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No party, defaults update

Standard & Poor’s have already informed us that with 28 defaults logged, 2008 has already surpassed last year’s total in terms of corporate woe. And with 27 default hailing from the US, and one from Canada, it is thus far an entirely north American affair.

The outlook stateside is also not good, according to S&P’s latest update. The US leads the pack in terms of “weakest links” - entities that are closest to the default threshold - with 107 entities or 82 per cent of the total.

1296.jpgThe 12-month trailing speculative default rate (right) stands at 1.29 per cent, well below its 1981 to 2007 average of 4.35 per cent. The uptick in the green US line though, now at 1.64 per cent, is notable.

S&P’s baseline forecast now sees that rate a year from now at 4.7 per cent in the US. That though assumes that US companies continue to default at about the same rate that they have on average in the first four months of the year.

An acceleration in the rate of defaults and we move towards the pessimistic forecast of 8.5 per cent in 12 months time.

The latest global sick-list contained three supposedly recession-proof gaming operators, in what was a leisure and consumer heavy roll call.  Those who enjoyed the fruits of the debt-financed consumer boom are now facing leaner times.

The outlook from S&P backs this up. Their current list of weakest links is the highest in five years. And it is dominated by the media and entertainment, consumer products and retail sectors.

Related links
Gillian Tett: A new wave of grime lurks - FT
The bust after the boom - FT Alphaville

1298.jpg

This entry was posted by Helen Thomas on Friday, May 23rd, 2008 at 11:52 and is filed under Capital markets. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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Comments

  1. May 27   0:49 Posted by Ausfallraten der Unternehmensanleihen nehmen zu. In absoluten Zahlen verbleiben sie aber auf niedrigem Niveau. • Börsennotizbuch [report]

    […] Eine wichtige Entwicklung — die Ausfallraten bei den Unternehmensanleihen. Obwohl FT Alphaville etwas zu laut über eine Verschlechterung spricht, verbleiben die Ausfallraten noch im historisch sehr niedrigen Bereich. Gleichwohl informiert Standard & Poor’s, dass die Ausfälle zunehmen. In diesem Jahr sind bereits mehr Unternehmensanleihen ausgefallen als 2007, die allermeisten in den USA: Standard & Poor’s have already informed us that with 28 defaults logged, 2008 has already surpassed last year’s total in terms of corporate woe. And with 27 default hailing from the US, and one from Canada, it is thus far an entirely north American affair. […]

  2. May 24   21:56 Posted by leroygardner3.com | finance | technology | syndicated live » Blog Archive » Weekend Rolling…Happy Memorial Day! [report]

    […] Corporate bond defaults are on the rise. (FT Alphaville) […]

  3. May 23   22:48 Posted by Paul Murphy [report]

    Monkey - Heard what here first?

  4. May 23   20:30 Posted by Alea | #Links [report]

    […] No party, defaults update […]

  5. May 23   12:27 Posted by Monkey [report]

    OK - no worries. Private company anyway - will try to be a little more careful in future. That said, when it does go down you heard it here first

  6. May 23   12:19 Posted by Paul Murphy [report]

    Monkey - apols for censoring your comment. We’ve got to be careful of naming names when saying a biz might fail.

  7. May 23   12:10 Posted by Monkey [report]

    Bound to be some UK casualties soon. My guess is that the 1st default over here will be XXXXX Business model looks shot - Loans (if they are trading) quoted sub 30p in the £1. Dum dum de dum, dum de dum de dum de dum

  8. May 23   12:08 Posted by TheWord [report]

    Would love to know what S&P were rating those 28 defaulters at 6mnths, 3mnths, 1mnth and 2wks prior to the event.

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