S&P: Global junk default rate holds steady at 1.09% in May

By Caroline Salls

Pittsburgh, June 12 - Standard & Poor's said the global corporate speculative-grade bond default rate remained at 1.09% for the 12 months ended in May, the same as in April and the lowest level in more than two decades.

According to a Monday report, speculative-grade default rates were recorded at 1.66% in the United States, 0.55% in Europe and zero in the emerging markets.

From January through May, 10 defaults were recorded among S&P-rated entities, affecting $4.9 billion in rated debt.

"Globally, the speculative-grade default rate has been at historical lows for the past two months and has remained below the long-term (1981-2005) average of 4.66% for 28 consecutive months," S&P's Diane Vazza said in the report.

"The global default rate is expected to edge up slowly from its trough in 2006, but the near-term default outlook is mostly sanguine, owing to expectations of relative economic stability, relatively favorable financing conditions, and healthy corporate profitability."

As of June 11, S&P said a total of 19 weakest links remained vulnerable to default on $6.5 billion of rated debt, one more than a month earlier and one fewer than the average of 20 entities recorded over full-year 2005.

U.S.-based issuers (including tax havens) constituted 18 of the 19 issuers.

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