Global high-yield defaults unchanged at 2.4% in November, Moody's says

New York, Dec. 6 - The global high-yield default rate remained at 2.4% for the 12 months ending in November, unchanged from the month-earlier rate, according to Moody's Investors Service.

Although the latest report is the third without a drop, Moody's anticipates defaults will decline over the short term, ending this year at 2.3%, dropping further to 1.9% in March 2005 before turning higher, rising to 2.6% by November 2005.

"Although November marks the third consecutive month in which the default rate failed to decline, the results of Moody's forecasting model suggest that there is still room for improvement in the short run," said David T. Hamilton, Moody's director of corporate default research, in a news release.

"Default rates will begin rising somewhat higher in 2005 driven by changes in credit quality that are already taking shape, including an increase in low-quality new speculative-grade issuance, a flattening yield curve, and a relatively less favorable financing and macroeconomic environment.

"Nevertheless, we expect the default rate to remain below its 5% long-run average."

Two issuers defaulted on $243 million of bonds during November, Israel-based telecommunications company Barak ITC with $183 million of bonds and U.S. food company Tom's Foods Inc. with $60 million of bonds.

So far 2004 has seen 35 corporate issuers default on $11 billion of bonds. By comparison, the same period of 2003 saw 72 issuers default on $32 billion.

By geographical region, the default rate for U.S.-based issuers was 2.9% for the 12 months to November, unchanged from the month before.

For Europe, the rate fell to 0.6% from 0.7%. For the 17th consecutive month, there were no Moody's-rated corporate defaults in continental Europe. However, Finmatica SpA, a company not rated by Moody's, defaulted on $100 million of bonds.

The last default by a continental European issuer rated by Moody's was Getronics NV in June 2003.

November saw one loan default on $150 million from GEO Specialty Chemicals. Year to date, nine North American issuers have defaulted on rated loans, for a total of $2.9 billion, Moody's said.

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