Number of defaults on debt payments tripled in Q2: S&P
The number of defaults on debt payments by companies that were certified by S&P tripled in Q2 of 2011 in comparison to Q1, a new article said.
By PTI | Updated:
DUBAI: The number of defaults on debt payments by companies that were certified by credit ratings agencies tripled in the second quarter of 2011 in comparison to the first quarter, a new article published by Standard & Poor's Global Fixed Income Research has said.
According to the report, globally, 15 companies (13 public and two confidentially rated) defaulted in the second quarter of 2011.
The volume of rated debt affected by defaulters in the second quarter was USD 39.5 billion, up from five defaults in the first quarter with USD 3.6 billion in debt, the research paper, titled, 'Quarterly Global Corporate Default Update And Rating Transitions', said.
Of the 15 defaults in the second quarter of 2011, eight were domiciled in the US, two in Canada, two in New Zealand, and one each in the UAE, Russia, and France.
"On a trailing-12-month basis, the global speculative-grade default rate as of June, 2011, was 2 per cent, down slightly from 2.08 per cent at the end of March and 5.12 per cent at the same time in 2010," said Diane Vazza, the head of Standard & Poor's Global Fixed Income Research division.
"The default rate is now at its lowest point since August 2008, the last reading prior to the collapse of Lehman Brothers and the ensuing recession in the US.
"Overall, credit quality has, in our view, continued to stabilise over the past 18 months, as the number of downgrades has decreased slightly across all regions," said Vazza.
"The downgrade-to-upgrade ratio fell to 0.64 per cent in the second quarter of 2011 from 1.10 per cent in the previous quarter," she said.
The decrease from the first quarter is the result of a slight uptick in upgrades -- to 3.5 per cent from 2.45 per cent -- along with a decrease in downgrades to 2.25 per cent from 2.7 per cent.
According to the report, globally, 15 companies (13 public and two confidentially rated) defaulted in the second quarter of 2011.
The volume of rated debt affected by defaulters in the second quarter was USD 39.5 billion, up from five defaults in the first quarter with USD 3.6 billion in debt, the research paper, titled, 'Quarterly Global Corporate Default Update And Rating Transitions', said.
Of the 15 defaults in the second quarter of 2011, eight were domiciled in the US, two in Canada, two in New Zealand, and one each in the UAE, Russia, and France.
"On a trailing-12-month basis, the global speculative-grade default rate as of June, 2011, was 2 per cent, down slightly from 2.08 per cent at the end of March and 5.12 per cent at the same time in 2010," said Diane Vazza, the head of Standard & Poor's Global Fixed Income Research division.
"The default rate is now at its lowest point since August 2008, the last reading prior to the collapse of Lehman Brothers and the ensuing recession in the US.
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"Overall, credit quality has, in our view, continued to stabilise over the past 18 months, as the number of downgrades has decreased slightly across all regions," said Vazza.
"The downgrade-to-upgrade ratio fell to 0.64 per cent in the second quarter of 2011 from 1.10 per cent in the previous quarter," she said.
The decrease from the first quarter is the result of a slight uptick in upgrades -- to 3.5 per cent from 2.45 per cent -- along with a decrease in downgrades to 2.25 per cent from 2.7 per cent.
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