While March saw equity markets rallying – the experience of the corporate credit sector was somewhat different.
RBC Capital has a summary of Moody’s March default report, released late Monday.
Moody’s released its default report for March which saw a pick-up in the default rate from 5.2% in February to 7% in March. There were a total of 35 defaults in March which marks the greatest number of defaults in a single month since the Great Depression, according to Moody’s. In the US, the default rate rose from 4.5% to 7.4% whilst in Europe, the rate jumped to 4.8% from 2.0% in the previous quarter. The Moody’s forecasting model now sees default rates peaking at 14.6% in Q4 2009 which is down moderately from previous months as high yield bond spreads have tightened. European default forecasts remain the highest at a forecast peak of 21% in Q4 2009.
Bit of a mixed message there — but in case you’re wondering — default levels during the Great Depression peaked at 15.4 per cent, according to Moody’s.
Related links:
Corporate credit, the pachydermic herd in the room – FT Alphaville
Brace yourselves for record corporate defaults – FT Alphaville
Moody’s predicts surge in defaults – Bond Vigilantes