S&P reports 0.10% global third-quarter default rate

By Caroline Salls

Pittsburgh, Oct. 30 - Standard & Poor's global corporate default rate for speculative-grade and investment-grade issuers declined to 0.10% in the third quarter, down from 0.18% for the third quarter of 2005, according to an S&P report.

The total number of third-quarter defaults remained at six, the same as in the first and second quarters, and the lowest count since the fourth quarter of 1997, S&P reported.

The volume of rated debt affected by third-quarter defaults was $0.83 billion, significantly lower than either the first or the second quarter of 2006, and well below the $19.6 billion recorded in the third quarter of 2005.

S&P said all six defaults that occurred in the third quarter were non-financial issuers, and four of the six companies that defaulted are based in the United States, one from Hong Kong and one from New Zealand.

The defaults were dispersed among the media and entertainment, insurance, chemicals, packaging and environmental services, metals, mining and steel and telecommunications sectors.

Specifically, the defaulting companies were U.S.-based Atlantic Mutual Insurance Co., U.S.-based Charter Communications Inc., Australia's Linsa Insurance Ltd., Hong Kong's Ocean Grand Holdings Ltd., U.S.-based Premier Entertainment Biloxi LLC and U.S.-based Radnor Holdings Corp.

S&P said expectations for economic strength, financing conditions and corporate profitability in 2006 are still favorable, albeit lower than the growth rates posted in 2005.

In the United States, S&P said the share of new issues rated B- and lower as a proportion of total speculative-grade issuance was 45% in the third quarter of 2006; marginally higher than the 44% average recorded in full-year 2005.

In Europe, the proportion of lower-grade issuance jumped to 50% in the third quarter of 2006, its highest level in more than five years and nearly double the rate from last quarter.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.