S&P expects U.S. junk default rate to decrease to 3.9% by year’s end

By Caroline Salls

Pittsburgh, Feb. 15 – Standard & Poor’s expects the U.S. corporate trailing-12-month speculative-grade default rate to decrease to 3.9% by December 2017 from 5.1% in December 2016, according to a news release.

S&P said this expectation reflects its continued expectations for the speculative-grade default rate to peak toward the end of the first half of 2017, declining afterward.

To reach its baseline default rate forecast of 3.9% for the 12 months ending December 2017, S&P said 70 speculative-grade issuers would need to default. In comparison, 91 speculative-grade entities defaulted in 2016.

In its optimistic scenario, the ratings agency said it expects the default rate to fall to 3.1% through December 2017, which would require no more than 55 defaults.

Under the pessimistic scenario, S&P said the default rate would finish the year at 4.7%, which would require at least 84 defaults.

© 2015 Prospect News.
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