Moody's global speculative-grade default rate falls to 2.9% in October

By Caroline Salls

Pittsburgh, Nov. 8 - Moody's Investor Service's trailing 12-month global speculative-grade default rate came in at 2.9% in October, down from 3.1% in September and just above the rating agency's year-ago forecast of 2.2%, Moody's said in its monthly default report.

A total of 48 Moody's-rated corporate debt issuers have defaulted so far this year, one of which defaulted in October.

"Default rates remain low, stable and very close to our expectations," Moody's Albert Metz said in the report.

"There are differences by region, with a higher default rate in the U.S. than we see in the rest of the world. But the pace of defaults overall remains very low by historic standards."

In the United States, Moody's said the speculative-grade default rate edged lower in October, ending the month at 3.4%, compared with 3.5% in September.

In Europe, the rate declined to 2.5% in October, down from a revised level of 2.8% in September.

Moody's said that the decrease in the European default rate was driven mainly by one defaulter moving out of the 12-month trailing window.

Moody's said it now expects the global speculative-grade default rate to end 2012 at 2.8%. If realized, the agency said this is well below the historical average of 4.8% since 1983.

Across industries, Moody's said it expects default rates to be highest in the media, advertising, printing and publishing sector in the United States and the hotel, gaming and leisure sector in Europe.

By dollar volume, Moody's global speculative-grade bond default rate edged lower to 1.9% in October from 2.0% in September.

In the United States, the dollar-weighted speculative-grade bond default rate came in at 1.5% in October, down from 1.6% in September. In Europe, the dollar-weighted speculative-grade bond default rate remained unchanged at 3.3% from September to October.

In the leveraged-loan market, Vertis was the only Moody's-rated defaulter in October, sending the ratings agency's trailing 12-month U.S. leveraged loan default rate to 2.7% in October, up from 2.6% in September.

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