Bangkok--5 Jul--Standard & Poor's
Despite global risk aversion making a comeback as a result of the sovereign debt struggles in Europe, the U.S. speculative-grade default rate fell to an estimated 6% at the end of June, said an article published today by Standard & Poor's. This is down from a high of 11.3% in November 2009 and 6.85% this past month.
The default rate is still above its long-term average of 4.6% and remains a lagging indicator to the overall economy, according to the article, titled "U.S. Credit Metrics Monthly: Default Rate Declined By Almost One Percentage Point To An Estimated 6.0% In June (Premium)." Credit metrics in the U.S. are strengthening somewhat, though still at a pace indicative of caution among market participants.
"In June, seven companies defaulted in the U.S., compared with 24 at the same time in 2009," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "All seven companies were publicly rated, and four were in the leisure time/media sector."
"The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate in June is 6.0%, which is subject to revision," said Ms. Vazza. "This is almost a full percentage point lower than the 6.85% in May."
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