The global speculative-grade default rate came in better than forecast for 2012, according to Moody’s Investors Service.
The rating agency reports that the global speculative-grade default rate slipped to 2.6% in the fourth quarter of 2012, down from 3.2% in the prior quarter, and below the rating agency’s forecast of 2.9% (which was made at the start of the year).
A total of 58 Moody’s-rated corporate debt issuers defaulted last year, with 10 defaulting in the fourth quarter, it says.
“Default rates remain low, consistent with our expectations,” notes Albert Metz, managing director of credit policy research with Moody’s. “While European spreads are at a five-year low, we nevertheless expect a slight increase in defaults going forward.”
Moody’s forecasting model now sees the global speculative-grade default rate rising modestly, to 3.0%, by the end of 2013. Still it notes that this would be below the historical average of 4.8%.
By region, the model predicts that the rate will be 3.0% in the US and 3.3% in Europe by the end of this year. And, by sector, it expects default rates will be highest in the media: advertising, printing & publishing sector in the US, and the hotel, gaming & leisure sector in Europe.
Moody’s global distressed index also finished the year lower, sitting at 14.1% at the end of the fourth quarter, down from 17.0% in the prior quarter. A year ago, the index stood at 24.1%, it notes.