With all the bank earnings coming out this week and next, there is quite the focus on debt. Consumer debt and how it’s affecting spending habits, but also corporate debt. S&P Global Ratings released a report this week looking at one particular slice of corporate debt — defaults, which are on the rise. And there’s an accompanying rise in “re-defaulters.”

According to S&P, the number of defaults was up 80% in 2023, the fastest increase since 2008. But within that trend, “over one-third of the defaults we saw in 2023, and again, are seeing in 2024, are companies that have already previously defaulted,” said Nicole Serino, director of credit research and insights at S&P Global.

She said some of these companies are defaulting two, three, four, and even five, times.  

“This tells us that there is a group of highly leveraged companies where restructuring after that initial default may not have sufficiently addressed” the company’s challenges, Serino said.

But the defaults she referenced aren’t necessarily tied to bankruptcy and closure.

“There is also another kind of default,” said Cristiano Zazzara, who teaches finance at New York University’s Stern School of Business. He said a lot of these multiple defaults come out of so-called distressed exchanges, in which the companies often just default on a portion of their debt.

“But they tend to restructure their capital commitments, their financial structure, and then tend to stay in a weak situation,” Zazzara said.

But even though there has been a sharp increase in companies not paying up, the overall default rate as tracked by S&P is still less than 4.8%, fewer than 200 companies.