US default risk lowest in 2 years: Moody
The number of U.S. companies at greatest risk of default dropped to the lowest level in two years as Federal Reserve efforts bolstered the economy, according to Moody’s Investors Service.
Companies rated at or below B3 with a negative outlook declined to 195 as of Sept. 1 from a high of 288 in June 2009, Moody’s said in a report. The B3 rating is six steps below investment grade.
Speculative-grade debt sales in the U.S. jumped to $184.2 billion this year compared with $100.1 billion in the same period of 2009, according to data compiled by Bloomberg. Sales of $119 billion in the first half were the most since Bloomberg began compiling the data in 1999.
The extra yield investors demand to own U.S. high-yield bonds instead of Treasuries declined 85 basis points this quarter to 632 basis points, according to the Bank of America Merrill Lynch U.S. High Yield Master II index. The debt has returned 8.5 percent this year, the benchmark shows.
Moody’s trailing 12-month global speculative-grade default rate ended August at 5 percent compared with 12.3 percent for the same period a year earlier. The New York-based risk assessor added 13 companies to its B3 Negative and Lower Corporate Ratings List in the three months ended Aug. 31, compared with 35 additions in the same period of 2009.
Companies are being removed from the list mostly because credit quality is improving, Keisman said, after ratings upgrades struck 19 of 27 names from the tally. The other eight were taken off either because they defaulted or their ratings were withdrawn, according to the report.
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