S&P's U.S. junk default rate estimated to be 10.5% for February

By Caroline Salls

Pittsburgh, March 3 - Standard & Poor's said its U.S. speculative-grade default rate declined slightly to an estimated 10.5% for the 12 months ended in February "with the economy on a slow path toward recovery," according to an article released on Wednesday.

S&P said the U.S. rate was previously at a high of 10.9% at the end of 2009 and again in January.

"The default rate remains at elevated levels, consistent with its performance as a lagging indicator to the overall economy," S&P's Diane Vazza said in the release.

"Nevertheless, credit metrics in the U.S. are showing indications of strengthening credit quality, albeit at a cautious pace."

Although the default rate exceeds 10%, the ratings agency said far fewer issuers are defaulting each month. In February, three companies defaulted, compared with 25 at the same time in 2009.

S&P said it expects the speculative-grade default rate to decline to a mean forecast of 5% by December 2010, but it could reach 6.9% if economic conditions are worse than expected.

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