Bangkok--4 Mar--Standard & Poor's
With the economy on a slow path toward recovery, the U.S. speculative-grade default rate declined only slightly in February--to an estimated 10.5%, said an article published today by Standard & Poor's, titled "U.S. Credit Metrics Monthly: Default Rate Drops Nominally In February To An Estimated 10.5% (Premium)."
It was previously at a high of 10.9% at the end of 2009 and again in January. "The default rate remains at elevated levels, consistent with its performance as a lagging indicator to the overall economy," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Nevertheless, credit metrics in the U.S. are showing indications of strengthening credit quality, albeit at a cautious pace."
Although the default rate exceeds 10%, far fewer issuers are defaulting each month. In February, three companies defaulted, compared with 25 at the same time in 2009.
The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate in February is 10.5% (subject to revision), slightly lower than the 10.9% in both December and January. 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 we expect.
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