The global speculative-grade default rate dipped to 2.9% in October, down from 3.1% in September, says Moody’s Investors Service in a new report.
A total of 48 Moody’s-rated corporate debt issuers have defaulted so far this year, the rating agency says, with one of those defaults coming in October. Based on its forecasting model, Moody’s now expects the global speculative-grade default rate to end the year little changed at 2.8%, which would be well below the historical average of 4.8%.
“Default rates remain low, stable and very close to our expectations,” notes Albert Metz, managing director of Moody’s credit policy research. “There are differences by region, with a higher default rate in the US than we see in the rest of the world. But the pace of defaults overall remains very low by historic standards.”
By sector, Moody’s expects default rates to be highest in the media: advertising, printing & publishing sector in the US, and the hotel, gaming & leisure sector in Europe.
Moody’s also reports that the global distressed index, which measures the percentage of speculative-grade issuers with debt trading at distressed levels, came in at 14.7% in October, down from 17.0% in September. A year ago, the index was 29.5%.