Moody’s global junk default rate unchanged at 2.3% in second quarter

By Caroline Salls

Pittsburgh, July 15 – Moody’s Investors Service’s trailing 12-month global speculative-grade default rate finished the second quarter of 2015 at 2.3%, unchanged from the level in both the first quarter and a year ago, according to a report released Wednesday.

In the United States, Moody’s speculative-grade default rate held steady at 2% from the first quarter to the second. In Europe, the default rate fell to 2% from 2.2% during the same period.

Moody’s said it now expects the global speculative-grade default rate to finish this year at 2.6%. By region, the agency expects the default rate to rise to 3% in the United States and fall to 1.7% in Europe.

“Looking ahead, we believe corporate defaults will likely remain low,” Moody’s Albert Metz said in the report.

“Despite the challenges from a potential interest rate action by the Fed and ongoing Greek debt problems, among other things, the corporate debt market is expected to keep healthy at least in the near-term.”

A total of 18 Moody’s-rated corporate debt issuers defaulted in the second quarter, down slightly from 20 in the first quarter.

Of the 18 defaults, the ratings agency said five were recorded in June, including American Energy – Woodford LLC.

In the leveraged loan market, seven Moody’s-rated loan defaults were recorded in the second quarter of 2015, all from the United States. The agency said the U.S. leveraged loan default rate ended the second quarter at 0.9%, down from 1% in the previous quarter and 1.7% one year ago.

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