High-yield defaults fall to 1.9% in May, Moody's says

New York, June 2 - The global high-yield default rate edged down to 1.9% for the 12 months ending in May from 2.0% in April, Moody's Investors Service said.

The figure was the lowest since July 1997, the rating agency said.

Moody's is forecasting that defaults will rise to 2.1% at the end of the year and 3.0% in May 2006.

Defaults have dropped by one sixth so far this year from 2.3% in January and are down from 3.6% a year ago, Moody's noted.

For the year so far, there have been 11 defaults on $2.9 billion of bonds.

The total is made up of eight in the United States, two in Sweden and one in Brazil.

The only default by a Moody's-rated issuer in May was Collins & Aikman Products Co. With $915 million in bonds and $750 million in loans, it was also the largest default so far in 2005.

For U.S. issuers, the speculative-grade default rate fell to 2.2% in May from 2.3% in April.

The European rate remained at 1.7% in May, unchanged from April.

Collins & Aikman also the only Moody's-rated default in the leveraged loan market for the month. Moody's speculative-grade loan default rate fell to 1.9% from a revised April rate of 2.0%.

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