Defaults down again, now 1.1%, Moody's says

New York, Nov. 7 - The global speculative-grade default rate fell to 1.1% for the 12 months ending in October, Moody's Investors Service said.

The level is down from 1.3% in September and is the lowest since March 1995, when it was just below 1.1%.

A year ago the rate was 1.8%, the rating agency noted.

Moody's said its model forecasts a rate of 3.6% in a year's time and 3.9% in October 2009.

"We continue to expect default rates to rise over the next year as distressed credits find it harder to obtain rescue financing," said Kenneth Emery, Moody's director of corporate default research, in a news release. "However, default rates should remain below their long-run average of approximately 5% unless global economic growth slows more than expected."

The default rate for the United States declined to 1.1% in October from 1.2% in September, taking it down to the lowest rate since March 1982 when it was 1.0%. In a year's time, Moody's model predicts a 4.0% rate.

October saw a single default from an issuer rated by Moody's, Pope & Talbot, Inc., which filed for bankruptcy protection in Canada under the Companies' Creditors Arrangement Act with $135 million of bonds and $325 million of unrated loans.

So far this year 16 issuers rated by Moody's have defaulted, down from 25 in the same period of 2006.

No Moody's-rated leverage loan issuers defaulted in October. The trailing 12-month leveraged loan default rate fell from 0.4% in September to 0.3% in October.

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