Company Defaults Elusive as Credit Market Fragility in Focus
- Higher costs, rising debt hasn’t led to more missed payments
- Borrowers are helped by bulging cashpiles and economic growth
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Amid rising rates, ballooning debt levels and widening spreads there’s one statistic that gives comfort to credit investors: default rates.
Insulated by cheap money from the QE era and bolstered by cash on their balance sheets, it remains rare for companies in Europe and the U.S. to miss debt payments. Among higher-risk speculative-grade firms the default rate fell to 2.9 percent last quarter, and may drop further to 2.1 percent by year-end, according to Moody’s Investors Service. And only one investment-grade firm has defaulted since 2012, data from Standard & Poor’s Global Ratings show.