Default Rate Climbs to 2.8% on U.S. High-Yield Debt, S&P Says

The trailing 12-month U.S. high-yield corporate default rate increased to an estimated 2.8 percent in July from 2.7 percent in the prior month, according to Standard & Poor’s.

Three companies defaulted last month, bringing the total this year to 26, S&P analysts led by Diane Vazza in New York wrote in a report today. The trailing default rate for U.S. speculative-grade debt has risen from 2 percent at the end of 2011.

The extra yield investors demand to hold speculative-grade bonds rather than government debt declined to 616 basis points, or 6.16 percentage points, as of yesterday from this year’s high of 723 on June 5, according to the Bank of America Merrill Lynch U.S. High Yield Master II index.

High-yield, high-risk, or junk debt is rated below Baa3 by Moody’s Investors Service and lower than BBB- at S&P.

To contact the reporter on this story: Matt Robinson in New York at Mrobinson55@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.