New York, January 09, 2013 -- Moody's trailing 12-month global speculative-grade
default rate came in at 2.6% in the final quarter of 2012,
down from 3.2% in the prior quarter and close to the rating
agency's year-ago forecast of 2.9%, Moody's
Investors Service says in its monthly default report. A total of
58 Moody's-rated corporate debt issuers defaulted last year,
with 10 defaulting in the fourth quarter.
Moody's "December Default Report" is now available,
as are Moody's other default research reports, in the Ratings
Analytics section of Moodys.com.
"Default rates remain low, consistent with our expectations,"
notes Albert Metz, Managing Director of Credit Policy Research.
"While European spreads are at a five-year low, we nevertheless
expect a slight increase in defaults going forward."
In the US, the speculative-grade default rate dropped to
3.2% in December, down from 3.6% in
the previous quarter. At this time last year, the US rate
was 1.9%. In Europe, the rate declined to 1.8%
from 3.1% in the previous quarter. Last year,
the European default rate stood at 3.3% at end-December.
Based on its forecasting model, Moody's now expects that the
global speculative-grade default rate will rise modestly,
to 3.0%, by the end of 2013. That rate,
if realized, would be below the average of 4.8% since
1983. By region, the model predicts that the rate will be
3.0% in the US and 3.3% in Europe by the end
of this year. Across industries, Moody's continues to expect
default rates to be highest in the Media: Advertising, Printing
& Publishing sector in the US, and the Hotel, Gaming &
Leisure sector in Europe.
By dollar volume the global speculative-grade bond default rate
dropped to 1.7% in the fourth quarter from 2.0%
in the third. The global dollar-weighted default rate ended
2011 at 1.8%.
In the US, the dollar-weighted speculative-grade bond
default rate came in at 1.5% in December, down slightly
from 1.6% in the prior quarter. The comparable rate
was 1.1% a year ago.
In Europe, the dollar-weighted speculative-grade bond
default rate came in at 2.3% in the fourth quarter,
down from the third quarter's 3.3%. Last year,
the rate stood at 4.3% at end-December.
Moody's global distressed index arrived at 14.1% at
the end of the fourth quarter 2012, down from 17.0%
in the prior quarter. A year ago, the index stood at 24.1%.
In the leveraged-loan market, there were three Moody's-rated
defaulters during the final quarter of 2012, including CoActive
Holdings LLC, which completed a distressed exchange on both its
first and second lien loans in December. Moody's trailing
12-month US leveraged loan default rate closed 2012 at 2.9%,
up from 2.6% in the prior quarter and 0.6%
a year ago.
Moody's research subscribers can access this report at http://www.moodys.com/research/Monthly-Default-Report-December-2012--PBC_148878.
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Albert Metz
MD - Credit Policy Research
Credit Policy
Moody's Investors Service, Inc.
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Moody's: Global Spec-Grade Corporate Default Rate Ends 2012 at 2.6%