Default rates on high-yield securities from U.S. issuers crept higher last month, from 2.6% in August to 2.7% in September, according to Moody's Investors Service. The uptick is the first increase in the U.S. default rate since June; Moody's also recently revised its forecast for global defaults from 1.6% to 1.9% at year end, said Sharon Ou, analyst at Moody's.
While U.S. defaults rose, the overall rate remained flat at 2.26% due to the decelerating European rate, which clocked in at 0.67% for September. "The U.S. default rate is really the core of the series; it's the driver of the overall default rate, so the uptick reinforces the idea that default rates will be bottoming out in the next six months," said Christopher Garman, head of high-yield strategy at Merrill Lynch.
