Moody's says defaults rise slightly to 1.5% in April, predicts 2.4% for year-end

New York, May 7 - Moody's Investors Service said the global speculative-grade default rate for the 12 months through April "edged up" to 1.5% from 1.4% the month before.

The level remains lower than the 1.6% recorded a year ago, the rating agency noted.

April saw just one default by a Moody's-rated issuer, Bally Total Fitness Holding, which failed to make interest payments due April 16 on $300 million of senior subordinated notes and defaulted under the terms of its indenture on an additional $235 million of senior notes.

Moody's forecasting model is now predicting the default rate for 2007 as a whole will be 2.4% and that by the end of April 2008 there will be a further increase to 3.4%.

"Default rates remain low due to a continuation of the benign economic conditions and ample liquidity, which have allowed distressed and lowly-rated credits avoid default," said Moody's director of corporate default research Kenneth Emery in a news release.

For 2007 so far, there have been four defaults by bond issuers with Moody's ratings, affecting $2.0 billion of bonds. The biggest is SunCom Wireless, which completed a distressed exchange on $750 million bonds in January. Three of the four defaults are from U.S.-based issuers, with the fourth coming from Italy.

No syndicated loans rated by Moody's defaulted in April. The 12-month default rate for loans held steady at 0.4%.

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