Bangkok--2 Aug--Standard & Poor's
Standard & Poor's expects the U.S. corporate trailing 12-month speculative-grade default rate to decline to 1.6% by June 2012. A total of 25 issuers would need to default from July 2011 to June 2012 to reach this forecast, said an article published today by Standard & Poor's Global Fixed Income Research, titled "U.S. Corporate Defaults To Remain Relatively Low In The Short Term."
By comparison, the default rate in June 2011 is 2.25%. "In the 12 months ended June 2011, 32 speculative-grade issuers defaulted. Less than one-third of those defaults occurred in the first half of 2011. Improved lending conditions and greater availability of capital, even for low-rated issuers, continue to temper our default expectations in the short term," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research.
"In addition, stronger credit quality, as reflected by fewer downgrades and lower negative bias, should help companies mitigate the effects of lackluster economic growth and uncertainty about domestic and international sovereign funding."
In addition to our baseline projection, we forecast the default rate in our optimistic and pessimistic scenarios. In our optimistic default rate forecast scenario, the economy and the financial markets improve more than expected, and, as a result, we would expect the default rate to be 1.2% (18 defaults in the next 12 months).
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 4% (62 defaults) by June 2012.
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Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760