Moody's: Global speculative-grade default rate down again in Q2 2017

Moody's global trailing 12-month speculative-grade default rate closed at 3.2% in the second quarter of 2017, down from 3.9% the prior quarter and 4.7% a year ago, Moody's Investors Service says in its latest global monthly default report. The US speculative-grade default rate, meanwhile, fell to 3.8% in the second quarter from 4.7% in the first quarter, while the European rate edged up to 2.8% from 2.5% over the same period.

Globally, the year-to-date corporate default tally rose to 50 in the past quarter after 28 Moody's-rated companies defaulted. Defaults remained concentrated in the US in Q2 2017, with 18 US companies defaulting, as compared to 8 companies in Europe. Notably, the oil and gas and retail sectors were the biggest contributors of the quarter's defaults, with five in each sector.

 

"Despite some concerns about distressed retailers, overall credit conditions remain benign as indicated by the low unemployment rates and high yield spreads," observed Sharon Ou, a Moody's Vice President.

Looking ahead, Moody's expects the global speculative-grade default rate to finish 2017 at 2.7%, before continuing its descent to reach 2.4% a year from now. In the US, Moody's expects the default rate to close the year at 3.1%, down from 3.8% currently, while in Europe the rate is expected to fall to 2.3% from its current 2.8% during the same period.

Across sectors, Moody's expects the Media: Advertising, Printing & Publishing sector to see the highest default rate in the coming 12 months, followed by retail, in both the US and Europe.

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