"The 2010 default rate of 3.27% is even lower than our optimistic expectation of 4.3% (60 defaulters), owing to a stronger and faster-than-expected economic recovery and a significant infusion of liquidity that we did not anticipate at the beginning of the year," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research.
"The rise and fall of the U.S. default rate in the current cycle is unprecedented, both in its steepness and magnitude," noted Ms. Vazza. "From a 25-year low of 1% in December 2007, the default rate rose for 23 consecutive months and peaked in November 2009 at 11.42%--a level exceeded only four times in the 30-year history of the time series."
This record 10.42% increase in the default rate from trough to peak over 23 months yields an average increase of nearly half a percentage point per month. By comparison, the next-steepest increase in the default rate occurred in 1991, when the default rate increased by an average of 0.38% per month, rising from 2.64% in May 1989 to an all-time high of 12.54% in July 1991.
Standard & Poor's most recent forecast anticipates that the default rate will continue declining in 2011 to 2.4% in September 2011.
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Media Contact:
Mimi Barker, New York (1) 212-438-5054, [email protected]
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760