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Mix-Ansicht- S&P says debt default rate higher than in last recession - JüKü, 15.04.2002, 14:36
- Re: S&P says debt default rate higher than in last recession - Morpheus, 15.04.2002, 23:09
S&P says debt default rate higher than in last recession
S&P says debt default rate higher than in last recession
By Jennifer Hughes in London
Published: April 12 2002 12:19 | Last Updated: April 12 2002 12:23
[global bonds market]
The rate of corporate debt defaults in the first quarter of this year rose above that seen in the recession of the early 1990s, credit ratings agency Standard & Poor's said on Friday.
The agency said 94 companies defaulted on $33.6bn of rated corporate bonds in the quarter, and warned the outlook for the rest of the year was not much better.
The figures imply a default rate among speculative grade issues of 4.16 per cent on the quarter, compared with a previous high of 3.4 per cent during the first quarter of 1991.
S&P said the default rate was lifted by 38 Argentine companies defaulting on $2.3bn of debt. The removal of the Argentine peso's peg to the dollar, and the peso's subsequent sharp fall, added to Argentine companies' woes, given that much of their debt was priced in dollars.
Excluding Argentina, the first-quarter default rate was 2.25 per cent, which, if annualised, beats the 8.9 per cent seen in 2001.
Including investment grade debt - which is rated triple B or above - the rate drops to 1.51 per cent, or 0.8 per cent excluding Argentina.
S&P warned its expected the default rate to decline only slightly throughout the year.
"In the US, given the risks associated with the strength of the recovery, as well as the threat of rising energy prices due to Middle East tensions, we expect only a moderate deceleration in defaults during the rest of 2002," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research.
She added:"Defaults in the European Union are likely to continue rising, peaking in the second quarter, reflecting the continued difficulties of the European telecommunications sector."
In last quarter, a total of 41 US companies defaulted, as did three UK groups. Elsewhere, two companies defaulted in Bermuda, Brazil, Canada and Indonesia, while one defaulted in Australia, China, the Netherlands and Switzerland.
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