The global speculative-grade default rate remained unchanged at 2% in February, said Moody’s Investors Service in a new report.
Only two Moody’s-rated corporate issuers defaulted in February, one in the U.S. and one in Brazil. Based on its forecasting model, Moody’s expects the global speculative-grade default rate to rise to 2.6% by the end of the year.
“Default rates are holding steady at historically low levels,” notes Albert Metz, managing director of credit policy research with Moody’s. “We expect this to continue over the near term, while recognizing that significant risks remain.”
Moody’s predicts that default rates will be highest in the consumer services sector in the U.S., and in the aerospace and defense sector in Europe, over the next 12 months.
By dollar volume, the global speculative-grade bond default rate remained unchanged at 1.5% in February from January. Moody’s distressed index, which measures the percentage of high-yield issuers that have debt trading at distressed levels, declined to 19.3% in February from 21.3% in January. A year ago, the index was much lower at 7.6%.