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Moody’s: Global corporate default rate rises [04-03-2013]  
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Against a macroeconomic backdrop of a continued economic uncertainty in Europe, corporate defaults among Moody's-rated issuers were up to 58 last year compared with 37 in 2011, said vice-president and senior analyst Sharon Ou.

She said along with increasing financial stress from the European sovereign debt crisis at the beginning of the year, defaults were elevated in the first quarter, when 23 companies defaulted, while in the subsequent quarters there were 11 or 13 defaults.

In a statement on Saturday, Ou said defaults in 2012 were led by the consumer industries and capital industries sectors, together they registered 23, or 40% of the year's count.

Across regions, defaults remained concentrated in North America last year, where 44 issuers defaulted on US$29bil of debt.

Elsewhere, nine defaults occurred in Europe, four in Latin America and one in Africa.

Meanwhile, Credit Policy Research managing director Albert Metz said last year's default count of 58 matched almost exactly its year-ago forecast of 63 defaults.

He said the overall incidence of defaults remained low in 2012, due mainly to an extremely accommodative monetary environment allowing distressed borrowers to access the debt markets and refinanced debt on favourable terms.

Moody's global speculative-grade default rate ended 2012 at 2.6%, up 1.9% from 2011 and was consistent with the rating agency's year-ago forecast of 2.9%.

The default rate for all Moody's-rated corporate issuers rose to 1.3% last year from 0.9% at the end of 2011, which likewise was consistent with the agency's year-ago forecast of 1.4%.

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