S&P: U.S. default rate continues decline to estimated 2.17% in July

By Caroline Salls

Pittsburgh, Aug. 9 - Standard & Poor's said the speculative-grade default rate continued to decline through the first half of 2011, although U.S. economic activity has recently shown signs of cooling, according to an S&P report titled "U.S. Credit Metrics Monthly: Default Rate Declines To An Estimated 2.17% In July 2011."

"The default rate fell to an estimated 2.17% at the end of July 2011, a level not seen since June 2008," S&P's Diane Vazza said in the release.

"This is a modest decline from 2.25% at the end of June 2011. The rate is less than half of the 5.55% during the same period in 2010."

The ratings agency said three U.S. companies defaulted in July, one each from the consumer/services transportation and financial institutions sectors.

S&P said it expects the speculative-grade default rate to decline to a baseline forecast of 1.6% by June 2012. Alternately, the default rate could climb to 4%, according to the agency's pessimistic scenario, or fall to 1.2%, under its optimistic scenario.

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