The global default rate on high-yield, or speculative, debt is expected to fall to 2.8% by the end of 2010, according to Moody’s Investors Services Inc.
“Defaults in 2010 will remain few and far between as long as the high-yield debt markets remain wide open for business and the global economic recovery is maintained,” said Kenneth Emery, Moody’s director of default research.
At the end of the first quarter, the trailing 12-month global speculative-grade default rate was 9.9%. That’s slightly higher than the default rate of 7.8% after the first quarter of 2009, but down from 13% at the end of December 2009.
Mr. Emery said the trailing 12-month default rate will decrease due to the large number of defaults in the first half of 2009 dropping out of the 12-month window.
In the United States, Moody’s forecasts the default rate on high-yield debt will fall to 3.1% by year-end. In Europe, the ratings agency said the default rate is expected to decline to 1.4%.