The global speculative-grade default rate declined slightly in May, descending to 1.4% from April’s upwardly revised level of 1.6%, reports Moody’s Investors Service.

The global default rate began the year at 1.7%, while a year ago it stood at 1.8%, the rating agency noted. “The low level of defaults reflects the ongoing benign credit environment that is being underpinned by strong global economic growth and ample liquidity,” says Moody’s director of corporate default research, Kenneth Emery.

Looking ahead, Moody’s default rate forecasting model predicts that the global speculative-grade default rate will increase to 2.2% by the end of 2007 and reach 3.4% by May 2008.

During May, four Moody’s-rated bond issuers defaulted on a total of $1.2 billion of bonds: Remy International, Inc., InSight Health Services Corp., North Atlantic Trading Company, Inc., and its parent company, North Atlantic Holding Company, Inc. All four are based in the U.S. Year-to-date, eight issuers have defaulted on a total of $3.2 billion of bonds. For the comparable period in 2006, there were 12 defaulters, affecting $3.0 billion of bonds.

As a percentage of dollar volume outstanding, the global speculative-grade default rate edged higher in May, to 1.1% from 1.0% in April. At 1.1%, the current dollar-weighted default rate is the same as it was at the start of the year, but down significantly from the 4.0% level it reached a year ago.