Corporate default rates, at 9-year low, at 1-year high
The FT headline is a screamer: “Company defaults highest in a year“. And the rhetoric is alarmist:
Company defaults this month will be the highest since September last year in a possible early danger sign of trouble ahead for the global economy, bankers have warned.
Dealbook picks up the trope:
Noting a trend that seems both worrisome and yet inevitable, The Financial Times highlights a report showing that company defaults worldwide are at a one-year peak.
But looking more closely, it turns out that default rates, as measured by Moody’s, are just 1.5% for junk-rated debt, the lowest since 1997. The fact that five companies defaulted in September is just natural statistical variation. Especially since I challenge you to identify any of the following: Damovo, Dura, Luxfer, Schefenacker. Yes, they’re the companies in default: not exactly WorldCom calibre.
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Looking for the historical default rates on BBB bonds over a five or six year period prior to 2007. Can anyone suggest a site where I might find them?