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Global high-yield defaults rise to 1.64% in April, S&P says
New York, May 3 - The global speculative-grade default rate rose to 1.64% for the 12 months ending in April from 1.47% in March, Standard & Poor's said.
But the rating agency noted that the March figure was an eight-year low and also pointed out that the rate remains below the long-term average of 4.91% for 1981 to 2004.
S&P continues to expect defaults to remain low near term, with a rise towards the end of 2005.
Again, S&P remains concerned about further into the future, with the likelihood of a more significant increase in 2006 thanks to the high volume of low rated new issuance in recent years.
For the first four months of 2005, low rated deals made up 51% of total U.S. junk bond new offerings, compared to 43% for all of 2004 and 31% in 2003.
By region, the default rate in the United States was 2.16% for the 12 months to April while the European figure held at 0%. For emerging markets, the rate was 0.46%. There have been no European defaults in the last 12 months while emerging markets has seen two, OAO NK Yukos from Russia and one confidentially rated corporation.
The Unites States has seen nine defaults for 2005 so far affecting $4.3 billion of debt.
April saw four companies fail to live up to their obligations: aaiPharma Inc., Eagle Picher Holdings Inc., SR Telecom Inc. and Meridian Automotive Systems Inc. SR Telecom is based in Canada, the remainder are from the United States.
S&P's "weakest link" list of issuers vulnerable to default had 21 issuers with $4.9 billion of debt as of May 3, the same number as a month earlier. Issuers qualify for the list of they are rated CCC or lower and have a negative outlook or are on CreditWatch Negative. In the past month SR Telecom was removed because it defaulted and Belize added because of a downgrade.
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