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Most Defaults Outside of Finance Happen in Developed Nations

  • 9 of 10 defaults aren’t in EM due to number of rated U.S. cos.
  • 2016 drop in oil prices saw a spike in energy defaults
Venezuela’s state oil company Petroleos de Venezuela was last year’s biggest emerging-market defaulter, according to Moody’s. 

Venezuela’s state oil company Petroleos de Venezuela was last year’s biggest emerging-market defaulter, according to Moody’s. 

Photographer: Wil Riera/Bloomberg

Developed nations account for 9 of every 10 defaults outside the financial industry in the past two decades, according to a report by Moody’s Investors Service.

That skew reflects the much-higher number of rated entities in the U.S. and includes a big chunk of lower-tier speculative grade issuers. While emerging-market companies tend to get hit by currency volatility as well as sovereign and banking crises, the implosions in developed nations most often sprout from industry trends, competition or aggressive financial policies that undermine capital structure, Moody’s analysts Richard Morawetz and Daniel Gates wrote in the note.