The global default rate for speculative-grade securities held steady in the second quarter (Q2), Moody’s Investors Service announced on Wednesday.
The Q2 reading of 2.3% was in line with the previous quarter, and Q2 2014, the New York-based credit rating agency says. Based on its forecasting model, Moody’s now expects the global speculative-grade default rate to finish this year at 2.6%.
“Looking ahead, we believe corporate defaults will likely remain low,” says Albert Metz, managing director of Moody’s credit policy research. “Despite the challenges from a potential interest rate action by the Fed and ongoing Greek debt problems, among other things, the corporate debt market is expected to keep healthy at least in the near term.”
The rating agency says that it expects the default rate to rise to 3.0% in the U.S. this year, and to fall to 1.7% in Europe. In Q2, the speculative-grade default rate held steady in the U.S. at 2.0%, whereas, in Europe, the default rate fell to 2.0% from 2.2% in Q1.
A total of 18 Moody’s-rated corporate debt issuers defaulted in Q2, down slightly from 20 in the Q1. In addition, Moody’s global distressed index, which measures the percentage of high-yield issuers whose debt is trading at distressed levels, declined to 14.5% in Q2 from 16.4%, the agency says. Although, at this time last year, the index was much lower at 6.5%.