Only 1.6% Of All Speculative-Grade Entities Are Expected To Default In The U.S. Through March 2012, Article Says

Stocks and Financial Services Press Releases Thursday April 21, 2011 07:58
Bangkok--21 Apr--Standard & Poor's

Standard & Poor's baseline projection for the U.S. corporate trailing 12-month speculative-grade default rate for March 2012 is 1.6%. A total of 24 issuers would need to default from April 2011 to March 2012 to reach the forecast, said an article published today by Standard & Poor's Global Fixed Income Research, titled "U.S. Corporate Default Rate Expected To Decline To 1.6% By March 2012."

"The projection of 1.6% is another 0.86-percentage-point, or another 35%, decline from the 2.46% default rate in March 2011. This rate of decline would be sharp, but slower than the decline over the past 16 months," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Improved lending conditions and a lower cost of capital are keeping our default expectations relatively upbeat in the next 12 months. We are seeing stronger credit quality, as reflected in fewer downgrades and lower negative bias."

In addition to our baseline projection, we forecast the default rate in our optimistic and pessimistic scenarios. In our optimistic default rate forecast scenario, the economy and the financial markets improve more than expected. As a result, we would expect the default rate to be 1.2% (18 defaults in the next 12 months).

On the other hand, if the economic recovery stalls and the financial markets deteriorate--which is our pessimistic scenario--we expect the default rate to be 3.3% (50 defaults) by March 2012.

The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.

Media Contact:
Mimi Barker, New York (1) 212-438-5054, mimi_barker@standardandpoors.com
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760

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