Global junk defaults rise to 2.4% in October, Moody's says

New York, Nov. 8 - The global high-yield default rate rose slightly to 2.4% for the 12 months ending in October from 2.3% in September, according to Moody's Investors Service.

The increase was the first since October 2003, the rating agency added.

Moody's is now predicting that the default rate will remain stable over the next 12 months, falling back to 2.3% at the end of this year and rising to 2.4% at the end of 2005.

"The default rate may be approaching a cyclical low," said Moody's director of corporate default research David Hamilton in a news release. "We expect the default rate to bottom out near 1.9% around March or April of next year before beginning to trend higher. Over the short to medium run, we expect the improvement in aggregate credit quality to continue."

October saw four defaults on $2.3 billion of corporate bonds, all of them by U.S. issues.

Trump Atlantic City Associates was the biggest defaulter at $1.30 billion and is now the largest so far this year, beating RCN Corp. at $1.25 billion.

So far this year, 33 issuers have defaulted on $10.8 billion of bonds. By comparison, the same period of 2003 saw 71 issuers defaulting on $31.9 billion of bonds.

By region, the default rate for U.S. issues rose to 2.9% in October from a revised 2.8% in September, the second consecutive month of increases for the United States.

The European rate remained unchanged at 0.7%. No European issues have defaulted since January.

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