The global corporate speculative-grade default rate remained unchanged in January from the revised December 2004 figure of 2.3%, Moody’s Investors Service reported today.

As a percentage of dollar volume, the global corporate speculative-grade default rate fell to 2.2% in January 2005 from a revised rate of 2.5% in December 2004. In January, four corporate bond issuers defaulted on a total of US$879 million of bonds. Two of the four defaulters were based in the U.S., one in Brazil, and one in Sweden.

Moody’s default rate forecasting model for its issuer-weighted global speculative-grade default rate indicates that the default rate will rise to a level near 3% by the end of February 2006. The expected increase in the default rate will occur after the default rate hits a cyclical low approximately at the end of this quarter or the beginning of the next.

“The percentage of new speculative-grade issuers with the lowest ratings rose to a record 15.5% last year,” said David Hamilton, Moody’s director of default research. “Eventually, this cohort of high credit risk issuers will put upward pressure on the aggregate default rate. How much upward pressure is hard to guess. Still, Moody’s expects the default rate to remain below its historical 4.9% average over the next 12 months.”