Bangkok--9 Aug--Standard & Poor's
Two U.S.-based issuers defaulted this week, raising the year-to-date 2010 global corporate default tally to 48, said an article published today by Standard & Poor's, titled "Global Corporate Default Update (July 30 - Aug. 5, 2010) (Premium)."
"By region, the current year-to-date default tallies are 35 in the U.S., two in Europe, five in the emerging markets, and six in the other developed region," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. (The other developed region is Australia, Canada, Japan, and New Zealand.)
So far this year, distressed exchanges account for 15 defaults; missed interest or principal payments are responsible for 14; Chapter 11 filings account for 12; regulatory directives, receiverships, and debt reorganization are responsible for one each; and the remaining four defaulted issuers are confidential.
In our view, a modest amount of maturing debt over the next four quarters is one of the key factors that should keep default rates low in the one-year forecast horizon, even though many speculative-grade issuers could have a tough time refinancing if financial conditions worsen materially.
"Our baseline projection for the U.S. corporate speculative-grade default rate in the 12 months ended in June 2011 is 2.8%, with alternative scenarios of 2.5% at the optimistic end and 4.5% at the pessimistic end," said Ms. Vazza. Our pessimistic scenario is the same as the long-term (1981 to 2009) average default rate. Our forecasts are based on quantitative and qualitative factors that we consider, including, but not limited to, Standard & Poor's proprietary default model for the U.S. corporate speculative-grade bond market.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. 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 Contact:
Diane Vazza, New York (1) 212-438-2760