The global speculative-grade default rate continued to decline last month amid continued strong economic growth, Moody’s Investors Service Inc. reports.
Only three rated companies defaulted in July, and the global trailing 12-month speculative-grade default rate declined to 2.8% during the month from 3% in June. The rate is also down from 3.3% over the past year, the credit-rating agency reports.
“Higher oil prices, stronger economic growth across most regions and generally accommodative monetary policies have been the main drivers of the year-over-year decline in the global speculative-grade default rate,” said Sharon Ou, vice president and senior credit officer at Moody’s, in a statement. “We expect these same drivers to keep the default rate benign for the foreseeable future.”
Moody’s is forecasting that the default rate will continue to decline for the remainder of the year, finishing the year at 2.1%. However, it also notes that the recent escalation of global trade tensions creates headwinds for global economic growth, which could impact that forecast if financial markets or confidence suffers a large hit.