Bangkok--18 Nov--Standard & Poor's,
Eighty-five companies defaulted through Nov. 11, 2008, affecting debt worth $284 billion, said an article published today by Standard & Poor's. The rise in defaults in 2008 is in sharp contrast with trends in prior years, when only 22 defaults were recorded in all of 2007 and 30 in 2006.
Of the 85 defaults, 70 are domiciled in the U.S., five are from Europe, four are from Asia, three are from Canada, two are from Mexico, and one is from Russia, according to the article, titled "Global Bond Markets' Weakest Links And Monthly Default Rates (Premium)."
"In 2008, defaults have increased significantly, particularly in the U.S.," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The U.S. speculative-grade default rate increased for the 10th consecutive month, reaching 2.86% in October, up from 2.68% in September and a 25-year low of 0.97% at the end of 2007."
The default rate in Europe increased marginally to 1.01% from 1.00%, while the emerging markets default rate rose to 0.82% in October from 0.17% in September.
The U.S. also leads in the number of weakest links, with 156 of the 207 entities, or 75%. (Weakest links are defined as issuers rated 'B-' or lower with either a negative outlook or with ratings on CreditWatch with negative implications, and they are at greater risk of default.)
"The number of global weakest links continues to increase sharply as eroding credit quality leads to lower ratings and more entities with negative outlooks or ratings on CreditWatch negative," said Ms. Vazza. As of Nov. 11, weakest links increased for the ninth consecutive month to 207, with combined rated debt worth $417.38 billion. By sector, media and entertainment, consumer products, and forest products and building materials were the most vulnerable, with the highest concentration of weakest links.
RatingsDirect is the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. The standard version of this article is part of our standard Global Fixed Income Research content. The premium version contains expanded analysis of the article's most significant points, typically broken out by sector and region. Also in the premium version are in-depth charts and tables, the underlying data of which are available for download. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
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