Sunday, Aug 28, 2016
Dubai: About three bond issuers defaulted last week, bringing the total of defaults to 117 in 2016, ratings agency Standard and Poor’s said in a report.
The default tally has now surpassed the total number of defaults recorded in the entire year 2015, and is 60 per cent higher than the count at this time in 2015, the ratings agency said in a statement.
“The last time the global tally was higher at this point in the year was in 2009, when it reached 213 during the financial crisis,” said Diane Vazza, head
of S&P Global Fixed Income Research.
“Two-thirds of the total defaults in 2016 are from the US, consistent with the elevated US speculative-grade default rate of 4.7 per cent as of July 31. This is due, in part, to the large number of US issuers that we rate,” Vazza said.
Energy companies corners the highest concentration of the defaults, contributing to 56 per cent worldwide. This sector has been dominated by the US, with 77 per cent or 50 defaults.
Global speculative-grade default rate
“Three of the four defaults we saw this week were also by US based oil and gas issuers,” Vazza said.
As of July 31, the global speculative-grade default rate for the energy and natural resources sector was 17.2 per cent — more than seven times higher than the default rate of all other sectors.
Of the defaulting issuers so far in 2016, 78 are based in the US, 21 in emerging markets, and nine each in the other developed nations (Australia, Canada, Japan, and New Zealand) and Europe. In 2015, 73 issuers defaulted during this period; 42 were based in the US, 15 in emerging markets, 12 in
Europe, and four in the other developed countries, the S&P said.
By Siddesh Suresh ?Mayenkar Senior Reporter
Gulf News 2016. All rights reserved.
