The global speculative-grade default rate edged higher in October, reports Moody’s Investors Service, rising to 1.9% from 1.8% in September, driven by a rise in European defaults.
The default rate for the U.S. remained unchanged at 2.0% from September to October. But, in Europe, the default rate rose to 2.6% from 1.4%, due to a new default in Greece, and three Irish defaulters, which were included in the investment-grade default rate in September but entered the speculative-grade rate in October. So far this year there have been 21 defaults, compared to the 45 defaults between January and October 2010.
Based on its forecasting model, Moody’s expects the global speculative-grade default rate to fall to 1.4% by the end of the year, but to rise to 2.2 % by October 2012. Moody’s expects it will decline to 1.4% in the U.S. and to 2.2% in Europe, by the end of 2011. And, it expects the media sector to have the highest default rates in both Europe and the U.S.
“Corporate defaults continue to track our expectations quite closely,” said Albert Metz, Moody’s director of credit policy research. “Defaults in Europe are beginning to pick up a bit but they still remain few and far between, by historical standards.”
By dollar volume, the global speculative-grade bond default rate rose to 1.7% in October, from 1.2% in September. Last year, the rate was 1.4%, Moody’s reports.