Bangkok--5 Apr--Standard & Poor's
With the economy on a slow path toward recovery, the U.S. speculative-grade default rate experienced another slight decline in the 12 months through March 31--to an estimated 10%, said an article published today by Standard & Poor's, titled "U.S. Credit Metrics Monthly: Default Rate Continues Its Slow Descent To An Estimated 10% In March (Premium)."
It was previously at a high of 11.3% in November 2009 and 10.9% in December 2009 and January 2010. The default rate remains at elevated levels, consistent with its performance as a lagging indicator to the overall economy. Nevertheless, credit metrics in the U.S. are showing indications of strengthening credit quality, albeit at a cautious pace.
"In March, five companies defaulted, compared with 15 at the same time in 2009," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. The defaults in March are attributable to four financial and nonfinancial sectors.
"The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate in March is 10%, which is subject to revision," said Ms. Vazza. "This is slightly lower than the 10.48% in February."
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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