Bangkok--18 Mar--Standard & Poor's
Last year set many new records in terms of global corporate default and transition performance, said a study published today by Standard & Poor's. The article, which is titled "2009 Annual Global Corporate Default Study And Rating Transitions," says there were 264 defaults globally, the highest annual total since Standard & Poor's database began in 1981. The rated debt amount affected by these defaults reached $627.7 billion, also a series high. "Distressed exchanges featured prominently as a trigger," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "They accounted for 39% of defaults globally and 55% of total debt affected by defaults."
Notwithstanding the record number of defaults, the Gini ratio--a key measure of the relative ability of ratings to differentiate risk--rose to 82.7% in 2009 from an all-time low of 64.9% a year earlier. "The high Gini ratio for 2009 indicates that ratings ably differentiated between defaulters and nondefaulters in a year characterized by very high defaults," Ms. Vazza said. Broken out by rating, nine out of 17 rating categories recorded default rates that were in excess of the long-term average.
At the end of December 2009, speculative-grade default rates rose to 10.93% in the U.S. compared with 7.5% in Europe, 5.90% in the emerging markets, 7.5% in Asia-Pacific, and 9.35% in an assorted grouping of other developed markets. In all regions, default rates in 2009 outpaced the long-term averages. If all rated entities are included, the global default rate rose to 3.99% in 2009 from 1.72% a year earlier. Meanwhile, the investment-grade default rate fell to 0.32% in 2009 from 0.41% in 2008.
The study includes industrials, utilities, financial institutions (which includes banks, brokerages, asset managers, and other financial entities), and insurance companies around the world with long-term local-currency ratings. All default rates reported are calculated on an issuer-weighted basis. Also included is a detailed explanation of the methodology used in the study.
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, the article will also be available on Standard & Poor's public Web site at www.standardandpoors.com/gfir. 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 Contact:
Diane Vazza, New York (1) 212-438-2760
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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Americas Customer Service: (1) 212-438-7280
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