Moody's default rate for Latin American junk debt falls to 0.85%

By Angela McDaniels

Tacoma, Wash., Sept. 1 - The default rate on Latin American speculative-grade debt fell to 0.85% at the end of July, according to a report by Moody's Investors Service. The default rate stood at 2.2% one year ago.

There have been no Moody's-rated defaults yet this year, compared with two in 2010.

"Our baseline forecast for the Latin American speculative-grade default rate is 1.3% over the next 12 months," senior analyst and vice president Steffen Sorensen said in an agency news release.

"In such a low expected default environment, it is important to consider the impact of an unexpected economic deterioration. A more pessimistic scenario of a persistent global economic slump puts the forecast rate at 5% over the next year."

At the end of July, Moody's rated bonds and loans of 268 Latin American-domiciled corporate issuers, an increase of 55 issuers since July 2010. The issuers were spread over 19 countries, with 72% effectively domiciled in Argentina, Brazil and Mexico.

The agency said Latin American ratings volatility has nearly doubled since the last quarter of 2010, but it remains at a historical low.

Additionally, upgrades have outnumbered downgrades in the past year, according to Moody's.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.