S&P estimated U.S. junk default rate increases to 2.37% as of Jan. 31

By Caroline Salls

Pittsburgh, Feb. 1 - Standard & Poor's estimated 12-month trailing U.S. speculative-grade corporate default rate increased to 2.37% as of Jan. 31 from 1.98% in December, according to a report titled "Default Rate Flash: The U.S. Default Rate Jumped To An Estimated 2.37% In January."

S&P said positive economic data in January helped improve investor sentiment about the U.S. economy, as evidenced by the equity markets' strong performance, improved speculative-grade issuance and a decline in spreads.

However, the rating agency said eurozone problems persist, the cautious Fed said it would keep the funds rate near zero for an extended period, and concerns about slowing global growth continue.

Despite the estimated increase, S&P said the U.S. default rate is still below the 2.78% rate posted in January 2011.

S&P reported five U.S. corporate entities defaulted in January, including three in the leisure time/media sector, one in transportation and one in consumer/services.

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