Bangkok--21 May--Standard & Poor's
Consistent with all of our long-term default studies, our short-term corporate ratings performance analysis confirms that higher ratings generally correlate with greater stability and a lower likelihood of default, and vice versa, said an article published today by Standard & Poor's Global Fixed Income Research.
"The short-term corporate market is generally regarded as a bastion of stability, with a low incidence of defaults," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Between 1981 and 2009, only 118 issuers with short-term ratings--though not necessarily CP issuers--defaulted, in contrast with 1,933 defaults observed among companies with long-term ratings."
The article, titled "Global Short-Term Ratings Performance And Default Analysis (1981-2009)," says that defaults rarely occur among short-term corporate ratings. Only six out of the 29 years that we cover in the study recorded more than three defaults, and no defaults occurred in nine of the years.
Defaults, although rare, are usually clustered when they occur. Approximately 63% of the 118 defaults that occurred in the 1981-2009 period were recorded in two high stress periods, 2001-2002 and 2008-2009.
"The annual short-term corporate default rate peaked in 2009 at 0.93%, exceeding the previous high of 0.73% in 2002," said Ms. Vazza. "However, the vast majority of issuers that defaulted were rated lower than 'A-2'."
The 2009 annual default rate was 0% for 'A-1+', 0.19% for 'A-1', and 0.59% for 'A-2'. The average annual default rate for all rated short-term issuers from 1981-2009 was 0.22%, with a standard deviation of 0.28%.
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, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. 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