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Moody's: Global spec-grade corporate default rate falls slightly in January

February 11, 2014

Moody's trailing 12-month global speculative-grade default rate came in at 2.5% in January 2014, down from a revised rate of 2.8% in December 2013 and close to the rating agency's year-ago prediction of 2.8%, Moody's Investors Service says in its latest monthly default report. No defaults were recorded among Moody's-rated corporate debt issuers in the first month of 2014, compared with five during the same period last year.

"We remain in a low corporate default environment, driven by strong high-yield credit markets,'' says Albert Metz, Managing Director of Credit Policy Research. "Default rates remain below their historical averages."

Moody's "January Default Report" is now available, as are Moody's other default research reports, in the Ratings Analytics section of

In the US, the speculative-grade default rate declined to 1.8% in January from 2.2% in December. At this time last year, the US rate was 3.3%. In Europe, the rate also declined, to 4.1% in January from 4.2% (revised) in December. Last year, the European rate was 2.1% at end-January.

Based on its forecasting model, Moody's expects the global speculative-grade default rate to end 2014 at 2.2%, before rising to 2.5% in January 2015. By region, the model predicts that the rate will be 2.3% in the US and 1.9% in Europe at the end of this year.

Across industries over the coming year, Moody's expects default rates to be highest in the Consumer Services sector in the US, and the Hotel, Gaming & Leisure sector in Europe.

By dollar volume, the global speculative-grade bond default rate held steady at 1.1% from December's revised rate to January. At this time last year, the rate was 1.4%.

In the US, the dollar-weighted speculative-grade bond default rate ended January at 0.3%, down slightly from 0.4% in December. The rate was 1.6% in January 2013.

In Europe, the dollar-weighted speculative-grade bond default rate declined to 3.4% in January from 3.7% (revised) in December. The European rate stood at 0.8% at end-January 2013.

Moody's global distressed index came in at 7.5% in January, up from December's 7.4%. A year ago, the index stood at 12.1%.

In the leveraged-loan market, the trailing 12-month US leveraged loan default rate finished at 1.9% in January, down from 2.2% in December. A year ago, the rate was 2.7%.

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Source: EMBIN (Emerging Markets Business Information News)

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