The global speculative-grade default rate was little changed in the third quarter, says Moody’s Investors Service in a new report.
The rating agency reports that the speculative default rate finished the quarter at 2.8%, down from 2.9% in the second quarter and 3.3% in the same period last year. Moody’s forecasting model predicts the rate will tick up and finish the year at 3.0%, before falling to 2.7% by the end of the third quarter next year.
There were 11 defaults among Moody’s-rated corporate debt issuers in the third quarter, six from North America, three in Latin America, and two in Europe. For the year to date, there have been 51 defaults, which is the same as in the first three quarters of 2012.
“Global corporate defaults continue at their recent pace below the historical average,” notes Albert Metz, managing director of Moody’s credit policy research. “Our central scenario assumes an orderly resolution of the U.S. budget discussions, and under that scenario we expect corporate default rates to remain relatively stable for the next year.”
Moody’s expects default rates to be highest in the media: advertising, printing & publishing sector in the U.S. and the retail sector in Europe in the next 12 months.
Its global distressed index, which measures the percentage of high-yield issuers whose debt is trading at distressed levels, came in at 8.6% in the third quarter, down from 9.1% in the second. At this time last year, the index was at 17.0%.