Standard & Poor’s Ratings Services says the global speculative-grade bond default rate ticked up to 1.64% at the end of April from its eight-year low of 1.47% in March.

The rating agency notes that the global default rate for speculative-grade corporates has remained below the long-term (1981-2004) average of 4.91% for 17 consecutive months, but it’s still higher than the record low of 1.3% posted in the second quarter of 1997.

S&P suggests that expectations for economic stability, relatively favorable financing conditions, and healthy corporate profitability imply a sanguine outlook for defaults in the near term, with the global default rate edging up slowly from its trough before the end of 2005. Although, concerns for a more material increase in defaults in 2006 and beyond remain.

“In the U.S., results from a proprietary default forecast model indicate that U.S. speculative-grade default rates will decline slightly from their first-quarter low (2.0%) but then turn around in the final quarter of 2005,” explained Diane Vazza, head of Standard & Poor’s Global Fixed-Income Research Group. “The average forecast for the next four quarters (2.0%) remains lower than the historical average of the trailing four quarters (2.5%).”

As of May 2, a total of 21 entities remained vulnerable to default on rated debt worth US$4.9 billion, S&P said. This is flat from the previous month, but lower than the average of 30 entities recorded over full-year 2004.

www.sandp.com/gfir