The global market trailing one-year default rate was 1.4% as of Nov. 30, close to its all-time low of 1.28% in 1997, according to a new research report by Standard & Poor's Rating Services.
The expected default rate fell to 2.1% because of generally strong cash flows, said the report; the annualized average default rate has been nearly 5% since 1981. However, Dianne Vazza, head of S&P's global fixed-income research group, warned that the expected default rate for the next 12 months should edge up by the end of the year and could reach nearly 3% by the third quarter of 2006. The expected default rate is based on a proprietary analysis model used by S&P, which found that as of Dec. 6, a total of 18 entities remained vulnerable to default on rated debt worth $23.3 billion.
