S&P estimates: U.S. default rate fell in December, European rate rose

By Caroline Salls

Pittsburgh, Jan. 2 – Standard & Poor’s estimated that the U.S. trailing-12-month speculative-grade corporate default rate decreased to 3% in December from 3.1% in November, according to a report released on Tuesday.

A total of seven U.S. corporate issuers defaulted in December, the report said, including Walter Investment Management Corp., Denbury Resources Inc., Charming Charlie LLC, Bon-Ton Stores Inc., EP Energy LLC, Exco Resources Inc. and GNC Holdings Inc.

S&P said three defaults in December were from the energy and natural resources sector, which had an estimated speculative-grade default rate of 9.7%. Excluding this sector, S&P’s speculative-grade default rate estimate is 2.3%.

S&P said it expects the U.S. trailing-12-month speculative-grade corporate default rate to decrease to 2.7% by September 2018 from 3.1% in September 2017.

In addition, the ratings agency said it estimated that the European trailing-12-month speculative-grade corporate default rate increased to 2.4% in December from 2.2% in November.

S&P said it expects the 12-month default rate for speculative-grade-rated European financial and nonfinancial corporate issuers to remain at about 2% through the end of June 2018, significantly below the average trailing-12-month default rate of 3.2% between January 2002 and June 2017.

The two European defaults in December came from Bibby Offshore Holdings Ltd. and Elli Investments Ltd., S&P reported.

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