Moody's: Global speculative-grade default rate falls below 3%, lowest since 2015

Global speculative-grade defaults fell to 2.9% in August, down from 3.1% in July, marking the first time since October 2015 that the global default rate has fallen under 3%, Moody's Investors Service says in a new report.

"We expect the rate to continue its downward trajectory," said Sharon Ou, a Moody's Vice President and Senior Credit Officer.

Moody's anticipates the global default rate to reach 2.3% in August 2018. That would be down from a peak of 4.8% in August 2016 , when commodity sectors drove the default rate to a seven year high.

"This benign forecast is a function of a relatively low level of high yield spread and stability in commodity prices," Ou said.

The weakest industries include: media advertising, printing and publishing, durable consumer goods and retail.

Only two speculative-grade companies defaulted last month: a US retailer that completed a distressed exchange, and a Singapore-based semiconductor assembly and test services provider that failed to make coupon payments at the end of a grade period.

The US speculative-grade default rate fell to 3.4% in August, down from 3.6% in prior month. The rate in Europe fell to 2.6% from 2.8%.

In the leveraged loan market, only one Moody's-rated issuer defaulted in August. The US leveraged loan default rate stood at 1.4% for the month, unchanged from July. The high yield bond default rate fell to 1.6% globally on a dollar volume basis, compared to 1.8% in July.

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