Moody’s: Default Rate Ends Q2 at 6.1%
July 8, 2010
The global speculative-grade default rate dropped to 6.1% in the second quarter from 10% in the first quarter, according to a report issued by Moody’s Investors Service. The rate was at 11.1% at this point last year.
Moody’s predicts that the global default rate will drop to 2.4% by the end of the year and fall further to 1.8% by the second quarter of 2011. The U.S. speculative-grade default rate ended the second quarter at 6.3%, a decline from 11% in Q1.
The trailing 12-moth U.S. leveraged loan default rate ended Q2 2010 at 6.1%, down from 10.4% in the previous quarter and 9.1% last year.
“Given the indicators in the market, we expect the decline in default rates to continue through the end of this year,” said Albert Metz, Moody’s director of credit policy research, in a statement issued by the rating agency. “However, uncertainty is elevated as Europe continues to address sovereign debt issues that could impact the debt market.”
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