Bangkok--18 Sep--Standard & Poor's
The number of global weakest links remains elevated, though it has decreased recently as many of them have defaulted. As of Sept. 11, 2009, weakest links totaled 278, which is down from the record high of 300 in April, said an article published today by Standard & Poor's. The 278 weakest links have combined rated debt worth $305.53 billion.
Weakest links are issuers rated 'B-' and lower with either a negative outlook or ratings on CreditWatch negative.
"Over the past year, companies have seen their credit quality erode considerably, which leads to lower ratings and more entities with negative outlooks or ratings on CreditWatch with negative implications, as well as increased vulnerability to default," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
Corporate defaults continue to rise in 2009, already surpassing the number in all of 2008 by a wide margin. Through Sept. 14, 2009, 219 issuers defaulted, affecting debt worth $525.1 billion, according to the article, titled "Global Bond Markets' Weakest Links And Monthly Default Rates (Premium)." By comparison, 126 defaults were recorded in all of 2008, affecting debt worth $433 billion.
The 12-month-trailing global corporate speculative-grade bond default rate increased to 9.33% in August 2009 from 8.59% in July and is now almost 12x the 25-year low of 0.79% recorded in November 2007. The U.S. speculative-grade corporate default rate has increased for 21 consecutive months, reaching 10.37% in August, up from 9.38% in July and more than 10x the level at year-end 2007.
"By June 2010, we expect the U.S. corporate speculative-grade default rate to fall slightly from its peak in the previous quarter and reach 13.9%," said Ms. Vazza. "This represents a slight moderation from our baseline projection of 14.3% in March 2010."
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 Ratings in the left navigation bar, select Find a Rating. Members of the media may request a copy of this report by contacting the media representative provided.
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