Junk default rate hits record, agencies say worst is over

06 Nov 2009

Global speculative grade default rates hit 12.4% in October — the highest level seen since the 1930s depression, Moody’s said on Thursday. However, the rating agency believes that the cycle is near its peak and expects the defaults to rise to 12.5% next month and then to drop to 4.2% by October 2010.

The previous highest post-depression default rate recorded by Moody’s was 12.2% in July 1991.

Europe is likely to be hit less hard than the US, with Moody’s predicting that European junk default rates will hit 10.2% by year end, dropping back to 4.3% by next October. It expects the ...

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