Bangkok--14 May--Standard & Poor's
Globally, 62 companies (53 public and nine confidentially rated) defaulted in the first quarter of 2009, said an article published today by Standard & Poor's. This is the largest number of defaults since the first quarter of 2002 at the tail end of the last economic downturn, and it follows a similarly harsh fourth-quarter 2008, which saw 61 defaults.
The volume of rated debt affected by first quarter's defaults was a massive $541.2 billion--the largest quarterly amount on record (dating back to the first quarter of 2000), according to the article, titled "Quarterly Default Update And Rating Transitions (Premium)."
Forty of the defaults in the first quarter of 2009 were domiciled in the U.S., with the remaining 22 residing in 22 countries globally.
For a detailed description of this quarter's defaults, see "First-Quarter 2009 Quarterly Default Synopses (Premium)," published May 13, 2009, on RatingsDirect.
The quarterly global speculative-grade default rate rose to 2.2% at the end of first-quarter 2009 from only 0.47% during the same period in 2008.
On a trailing-12-month basis, the global speculative-grade default rate as of March 31, 2009, reached 4.9%--the highest point since the 5.3% seen in November 2003. The default rate is now above the long-term (1981-2008) average of 4.27%, after having remained below this level for 59 consecutive months.
"After hitting record lows in 2007, the pace of defaults has picked up markedly since the second half of 2008," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "If the pace set in the first quarter is maintained through the remainder of the year, defaults would total 248 in 2009, the largest number on record, dating back to 1981."
Our baseline forecast (with a 60% probability) is for a 12-month-forward (March 2010) corporate speculative-grade default rate of 14.3% in the U.S. This predicted range represents a record high in the 28-year history of the series. The current peak in the U.S. corporate speculative-grade default rate was recorded in July 1991 at 12.52%. To realize the baseline projection of 14.3%, 210 issuers must default in the next 12 months.
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Media Contact:
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Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760