Moody’s: Default Rate Fell to 7.5% in May
June 7, 2010
The global speculative-grade bond default rate dropped to 7.5% in May from 9% in April, according to a Moody’s Investors Service report.
In the U.S., the speculative-grade bond default rate dropped to 7.9% in May from 9.5% in April. The U.S. default rate reached peak of 14.5% in January and was 10.9% in June 2009. The European default rate declined to 6.8% in May from 7.8% in April, after reaching a peak of 11.8% in November 2009.
The rating agency predicts that the global default rate will end the year at 2.4% and continue to decline, reaching 1.9% by May 2011.
Moody’s forecasts the U.S. default rate falling to 2.7% by December, with the European default rate declining to 1.5%. However, the rating agency predicts defaults rates of 5.8% in the U.S. and 5.7% in Europe if a “pessimistic scenario” takes shape.
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