Moody’s Investors Service reported that its 12-month global speculative-grade corporate default rate edged down slightly to 1.7% in July from 1.8% in June.

July marks the 15th consecutive month that the speculative-grade default rate has come in below 2.1%, Moody’s noted. In addition to low levels, default rates have also exhibited very low volatility, the rating agency said. For nearly two years, Moody’s issuer-based speculative-grade default rate has varied by no more than 30 basis points from month to month.

Moody’s reported that it expects a marginal and gradual rise in corporate defaults over the next 12 months. Moody’s forecasting model predicts that its issuer-weighted global speculative-grade default rate will finish 2006 at 2.1%, rising to 2.7% by the end of July 2007.

“Not only has the default rate shown very little change in recent months, but so have many of the factors that Moody’s uses to forecast default rates, such as credit rating changes and the trend in industrial production,” said David Hamilton, Moody’s director of Corporate Default Research. “Nevertheless, the pace of defaults is about as low as it can get.”

There was just a single default in July, bringing the total number of Moody’s-rated corporate bond issuers that have defaulted in the first seven months in 2006 to 10, with a total dollar volume of $3.4 billion. For the comparable period in 2005, there were 16 defaulters affecting $3.8 billion of bonds.

Moody’s dollar volume based global speculative-grade default rate also fell slightly in July, to 3.9% from 4.0% in June. Hamilton noted that although it is still below its 5.5% historical annual average, the current global dollar volume weighted default rate is more than double the level of 1.9% of a year ago. At the beginning of 2006, the global dollar weighted default rate was 3.8%.

Moody’s further reported that corporate default rates remain low in major corporate bond markets.

In Europe, Moody’s issuer-weighted speculative-grade default rate remained unchanged at 0.5% from June to July. The current European default rate is down from 1.1% at the beginning of the 2006 and from 1.6% in July 2005.

Measured on a dollar volume basis, the European default rate also remained unchanged from June to July at 0.1%. Europe’s dollar volume weighted default rate is down considerably from the 1.4% level of a year ago.

Among U.S.-based companies, Moody’s issuer-weighted speculative-grade default rate edged down to 2.3% in July, from 2.4% in June. July’s U.S. default rate is unchanged from a year ago, but slightly below the year’s opening level of 2.4%.

Measured on a dollar volume basis, the U.S. default rate fell to 4.5% in July, down incrementally from its 4.6% June level. July’s U.S. dollar-weighted default rate was significantly higher than the 1.9% level it was a year ago.