Moody’s global speculative-grade default rate decreases to 3% in April

By Caroline Salls

Pittsburgh, May 9 – Moody’s Investors Service’s global speculative-grade default rate closed at 3% for the 12 months ended in April, down from 3.2% in March, the agency said in its latest global default report released Wednesday.

Moody’s said five issuers defaulted last month, bringing the year-to-date total to 33, exactly the same number recorded in April last year.

“Regionally, more defaults have occurred in North America this year, with 27, compared with 21 in the year-earlier period,” Moody’s Sharon Ou said in the report.

“In terms of sector default concentrations, retail recorded 10 defaults this year, the highest number among all sectors, followed by oil and gas with six defaults.”

Ou said the retail sector defaults reached their highest quarterly tally ever, with nine in the first quarter of 2018, even as April’s default count only included one retailer, Guitar Center Inc.

Among its rated U.S. issuers, Moody’s said it expects the default rate to be highest in media: advertising, printing and publishing in the coming year, followed by durable consumer goods and retail.

In Europe, Moody’s forecasts that the most troubled sector will be consumer services, followed by business services and retail.

Over the next 12 months, Moody’s said it expects the U.S. speculative-grade default rate to fall to 1.5% from 3.7%, and the European rate to decline to 0.9% from 2.2%.

Meanwhile, the agency said the global speculative-grade default rate is forecast to end this year at 1.7% and reach 1.2% by April 2019 on positive earnings and increased free cash flow in most corporate sectors, helped by global economic growth and a narrow option-adjusted high-yield spread.

© 2015 Prospect News.
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