Moody’s Investors Service reports that its global speculative-grade default rate came in at 1.8% for the 12 months ending in June, unchanged from May.

The 1.8% default rate finishes the second quarter only marginally higher than the 1.6% rate in the first quarter. Moody’s notes that corporate default rates have been flat over the past 12 months, remaining in a 1.6% to 2.1% range.

Moody’s default rate forecasting model predicts that the global speculative-grade default rate will finish the year at 2.1%, rising to 2.8% by the end of the second quarter 2007. The forecasted default rate is considerably below the 5% historical default for speculative-grade rated corporate bond issuers.

“Although corporate credit may be at or near a cyclical high, we do not foresee a sharp increase in defaults in the near future. Default rates are coming off decade lows and the most likely scenario going forward is one of default rates closer to historical average levels,” said David Hamilton, director of corporate default research.

A total of six rated corporate bond issuers defaulted in the second quarter, twice as many as in the first quarter. Five out of the six defaults in the second quarter were by U.S.-based issuers. The default rate for U.S. speculative-grade issuers edged higher to 2.4% in the second quarter from 2.3% in the first quarter. In Europe, the speculative-grade default rate finished at 0.5% in the second quarter, up from zero in the previous quarter.

The volume of corporate bond defaults totaled US$1.4 billion in the second quarter, down from US$1.9 billion in the first quarter and down from US$1.7 billion in the second quarter 2005.

Measured on a dollar volume basis, the global speculative-grade default rate fell slightly to 4.0% in the second quarter from 4.2% in the first quarter. Nevertheless, the current dollar-weighted global default rate is twice as high as the 2.0% level recorded at the end of the second quarter 2005. The significant jump in the dollar-weighted default rate on a year over year basis was mainly driven by several large defaults.