 2016
10
Effectiveness of MARC’s corporate ratings as default predictor (1998 – 2016)
10
History of issuers downgraded to D
10
1-year cumulative rating transition matrix: 1998 –2016
11
1-year cumulative rating transition matrix: 1998 –2016 (NR Adjusted)
12
2-year cumulative rating transition matrix: 1998 –2016 (NR Adjusted)
12
3-year cumulative rating transition matrix: 1998 –2016 (NR Adjusted)
12
4-year cumulative rating transition matrix: 1998 –2016 (NR Adjusted)
12
5-year cumulative rating transition matrix: 1998 –2016 (NR Adjusted)
12
1-year CAP curve: 1998-2016
13
Long-term 1-year accuracy ratio
13
Average time to default and default rating path (number of months)
14
Number of months prior to default
14
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Executive Summary
This report presents default statistics in MARC’s rating universe and the rating transition experience of corporate bond
issuers in 2016. Briefly:

Rating accuracy continued to improve. The absence of severe negative rating actions or rating cliffs underscores
continuing timely rating action on the part of MARC. For the period 1998-2016, the one-year accuracy ratio edged
up to 67.3%, from 66.9% for the period 1998-2015. This indicates that MARC’s ratings have demonstrated an
improvement in the effectiveness of MARC’s ratings as a measure of relative default risk.

Rating stability rose to 93.9% (2015: 90.8%), the highest level since 2002. That brought the long-term average
rating stability rate modestly higher to 85.1% (2015: 84.5%). By issuer count, a total of 58 issuers held on to their
existing ratings throughout the year of 2016. After adjusting for withdrawn issuers, the stability rates for “AAA”, “AA”
and “A” rated issuers were 98.6%, 94.0% and 88.5%, respectively, demonstrating a strong positive relationship
between the ratings of investment grade credits and long-run ratings stability.

Trend of downgrades outpacing upgrades persists. In 2016, MARC recorded four rating downgrades (2015: six
downgrades) and no rating upgrades (2015: zero upgrades) for its publicly rated credits and non-publicly disclosed
rated credits. On a more positive note, the slower pace of rating downgrades signals a likelihood of an improvement
in corporate quality ahead. It is also worth noting that all downgraded issuers experienced no more than a two-notch
rating change.

No defaults for a second consecutive year. As in the previous year, no issuers defaulted in 2016. As a result, the
long-term annual corporate default rate of the agency’s rated universe fell marginally to 2.1%, translating to longterm default rates of 0.9% and 9.0% for investment grade and high yield credits, respectively.
Fig. 1: Distribution of issuers in MARC universe by rating
bands, 2016
BBB
9%
B
1%
BB
5%
Fig. 2: Distribution of issuers in MARC universe by sector,
2016
Trading/Services
12%
C
0%
Quasi Sovereign
2%
Construction
3%
Finance
26%
AAA
30%
A
8%
Property
17%
Plantation
1%
Industrial
Products
1%
Infrastructure &
Utilities
38%
AA
47%
Source: MARC Fixed Income Research
Source: MARC Fixed Income Research
Fig. 3: Historical rating migration trend since 2007
Upgrade count
Downgrade count
Fig. 4: Historical stability rate
Default count
93%
12
91%
10
89%
Long-term average:
85.1%
87%
8
85%
6
83%
81%
4
79%
2
77%
75%
0
2007
2007
2008
2009
2010
2011
2012
Source: MARC Fixed Income Research
3
2013
2014
2015
2016
2007
2008
2009
2010
2011
2012
Source: MARC Fixed Income Research
2016 Annual Corporate Default and Rating Transitions Study
2013
2014
2015
2016
Fixed Income Research
Ringgit Corporate Bond Market
Total gross issuance in the corporate debt market in 2016 came in at RM84.8 billion, slightly lower than the previous
year’s RM85.0 billion. The marginal fall was largely due to a decrease in financing activities in both the private placement
(2016: RM13.2 billion; 2015: RM14.0 billion) and rated corporate bond (2016: RM43.4 billion; 2015: RM55.3 billion)
segments. Meanwhile, unrated government-guaranteed (2016: RM28.1 billion; 2015: RM15.6 billion) registered
increases. Concerns over US interest rate hikes, volatile crude oil prices and a relatively weak ringgit underpinned the
challenges faced by corporate issuers in 2016.
Issuances from the financial services (RM37.3 billion) and infrastructure & utilities (RM21.6 billion) sectors continued to
dominate the corporate bond primary market in 2016. DanaInfra Nasional, Cagamas and Lembaga Pembiayaan
Perumahan Sektor Awam (LPPSA) led the issuances from the financial services sector, while Sarawak Hidro Sdn Bhd,
Maxis Broadband Sdn Bhd and Lebuhraya DUKE 3 Sdn Bhd dominated issuances in the infrastructure & utilities sector.
Based on rating distribution, AAA and AA rated bonds continued to dominate, accounting for more than 91% of total
funds raised throughout 2016 (2015: 96%). Notably, there were two issues from the high yield segment from Special
Coral Sdn Bhd, a special purpose vehicle set up to fund the acquisition of Queensbay Mall in Penang. The company
issued two tranches of asset-backed securities (ABS) MTN worth RM30.3 million from its RM800 million MTN
programme.
Fig. 5: Corporate bond issuance trends (RM billion)
Fig. 6: Corporate bond issuance: by Industry and rating
distribution
Rated Corporate Bonds
140
Unrated Government Guaranteed
123.8
Unrated Corporate Bonds
120
100
80
86.2
85.9
85.0
84.8
2013
2014
2015
2016
70.7
61.0
53.1
60
40
20
0
2009
2010
2011
2012
Source: BPAM, MARC Fixed Income Research
Source: BPAM, MARC Fixed Income Research
Despite geopolitical challenges in 2016, collectively, corporate earnings have held up, reflected by the improvement in
earnings before interest, tax, depreciation and amortisation (EBITDA), based on a sample of 893 Bursa-listed
corporations (excluding the financial sector). The improvement was brought about by better corporate earnings from the
plantation and construction sectors. As for corporate borrowings, growth continued to be modest at circa 5% p.a. between
2015 and 3Q2016 compared to an average of 8% p.a. between 2010 and 2014. This was partly due to fewer debt-funded
acquisitions and implementation of cost-cutting measures. Our analysis of corporate leverage suggests that the overall
leverage position has improved, with average debt-to-equity (D/E) ratio standing below 0.4x for 2016.
Yields on Malaysian corporate bonds have crept upwards in response to the new US administration’s fiscal stimulus
plans as well as rising expectations of further Fed interest rate hikes. However, the increase has not been as significant
as that of local govvies due to the higher concentration of foreign holdings of the latter. Credit spreads on domestic bonds
which stood at 226 bps at the beginning of 2016 narrowed significantly in November to 155 bps before ending 2016 at
185 bps (2015: 224 bps). Going forward, we envisage Malaysian corporate bond yields to remain stable in 2017 against
a backdrop of a stable interest rate environment, recovery in commodity prices, attractive yields, strong economic
fundamentals and improving corporate earnings.
4
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Introduction to MARC’s Corporate Default Study
This report presents the default statistics and rating transition experience of corporate bond issuers in 2016. As we have
mentioned in the past reports, the problem of shrinking sample size has become more acute post-GFC as issuances
become more concentrated in a smaller number of individual issues and issuers. To address this problem, we have,
again, included implied senior unsecured debt ratings or public information ratings of corporates and financial institutions
acting in the capacity of credit enhancement provider, and standalone ratings of MARC-rated issuers with a Danajamin
Nasional Berhad (Danajamin) credit wrap. MARC maintains full rating surveillance on all these confidentially rated
issuers. Also, as in the past years, the structured finance universe and short-term ratings remain excluded.
An entity’s credit rating captures its corporate credit risk and relative default probability, and higher credit ratings stability
is expected at higher rating bands. Similarly, default rates are expected to be lower for higher-rated debt, and should
increase as we move down the credit rating scale.
Due to the small number of issuers in our corporate bond ratings universe, there may be some element of statistical bias.
As a result, some of the reported statistics may be inconclusive. Furthermore, ongoing data enhancement efforts to
ensure increased transparency and integrity may limit comparability with earlier default and rating transitions studies. As
such, this study is self-contained and supersedes previous studies.
There were 66 issuers (excluding structured finance and short-term paper issuers) in MARC’s rating universe at the
beginning of 2016 with 56 issuers rated in the investment grade segment and the remaining 10 categorised as high yield
issuers. There were no issuers in the C-rated category. Based on the distribution of issuers by sector, infrastructure and
utilities remained the largest contributor to MARC’s rating universe (2016: 37.9%; 2015: 33.8%), followed by the finance
sector (2016: 25.8%; 2015: 26.2%) and property sector (2016: 16.7%; 2015: 18.5%). Overall, the number of issuers
increased in the infrastructure & utilities and trading/services sectors, but decreased in the industrial products, plantation
and property sectors. Meanwhile, the number of issuers in the other sectors remained unchanged.
Fig. 7: Distribution of outstanding issuers by rating band - Majority of outstanding issuers are in the investment grade rating
category in MARC’s corporate rating universe
Year
AAA
AA
A
BBB
BB
B
C
High Grade
1998
1999
50.0%
0.0%
33.3%
16.7%
2000
30.0%
2001
17.4%
2002
2003
50.0%
0.0%
0.0%
0.0%
0.0%
100.0%
0.0%
16.7%
33.3%
0.0%
0.0%
0.0%
66.7%
33.3%
30.0%
10.0%
30.0%
0.0%
0.0%
0.0%
70.0%
30.0%
21.7%
47.8%
8.7%
4.3%
0.0%
0.0%
87.0%
13.0%
11.9%
16.7%
61.9%
7.1%
2.4%
0.0%
0.0%
90.5%
9.5%
12.0%
18.0%
62.0%
6.0%
2.0%
0.0%
0.0%
92.0%
8.0%
2004
10.5%
15.8%
59.6%
10.5%
1.8%
1.8%
0.0%
86.0%
14.0%
2005
10.3%
17.9%
64.1%
6.4%
0.0%
1.3%
0.0%
92.3%
7.7%
2006
11.0%
18.7%
64.8%
3.3%
1.1%
1.1%
0.0%
94.5%
5.5%
2007
11.1%
21.2%
61.6%
3.0%
1.0%
2.0%
0.0%
93.9%
6.1%
2008
13.1%
21.2%
57.6%
4.0%
3.0%
1.0%
0.0%
91.9%
8.1%
2009
16.0%
28.0%
47.0%
3.0%
4.0%
2.0%
0.0%
91.0%
9.0%
2010
20.2%
28.6%
40.5%
3.6%
3.6%
3.6%
0.0%
89.3%
10.7%
2011
24.1%
29.1%
36.7%
5.1%
1.3%
3.8%
0.0%
89.9%
10.1%
2012
29.1%
26.6%
26.6%
11.4%
3.8%
2.5%
0.0%
82.3%
17.7%
2013
33.8%
30.9%
22.1%
5.9%
2.9%
4.4%
0.0%
86.8%
13.2%
2014
31.7%
39.7%
14.3%
6.3%
4.8%
1.6%
1.6%
85.7%
14.3%
2015
32.3%
38.5%
13.8%
9.2%
4.6%
1.5%
0.0%
84.6%
15.4%
2016
30.3%
47.0%
7.6%
9.1%
4.5%
1.5%
0.0%
84.8%
15.2%
Source: MARC Fixed Income Research
5
2016 Annual Corporate Default and Rating Transitions Study
High Yield
Fixed Income Research
Summary of 2016 Experience
Highest ratings stability since 2002
In 2016, rating affirmations continued to dominate MARC’s rating actions. Rating stability – as measured by the
percentage of issuers with unchanged ratings, rose to 93.9% (2015: 90.8%), the highest level since 2002. By issuer
count, a total of 58 issuers held on to their existing ratings throughout the year of 2016. That brought the long-term
average rating stability rate modestly higher to 85.1% (2015: 84.5%). Concurrently, the overall rate of rating migrations
declined in 2016, with the downgrade rate falling to 6.1% from 9.2% in 2015. The upgrade rate remained unchanged at
0%.
Fig. 8: Summary of annual rating actions
Year
Upgrades
Downgrades
Default
Withdrawn
M igrating
Stable
M argin of
Downgrade to
Upgrade
2000
30.0%
0.0%
10.0%
0.0%
40.0%
60.0%
0:3
2001
0.0%
0.0%
4.3%
4.3%
4.3%
95.7%
0:0
2002
7.1%
7.1%
0.0%
2.4%
14.3%
85.7%
3:3
2003
8.0%
4.0%
0.0%
10.0%
12.0%
88.0%
2:4
2004
19.3%
0.0%
0.0%
10.5%
19.3%
80.7%
0 : 11
2005
9.0%
2.6%
2.6%
9.0%
14.1%
85.9%
2:7
2006
8.8%
11.0%
1.1%
9.9%
20.9%
79.1%
10 : 8
2007
5.1%
11.2%
4.1%
11.2%
20.4%
79.6%
11 : 5
2008
8.2%
7.1%
1.0%
8.2%
16.3%
83.7%
7:8
2009
1.0%
5.0%
5.0%
18.0%
11.0%
89.0%
5:1
2010
6.0%
11.9%
1.2%
23.8%
19.0%
81.0%
10 : 5
2011
2.5%
10.1%
2.5%
13.9%
15.2%
84.8%
8:2
2012
1.3%
12.7%
1.3%
20.3%
15.2%
84.8%
10 : 1
2013
0.0%
7.4%
1.5%
14.7%
8.8%
91.2%
5:0
2014
0.0%
6.3%
1.6%
6.3%
7.9%
92.1%
4:0
2015
0.0%
9.2%
0.0%
6.2%
9.2%
90.8%
6:0
2016
0.0%
6.1%
0.0%
6.1%
6.1%
93.9%
4:0
Arithmetic
M ean
6.2%
6.6%
2.1%
10.3%
14.9%
85.1%
n.a.
Source: MARC Fixed Income Research
6
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
MARC’s rated universe of issuers is primarily investment grade; of this universe, 96.4% maintained their ratings
throughout 2016. After adjusting for withdrawn issuers, the stability rates for “AAA”, “AA” and “A” standing at 98.6%,
94.0% and 88.5% respectively, demonstrating a strong positive relationship between the ratings of investment grade
credits and long-run ratings stability. However, the small sample size in the high yield group has contributed to counterintuitive rating stability measures, with no specific correlation between rating stability and credit rating. The stability rates
for “BBB”, “BB” and “B” came in at 78.3%, 82.1% and 78.9%, respectively.
Fig. 9: 1-year rating stability by rating band: 1998 – 2016
Cumulative Average 1-year Stability (1998- 2016)
Non NR adjusted
NR adjusted
100%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
AAA
AA
A
BBB
BB
B & Below
*the abbreviation ‘NR’ indicates withdrawn ratings
Source: MARC Fixed Income Research
Downgrades continued to outpace upgrades
Moderate domestic economic growth as well as rising global uncertainties continued to weigh on the domestic business
operating environment, leading to downgrades outpacing upgrades in 2016. For the year, MARC recorded four rating
downgrades (2015: six downgrades) and no rating upgrades (2015: zero upgrades) for its publicly rated credits and nonpublicly disclosed rated credits (See Appendix II for details on 2016 rating migrations). These include rated entities whose
ratings were enhanced through credit wraps. On a more positive note, the slower pace of downgrades signals a likelihood
of an improvement in corporate quality ahead.
Fig. 10: Rating drift versus real GDP growth in Malaysia
Rating drift (LHS)
Real GDP Growth (RHS)
40%
9.0%
20%
6.0%
0%
3.0%
-20%
0.0%
-40%
-3.0%
-60%
-6.0%
-80%
-9.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: MARC Fixed Income Research
7
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
A further breakdown shows that MARC’s universe of publicly rated credits experienced two rating downgrades, while the
remaining two were non-publicly disclosed standalone ratings. All downgraded issuers experienced no more than a twonotch rating change, indicating no sharp deterioration in average credit quality. Of note, there were only two issuers that
received two-notch rating downgrades: one was downgraded from “A” to “BBB+”, while the other was downgraded from
“BB-“ to “B”.
Fig. 11: Annual corporate downgrade rates by rating band
Year
AAA
AA
A
BBB
BB
B
C
High Grade
High Yield
All Corporate
2000
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2001
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2002
0.0%
14.3%
3.8%
0.0%
100.0%
0.0%
0.0%
5.3%
25.0%
7.1%
2003
0.0%
0.0%
6.5%
0.0%
0.0%
0.0%
0.0%
4.3%
0.0%
4.0%
2004
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2005
0.0%
0.0%
4.0%
0.0%
0.0%
0.0%
0.0%
2.8%
0.0%
2.6%
2006
0.0%
5.9%
11.9%
33.3%
100.0%
0.0%
0.0%
9.3%
40.0%
11.0%
2007
0.0%
9.5%
13.1%
33.3%
0.0%
0.0%
0.0%
10.9%
16.7%
11.2%
2008
0.0%
0.0%
5.3%
100.0%
0.0%
0.0%
0.0%
3.3%
50.0%
7.1%
2009
0.0%
3.6%
4.3%
33.3%
25.0%
0.0%
0.0%
3.4%
22.2%
5.0%
2010
0.0%
12.5%
14.7%
0.0%
33.3%
33.3%
0.0%
11.0%
22.2%
11.9%
2011
0.0%
13.0%
17.2%
0.0%
0.0%
0.0%
0.0%
11.4%
0.0%
10.1%
2012
0.0%
9.5%
19.0%
22.2%
33.3%
50.0%
0.0%
9.2%
28.6%
12.7%
2013
4.3%
4.8%
20.0%
0.0%
0.0%
0.0%
0.0%
8.5%
0.0%
7.4%
2014
0.0%
4.0%
22.2%
25.0%
0.0%
0.0%
0.0%
5.8%
11.1%
6.3%
2015
4.8%
0.0%
33.3%
16.7%
33.3%
0.0%
0.0%
7.3%
20.0%
9.2%
2016
0.0%
3.2%
20.0%
16.7%
33.3%
0.0%
0.0%
3.6%
20.0%
6.1%
Arithmetic Mean
0.5%
4.7%
11.5%
16.5%
21.1%
4.9%
0.0%
5.6%
15.0%
6.6%
Standard Deviation
1.5%
5.2%
9.6%
25.5%
33.1%
14.1%
0.0%
3.9%
15.6%
4.2%
282.6%
109.6%
83.3%
154.3%
157.0%
288.6%
n.a.
69.5%
103.5%
63.9%
Coefficient of Variation
Source: MARC Fixed Income Research
By sector, the industrial products and infrastructure & utilities sectors each experienced one rating downgrade. The other
two downgrades were from the trading/services sector. Historically, the industrial products sector has experienced
relatively higher negative rating migrations compared to other sectors due to limited business diversification on the part
of issuers who are generally mid-sized with modest shareholder strength, and are therefore generally more vulnerable
to economic cycles.
Fig. 12: Corporate downgrade rates by industry: long-term average
Industrial Products
17.3%
Consumer Products
16.7%
Trading/Services
10.5%
Property
8.2%
Infrastructure & Utilities
7.1%
Construction
1.9%
Plantation
1.6%
Finance
Technology
1.2%
0%
Source: MARC Fixed Income Research
8
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
No defaults for a second consecutive year
There were no defaulted issuers in 2016, the same as in 2015, given that most issuers are concentrated in the investment
grade category. As a result, the long-term annual corporate default rate fell marginally to 2.1%, translating to long-term
default rates of 0.9% and 9.0% for investment grade and high yield credits, respectively. Across sectors, the industrial
products sector has the highest long-term weighted average default rate of 7.1%.
Fig. 13: Annual corporate default rates by rating band
Year
AAA
AA
A
BBB
BB
B
C
2000
0.0%
0.0%
0.0%
33.3%
0.0%
0.0%
0.0%
0.0%
33.3%
10.0%
2001
0.0%
0.0%
0.0%
50.0%
0.0%
0.0%
0.0%
0.0%
33.3%
4.3%
2002
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2003
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2004
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2005
0.0%
0.0%
4.0%
0.0%
0.0%
0.0%
0.0%
2.8%
0.0%
2.6%
2006
0.0%
0.0%
1.7%
0.0%
0.0%
0.0%
0.0%
1.2%
0.0%
1.1%
2007
0.0%
0.0%
3.3%
33.3%
0.0%
50.0%
0.0%
2.2%
33.3%
4.1%
2008
0.0%
0.0%
1.8%
0.0%
0.0%
0.0%
0.0%
1.1%
0.0%
1.0%
2009
0.0%
0.0%
6.4%
33.3%
0.0%
50.0%
0.0%
3.3%
22.2%
5.0%
2010
0.0%
0.0%
2.9%
0.0%
0.0%
0.0%
0.0%
1.3%
0.0%
1.2%
2011
0.0%
0.0%
3.4%
0.0%
0.0%
33.3%
0.0%
1.4%
12.5%
2.5%
2012
0.0%
0.0%
0.0%
11.1%
0.0%
0.0%
0.0%
0.0%
7.1%
1.3%
2013
0.0%
0.0%
6.7%
0.0%
0.0%
0.0%
0.0%
1.7%
0.0%
1.5%
2014
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
0.0%
11.1%
1.6%
2015
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
n.a.
0.0%
0.0%
0.0%
2016
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
n.a.
0.0%
0.0%
0.0%
Arithmetic Mean
0.0%
0.0%
1.8%
9.5%
0.0%
7.8%
6.7%
0.9%
9.0%
2.1%
Standard Deviation
0.0%
0.0%
2.3%
16.6%
0.0%
17.8%
25.8%
1.1%
13.2%
2.6%
Coefficient of Variation
0.0%
0.0%
129.8%
175.6%
0.0%
226.9%
387.3%
125.0%
146.5%
121.2%
High Grade High Yield
Source: MARC Fixed Income Research
Fig. 14: Corporate default rates by industry: long-term average
Industrial Products
7.1%
Property
1.9%
Trading/Services
1.9%
Infrastructure & Utilities
0.7%
Finance
0.5%
Technology
0%
Plantation
0%
Consumer Products
0%
Construction
0%
Source: MARC Fixed Income Research
9
2016 Annual Corporate Default and Rating Transitions Study
All Corporate
Fixed Income Research
Fig. 15: Cumulative default rates by rating band: 1998 – 2016
Rating band
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
AAA
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
AA
0.0%
0.0%
0.0%
0.3%
0.7%
1.0%
1.3%
1.3%
A
2.4%
5.2%
8.0%
9.8%
11.4%
12.2%
12.5%
12.7%
BBB
6.8%
9.6%
9.6%
11.0%
12.3%
15.1%
16.4%
16.4%
BB
0.0%
3.2%
6.5%
6.5%
6.5%
6.5%
6.5%
6.5%
17.4%
21.7%
21.7%
21.7%
21.7%
21.7%
21.7%
21.7%
B & Lower
High Grade
1.2%
2.5%
3.9%
4.8%
5.7%
6.2%
6.5%
6.6%
High Yield
7.1%
10.2%
11.0%
11.8%
12.6%
14.2%
15.0%
15.0%
All Corporate
1.8%
3.4%
4.6%
5.6%
6.4%
7.1%
7.4%
7.5%
Source: MARC Fixed Income Research
Cum ulative default rate (1998 - 2016)
Fig. 16: Effectiveness of MARC’s corporate ratings as default predictor: 1998 – 2016
100%
1-year
5-year
80%
60%
40%
20%
0%
AAA
AA
A
BBB
BB
B
C
Source: MARC Fixed Income Research
Fig. 17: History of issuers downgraded to D
Year
Announced
Issuers
First Rating
Rating 1-year
Prior to Default
Last Rating
Prior to Default
2000
MOCCIS Trading Sdn Bhd
BBB
BBB
BBB
2001
Johor City Development Sdn Bhd
AA-
AA-
AA-
2005
ABI Malaysia Sdn Bhd
A
A
A-
2005
Pesaka Astana (M) Sdn Bhd
A+
A+
A+
2006
Maxisegar Sdn Bhd
A
A
BB
2007
Paradym Resources Industries Sdn Bhd
A-
A
BB
2007
Sistem-Lingkaran Lebuhraya Kajang Sdn Bhd
A
B-
B-
2007
ACE Polymers (M) Sdn Bhd
A
A-
BBB-
2007
Peremba Jaya Holdings Sdn Bhd
A
BBB-
C
2008
Evermaster Group Bhd
A
A-
BB-
2009
Tracoma Holdings Bhd
A
B
C
2009
Englotechs Holdings Bhd
A
BBB-
BB
2009
Ingress Sukuk Bhd
A+
A
C
2009
Oilcorp Bhd
A
A-
C
2009
Malaysia International Tuna Port Sdn Bhd
A+
A
C
2010
Malaysia Merchant Marine Bhd
A+
A+
BB+
2011
Dawama Sdn Bhd
C
2011
Mithrill Bhd
2012
A
A-
BBB
B+
B
Maxtral Industry Bhd
A
BBB-
BB
2013
Perwaja Steel Sdn Bhd
A
A-
C
2014
Kinsteel Bhd
A
A-
C
*The list above excludes confidentially rated defaults
Source: MARC Fixed Income Research
10
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Rating Transition
Investment grade issuers continued to display higher ratings stability than high
yield issuers
MARC assigns ratings based on its assessments of the relative likelihood of default which reflects a combination of both
qualitative and quantitative considerations. In other words, the rating summarises the relative ability of issuers to meet
the obligations fully and on a timely basis, both in terms of interest payments and principal repayments. Thus, the rating
should be seen as ordinal measures of credit risk, rather than predictive indicators of actual, cardinal default rates. In
assessing credit ratings of an issuer, relevant industry risks are taken into account from both short- and long-term
perspectives. Nevertheless, rating movement may also be impacted by other structural developments, which most of the
time are due to idiosyncratic developments affecting a specific issuer.
Like the methodology used to calculate annual default rates, the calculation of rating transition rates also compares the
ratings of issuers at the beginning of the time period (1st January) with ratings at the end of the time period (31st
December); as such, multiple rating migrations within the period are not taken into consideration. Multiple counts of an
issuer, however, are possible. That is, an issuer that stays in the rating universe for more than one year will continue to
be captured year-in, year-out as long as it has not been withdrawn from the rating universe. For example, if MARC began
rating one issuer in 1997 and if its issue had not been withdrawn from the universe until 2015, then this issuer would
appear in 18 consecutive 1-year transition tables from 1998 to 2016.
At the beginning of 2016, there were 66 outstanding issuers in MARC’s corporate rating universe, of which only 10 were
in the high yield segment. Given the significant sample constraints in the MARC rating universe, in particular the high
yield segment, caution should be exercised when interpreting the following statistics:

MARC’s ratings stability rose to 93.9% in 2016, up from 90.8% in 2015, lifting its long-term average rating stability
to 85.1%. By issuer count, a total of 58 issuers held on to their existing ratings throughout the year of 2016. The
high ratings stability can be attributed to the high concentration of investment grade issuers in MARC’s rating
universe.

After adjusting for withdrawn issuers, the stability rates for “AAA”, “AA” and “A” rated issuers were 98.6%, 94.0%
and 88.5%, respectively, demonstrating a strong positive relationship between the ratings of investment grade
credits and long-run ratings stability. However, the small sample size in the high yield group has produced counterintuitive rating stability measures, with no specific correlation between rating stability and credit rating. The rating
stability for “BBB”, “BB” and “B” came in lower at 78.3%, 82.1% and 78.9% respectively.
Fig. 18: 1-year cumulative rating transition matrix: 1998-2016
1998-2016
AAA
AA
A
BBB
BB
B
C
NR
Default
AAA
94.3%
1.3%
0.0%
0.0%
0.0%
0.0%
0.0%
4.4%
0.0%
AA
1.6%
87.5%
3.9%
0.0%
0.0%
0.0%
0.0%
6.9%
0.0%
A
0.0%
2.6%
76.7%
4.2%
0.6%
0.0%
0.2%
13.3%
2.4%
BBB
0.0%
0.0%
5.5%
64.4%
4.1%
1.4%
0.0%
17.8%
6.8%
BB
0.0%
0.0%
0.0%
0.0%
74.2%
16.1%
0.0%
9.7%
0.0%
B
0.0%
0.0%
0.0%
0.0%
0.0%
68.2%
0.0%
18.2%
13.6%
C
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
100.0%
*the abbreviation ‘NR’ indicates withdrawn ratings
Source: MARC Fixed Income Research
11
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Fig. 19: 1-year cumulative rating transition matrix: 1998–2016 (NR adjusted)
1998-2016
AAA
AA
A
BBB
BB
B
C
AAA
AA
A
BBB
BB
B
C
Default
98.6%
1.8%
0.0%
0.0%
0.0%
0.0%
0.0%
1.4%
94.0%
3.0%
0.0%
0.0%
0.0%
0.0%
0.0%
4.2%
88.5%
6.7%
0.0%
0.0%
0.0%
0.0%
0.0%
4.8%
78.3%
0.0%
0.0%
0.0%
0.0%
0.0%
0.7%
5.0%
82.1%
0.0%
0.0%
0.0%
0.0%
0.0%
1.7%
17.9%
83.3%
0.0%
0.0%
0.0%
0.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
2.8%
8.3%
0.0%
16.7%
100.0%
Source: MARC Fixed Income Research
Fig. 20: 2-year cumulative rating transition matrix: 1998–2016 (NR adjusted)
1998-2016
AAA
AA
A
BBB
BB
B
C
AAA
AA
A
BBB
BB
B
C
Default
97.3%
3.4%
0.1%
0.0%
0.0%
0.0%
0.0%
2.6%
88.5%
5.5%
0.2%
0.0%
0.0%
0.0%
0.1%
7.7%
78.8%
11.1%
0.0%
0.0%
0.0%
0.0%
0.2%
8.1%
61.7%
0.0%
0.0%
0.0%
0.0%
0.0%
1.4%
8.1%
67.5%
0.0%
0.0%
0.0%
0.0%
0.2%
3.6%
29.5%
69.4%
0.0%
0.0%
0.0%
0.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
3.1%
7.0%
3.0%
13.9%
0.0%
Source: MARC Fixed Income Research
Fig. 21: 3-year cumulative rating transition matrix: 1998–2016 (NR adjusted)
1998-2016
AAA
AA
A
BBB
BB
B
C
AAA
AA
A
BBB
BB
B
C
Default
96.0%
4.9%
0.1%
0.0%
0.0%
0.0%
0.0%
3.8%
83.5%
7.5%
0.5%
0.0%
0.0%
0.0%
0.2%
10.6%
70.5%
14.0%
0.0%
0.0%
0.0%
0.0%
0.5%
10.1%
48.9%
0.0%
0.0%
0.0%
0.0%
0.1%
2.1%
9.8%
55.4%
0.0%
0.0%
0.0%
0.0%
0.6%
5.5%
36.7%
57.9%
0.0%
0.0%
0.0%
0.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.2%
3.1%
6.1%
4.9%
11.6%
0.0%
Source: MARC Fixed Income Research
Fig. 22: 4-year cumulative rating transition matrix: 1998–2016 (NR adjusted)
1998-2016
AAA
AA
A
BBB
BB
B
C
AAA
AA
A
BBB
BB
B
C
Default
94.8%
6.3%
0.3%
0.0%
0.0%
0.0%
0.0%
4.9%
78.9%
9.1%
0.9%
0.0%
0.0%
0.0%
0.3%
12.9%
63.4%
15.6%
0.0%
0.0%
0.0%
0.0%
0.9%
11.3%
38.9%
0.0%
0.0%
0.0%
0.0%
0.2%
2.7%
10.6%
45.5%
0.0%
0.0%
0.0%
0.0%
1.0%
7.1%
40.5%
48.2%
0.0%
0.0%
0.0%
0.2%
0.0%
0.0%
0.0%
0.0%
0.0%
0.4%
3.1%
5.4%
6.1%
9.6%
0.0%
Source: MARC Fixed Income Research
Fig. 23: 5-year cumulative rating transition matrix: 1998–2016 (NR adjusted)
1998-2016
AAA
AA
A
BBB
BB
B
C
AAA
AA
A
BBB
BB
B
C
Default
93.6%
7.6%
0.4%
0.0%
0.0%
0.0%
0.0%
5.9%
74.6%
10.5%
1.3%
0.0%
0.0%
0.0%
0.5%
14.8%
57.2%
16.5%
0.0%
0.0%
0.0%
0.0%
1.4%
11.9%
31.3%
0.0%
0.0%
0.0%
0.0%
0.3%
3.2%
10.7%
37.4%
0.0%
0.0%
0.0%
0.1%
1.5%
8.5%
41.8%
40.2%
0.0%
0.0%
0.0%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.5%
3.0%
4.9%
6.7%
8.0%
0.0%
Source: MARC Fixed Income Research
12
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Cumulative Accuracy Profile (CAP) and Accuracy Ratio
MARC uses CAP to measure rating performances (rating accuracy ratio). To construct the CAP graph, rating and default
data are arranged from the lowest rating category (B & below) to the highest category (AAA). The cumulative share of
defaulters is then plotted against the cumulative share of issuers by rating until all issuers and defaulters are included
(AAA & below) (See Appendix I for details of the methodology).
MARC’s corporate rating accuracy ratio has improved steadily over the long term amid the absence of severe negative
rating actions or rating cliffs. For the period 1998-2016, the one-year accuracy ratio edged up to 67.3% from 66.9% for
the period 1998-2015. At the same time, the one-year accuracy ratio over the period of three and five years stood at
98.4% and 83.0%, respectively. These indicate that MARC’s ratings have demonstrated an improvement in the
effectiveness of MARC’s ratings as a measure of relative default risk.
Fig. 24: 1-year CAP curve: 1998-2016
Perfect Rating
1998-2016
100%
Defaulters included
80%
60%
40%
20%
0%
0%
20%
40%
60%
80%
100%
Issuers included
Source: MARC Fixed Income Research
Fig. 25: Long-term 1-year accuracy ratio
70%
65%
60%
55%
50%
45%
2010
2011
2012
2013
2014
Source: MARC Fixed Income Research
13
2016 Annual Corporate Default and Rating Transitions Study
2015
2016
Fixed Income Research
Path to Default from Original Rating and Last Rating
For all issuers that defaulted since 2000, the average time to default from the original rating was 4.2 years, with a median
of 3.4 years. For defaulters in the investment grade category, it took an average of 4.3 years to default from their initial
rating, with a median of 3.7 years. As expected, high yield issuers took a shorter time to default, with an average and
median of 3.3 years and 1.5 years respectively.
When examining the average time to default from prior rating bands, MARC’s ratings have again proven to be effective
in predicting defaults. This can be seen when comparing the time to default between investment grade issuers and high
yield issuers. In the former, it took an average of 1.8 years while for the latter, it took an average of 0.4 years. This also
indicates that most defaulters had been downgraded by MARC to the high yield category before the default event.
Fig. 26: Average time to default and default rating path (number of months)
Original
Band
Defaulted
Issuers
Average Months from
Original Rating
Median Months from
Original Rating
AAA
0
n.a.
n.a.
AA
1
78
78
17
50
43
BBB
3
40
18
BB
0
n.a.
n.a.
B
0
n.a.
n.a.
C
0
n.a.
n.a.
High Grade
18
51
45
High Yield
3
40
18
21
50
41
Defaulted
Issuers
Average Months from
Last Rating
Median Months from
Last Rating
AAA
0
n.a.
n.a.
AA
0
n.a.
n.a.
A
2
22
22
BBB
4
10
10
BB
5
1.4
1
B
2
16
16
C
8
2
1
High Grade
2
22
22
High Yield
19
5
4
All Corporate
21
7
6
A
All Corporate
Band Prior to
Default
Source: MARC Fixed Income Research
Fig. 27: Number of months prior to default
# months prior to default
A
BBB
BB
B
Trailing 12-month Median (1998-2014)
Trailing 12-month Average (1998-2014)
D
75
65
55
45
35
25
Source: MARC Fixed Income Research
14
2016 Annual Corporate Default and Rating Transitions Study
15
5
Fixed Income Research
Corporates to Maintain Credit-Supportive Corporate Earnings
Against a baseline scenario of moderate domestic economic growth, manageable inflation and accommodative monetary
policy stance, MARC expects the corporates in its rated universe to largely maintain credit-supportive corporate earnings
and financial metrics. The predominance of investment-grade credits and stable outlooks in MARC’s rated universe
suggest a sideways trend in credit quality. This expectation is also conditioned upon rated corporates remaining
committed to disciplined capital investment and acquisition activity, as well as sound balance sheet management.
Notwithstanding this, challenging business conditions in some sectors such as oil and gas-related, property and
automotive sectors imply issuers belonging to these sectors are more likely to face heightened financial pressure over
the near term as a result of margin compression, sluggish sales and inventory build-up. These factors are likely to affect
their debt servicing capacity and ability to discharge other fixed payment obligations in general.
15
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Appendix I: Data and Methodologies
This long-term corporate default and rating transitions study uses MARC’s database of national scale issuer credit ratings
which reflect MARC’s independent opinion of an issuer’s ability to meet its debt obligations. The relative likelihood of
default is indicated by the rating level assigned to the affected issuers, the rating outlook attached as well as the watchlist
assigned. To truly reflect an issuer’s standalone credit rating, issuing subsidiaries and affiliates were removed where
their ratings have a direct relation to their parent company ratings and are being rated on par with the parent’s. Issuers
with multiple debt lines were consolidated to only one rating; moreover, senior unsecured long-term ratings or, in the
absence of this, the highest-rated security lines were used. This study excludes short-term ratings and all structured
finance issuers. Meanwhile, issuers which are domiciled in foreign countries are also eliminated in our study due to the
constraints of using a local rating scale. In addition, issuers with bank or corporate guarantees are also excluded as this
study aims to analyse the standalone corporate default risk.
This study analyses the rating histories of 250 corporate issuers that were rated by MARC between 1996 and 2016.
MARC conducts its analysis of rating transitions and default at the issuer level in line with international practice. Each
study captures the history of corporate ratings from December 1997 onwards through December 31st of the year indicated
for the default study, thus ensuring consistency in the statistical reporting. Data enhancement efforts which are being
continuously carried out to ensure a certain degree of transparency and integrity may lead to different outcomes from
one report to another. This study is self-contained and should supersede previous ones. A major challenge to this study
is the extremely small sample size, particularly in high yield ratings; as a result, some of the statistics could not be divided
for investment grade and high yield analysis as the small number of observations would be statistically insignificant.
MARC’s long-term rating scale has a single “C” rating level between “B-“ and “D”, compared to global rating agencies
which typically have three intermediate categories i.e. “CCC”, “CC” and “C”. Also, within the three categories, the practice
is to append modifiers (+/-) or 1, 2, and 3 to each generic rating.
Default Definition
(Specifically prescribed for MARC’s Default and Rating Transitions Study: 1996-2016)
16

Issuers will be rated 'D' upon default. Distressed obligations typically are rated along the continuum of 'B' to 'C'
rating categories. In situations where analysis indicates that an instrument is irrevocably impaired where the issuer
is not expected to meet payments of interest and/or principal in full in accordance with the terms of the obligation's
documentation during the life of the transaction, but where no payment default in accordance with the terms of the
documentation is imminent, the obligation may be rated in the 'B' or 'C' categories.

MARC will assign default ratings where it has reasonably determined that payment has not been made on a
material obligation in accordance with the requirements of the obligation's documentation, or where it believes
that a default rating consistent with MARC’s published definition of default is the most appropriate rating to assign.

Default is defined as one of the following:

Failure of an issuer/obligor to make timely payment of principal and/or interest under the contractual terms of
the rated financial obligation (first dollar missed payment basis);

Bankruptcy filings, administration, receivership, liquidation, winding-up or cessation of business of an
issuer/obligor; or

Distressed or other coercive exchange of a rated financial obligation, where creditors were offered securities
with diminished structural or economic terms compared with the existing financial obligation of the
issuer/obligor.
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Default Rate Calculation

The default rate calculation used in MARC’s Corporate Default Study is given by the following formula:
dt= xt/ (nt-1- wt-1)
Where xt is the number of defaulted issuers in year t, wt-1 is the number of rating withdrawals in the preceding
year and nt-1 is the number of outstanding ratings at the end of preceding year and adjusted for previous defaults.

The denominator reflects issuers whose ratings were withdrawn and therefore not at risk of default over the
measurement period. Hence, there are three possible scenarios that need to be modelled to predict the default
rate under the scope of MARC’s Corporate Default Study: survival to the next time period, rating withdrawal and
defaulted issuer.
CAP and Accuracy Ratio
To construct the CAP graph, the rating and default data are arranged from the lower rating category (B & below) to the
highest category (AAA). Subsequently, the fraction of all defaulters that occurred among borrowers rated B & below are
plotted against the fraction of all issuers that are rated B & below. This gives us the first point of the curve. Similarly, the
second point of the curve is obtained by plotting the fraction of all defaulters that occurred among borrowers rated B+ &
below against the fraction of all issuers that are rated B+ & below. Then, the cumulative share of defaulters is plotted
again against the cumulative share of issuers by rating until all issuers and defaulters are included (AAA & below).
If MARC’s rating methodology does not differentiate credit risk profile at all, then the CAP curve would lie along the
diagonal line (45-degree straight line). In this case, its accuracy ratio, which summarises the statistical information in the
CAP curve, would be 0%. In contrast, if MARC’s rating methodology perfectly ranks issuers according to default risk, all
default cases would only occur among the worst rating category. In this case, the CAP would capture all areas above the
diagonal line and the accuracy ratio would be equal to 100%. We compute the accuracy ratios by dividing the area A
(MARC’s rating under analysis) over area A + B (perfect rating model).
Fig. 28: CAP curve
Source: MARC Fixed Income Research
17
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
Appendix II: Details on 2016 Rating Migrations
Date
Announced
Rating Actions
Rating
Outlook
Rating
(Before)
Rating
(After)
Infrastructure & Utilities Alam Maritim Resources Bhd
26-Aug-16
DOWNGRADED
NEG
A
BBB+
Trading/Services
7-Sep-16
DOWNGRADED
STA
AA-
A+
M ain Sector
Issuer Name
DRB-Hicom Bhd
*The list above excludes rating migrations of confidentially rated issuers
Source: MARC Fixed Income Research
Appendix III: 1-year Rating Migrations at Modifier Level
1998-2016
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
C
NR
Default
AAA
94.3% 0.9%
0.4%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
4.4%
0.0%
AA+
8.2% 83.6% 1.6%
1.6%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
4.9%
0.0%
AA
0.0%
4.8% 79.0% 3.2%
1.6%
1.6%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
9.7%
0.0%
AA-
0.0%
0.0%
3.3% 84.6% 4.4%
0.0%
1.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
6.6%
0.0%
A+
0.0%
0.0%
0.6%
6.7% 66.7% 6.1%
2.4%
0.6%
1.2%
0.0%
0.0%
0.6%
0.0%
0.0%
0.0%
0.0%
0.0% 13.9%
1.2%
A
0.0%
0.0%
0.0%
0.4%
6.5% 71.1% 4.7%
1.7%
0.0%
1.7%
0.0%
0.0%
0.4%
0.0%
0.0%
0.0%
0.0% 11.2%
2.2%
A-
0.0%
0.0%
0.0%
0.0%
0.0%
7.6% 59.0% 5.7%
1.9%
1.9%
1.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1.0% 17.1%
4.8%
BBB+
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 16.7% 41.7% 16.7% 4.2%
0.0%
0.0%
0.0%
0.0%
4.2%
0.0%
0.0% 16.7%
0.0%
BBB
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
3.7% 55.6% 11.1% 0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 22.2%
7.4%
BBB-
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
4.5%
4.5% 50.0% 9.1%
4.5%
0.0%
0.0%
0.0%
0.0%
0.0% 13.6% 13.6%
BB+
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 62.5% 0.0% 12.5% 0.0%
0.0%
0.0%
0.0% 25.0%
0.0%
BB
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 81.8% 9.1%
0.0%
0.0%
0.0%
0.0%
0.0%
BB-
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 58.3% 8.3% 16.7% 8.3%
0.0%
8.3%
0.0%
B+
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 40.0% 20.0% 20.0% 0.0% 20.0%
0.0%
B
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 28.6% 0.0%
B-
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 10.0% 80.0% 0.0%
0.0%
C
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0% 100.0%
Source: MARC Fixed Income Research
18
2016 Annual Corporate Default and Rating Transitions Study
9.1%
0.0%
0.0%
0.0% 42.9% 28.6%
0.0%
10.0%
Fixed Income Research
THIS PAGE IS INTENTIONALLY LEFT BLANK
19
2016 Annual Corporate Default and Rating Transitions Study
Fixed Income Research
----------------------------------------------------
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20
2016 Annual Corporate Default and Rating Transitions Study