More fallen angels expected but also a drop in default rates

Fallen angel Madrid from Adobe 19Aug20 575x375
By Mike Turner
29 Jan 2021

Corporate default rates are expected to decline towards the end of this year after peaking in the next few months, but the number of borrowers facing a plunge into junk ratings is near a record high. Lenders say that they are taking a pragmatic view on the companies in their loan portfolios to try and prevent defaults.

Defaults this year are forecast to fall in the high yield sector, according to Moody’s. The ratings agency put the trailing 12 month global default rate for junk rated companies at 6.7% up to December 2020. This was a 3.2% rise from the same period in 2019.

Of the ...

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