Bangkok--14 Feb--Standard & Poor's
The 2011 global corporate default tally remains at two issuers after no issuers defaulted this week, said an article published today by Standard & Poor's, titled "Global Corporate Default Update (Feb. 4 - 10, 2011) (Premium)."
By comparison, 17 global corporate issuers had defaulted by this time last year (14 U.S.-based issuers and one issuer each from Australia, Bahrain, and Canada).
Both of this year's defaulters missed interest or principal payments, which were among the top reasons for default last year. Of the defaults in 2010, 28 defaults resulted from missed interest or principal payments, 25 defaults resulted from Chapter 11 and foreign bankruptcy filings, 23 from distressed exchanges, three from receiverships, one from regulatory directives, and one from administration.
Standard & Poor's baseline projection for the U.S. corporate trailing 12-month speculative-grade default rate for December 2011 is 1.8%. (A total of 27 issuers would need to default during that period to reach the forecast.) This is another 1.47-percentage-point (or another 45%) decline from 3.27% in December 2010. The rate of decline will remain sharp, but somewhat slower than what we saw in the past 13 months. In our optimistic default rate forecast scenario, the economy and the financial markets improve more than expected. In this scenario, we expect the default rate to be 1.3% (22 defaults). On the other hand, if the economic recovery stalls and the financial markets deteriorate--which is our pessimistic scenario--we expect the default rate to be 3.5% (52 defaults) by the end of 2011. We base our forecasts on quantitative and qualitative factors that we consider, including, but not limited to, Standard & Poor's proprietary default model for the U.S. corporate speculative-grade bond market. We update our outlook for the U.S. issuer-based corporate speculative-grade default rate each quarter after analyzing the latest economic data and expectations.
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