Moody's global speculative-grade default rate down to 9% in April

By Caroline Salls

Pittsburgh, May 6 - Moody's Investors Service said its global speculative-grade default rate continued its downward path in the 12 months ended in April, sliding to 9% from March's level of 10%, according to a news release.

A year ago, the global default rate stood at 8.8%.

Moody's said it now predicts that the global speculative-grade default rate will finish this year at 2.7% and then fall to 2.0% a year from now.

"The pace of defaults continues to fall, and the credit outlook today is far less negative than it was a year ago," Moody's Albert Metz said in the release.

"While risks certainly remain, our base case projections indicate very few defaults over the near term."

In the United States, Moody's said the speculative-grade default rate also decreased to 9.5% in April from 11% in March.

However, Moody's said the European default rate rose to 7.8% in April from 7.3% in March.

The U.S. dollar-weighted speculative-grade bond default rate ended April at 9.1%, also down from March's level of 11.3%, while the European dollar-weighted speculative-grade bond default rate fell to 3.9% in April from 5.8% in March.

Among U.S. speculative-grade issuers, Moody's said it foresees the default rate falling to 3.0% by the end of the year. In Europe, the agency projects the speculative-grade default rate will decline to 1.5%.

According to the release, a total of five Moody's-rated corporate debt issuers defaulted in April, which sends the year-to-date default count to 22.

In comparison, Moody's said that 115 defaults were recorded in the first four months last year, 25 of which were April defaults.

Overall, 20 of this year's defaults were by North American issuers, while the rest were from Europe and Asia.

Across industries over the coming year, Moody's said default rates are expected to be highest in the consumer transportation sector in the United States and the business service sector in Europe.

Measured on a dollar-volume basis, Moody's global speculative-grade bond default rate closed at 8.1% in April, down from 10.3% in March.

In the leveraged loan market, no Moody's-rated loan defaulters were recorded in April. As a result, the trailing 12 month U.S. leveraged loan default rate fell to 8.8% in April from 10.4% in March.

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