Bangkok--6 Jan--Standard & Poor's
Standard & Poor's Ratings Services announced in a report published today that the U.S. speculative-grade default rate decreased to an estimated 10.9% in December. The report, entitled "U.S. Credit Metrics Monthly: Default Rate Declines To 10.9% In December (Premium)," notes that this is the first monthly decline since October 2007, when the default rate hit a 25-year low of 0.99%. The highest U.S. default rate on record is 12.54%, set in July 1991.
"Credit conditions in the U.S. remain challenging, but signs of improvement are beginning to emerge, such as improved lending conditions and a resurgence in new issuance," stated Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.
During December, four defaults were recorded, bringing the year-to-date total to 189. All of the defaults in December were from nonfinancial sectors.
The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate in December is 10.9% (subject to revision), down from 11.28% in November. Standard & Poor's expects the speculative-grade default rate to continue declining to a mean forecast of 6.9% by September 2010, but it could also decline to only 9.9% if economic conditions are worse than expected.
Standard & Poor's distress ratio also continues to decline with the narrowing of spreads, and stood at 14.6% as of Dec. 15, 2009. After reaching unprecedented highs at the end of 2008, the distress ratio is now hovering at a level not seen since June 2008.
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 by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760