Bangkok--4 Feb--Standard & Poor's
Following recent improvements in economic conditions, the speculative-grade default rate in the U.S. held steady at an estimated 10.7% in January, said an article published today by Standard & Poor's, titled "U.S. Credit Metrics Monthly: Default Rate Remains Unchanged At 10.7% In January (Premium)."
"This is only slightly lower than the 10.9% recorded at the end of 2009 and is consistent with the default rate's performance as a lagging indicator to the overall economy," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Credit metrics in the U.S. are showing the first indications of strengthening credit quality, as well as stronger lending conditions and signs of life among speculative-grade new issuance."
The stabilization in the default rate comes as fewer defaults are being recorded. However, the pool of high-yield issuers is also shrinking, which is keeping the default rate elevated. During January, seven companies defaulted, compared with 14 at this time in 2009.
The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate in January is 10.7% (subject to revision), in line with the 10.9% in December. We expect the speculative-grade default rate to decline to a mean forecast of 5% by December 2010, but it could reach 6.9% if economic conditions are worse than expected.
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:
David Wargin, New York (1) 212-438-1579,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760