Bangkok--2 Dec--Standard & Poor's
Anticipation of a resolution to the European sovereign debt crisis through a new rescue package and the actions of central banks around the world, as well as the better-than-expected start to the U.S. end-of-the-year holiday shopping season helped to lift investor sentiment towards the end of November, said an article published today by Standard & Poor's Global Fixed Income Research, titled "Default Rate Flash: U.S. Default Rate Declines To An Estimated 1.96% In November."
"In the meantime, six U.S. companies defaulted on their debt during the month, and our estimated 12-month trailing speculative-grade corporate default rate declined to 1.96% in November from 2.06% in October," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. The default rate is a lagging indicator and an increasing trend usually results from sustained deterioration in both market fundamentals and economic growth.
"The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate as of November is 1.96%, down from 2.06% a month ago," said Ms. Vazza. "The default rate increased by 12 basis points (bps) in October--the first increase of more than 10 bps since December 2009." In November 2007, the default rate had bottomed out at 1.0% and then increased steadily during the next two years until it peaked at 11.5% in November 2009. After that, the rate declined until it reached 1.94% in September 2011 before edging up in October.
There were six U.S. defaults in November: two in leisure/media, one in homebuilding, one in energy and natural resources, and two in the transportation sector. One of the defaults in the transportation sector was American Airlines, which filed for bankruptcy on Nov. 29 after the company's negotiations with the labor unions failed. (For more details, see "AMR And American Airlines Downgraded To 'D' On Bankruptcy Filing; Issue Ratings Also Lowered," published on Nov. 29, 2011, on RatingsDirect on the Global Credit Portal.)
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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