28 corporate borrowers have defaulted on $18.9 billion in debt payments so far in 2008, exceeding the 22 defaults recorded for all of last year, says S&P. 27 of the 28 defaults came from U.S. companies. Bloomberg:
Defaults are increasing as the economy nears recession, earnings prospects weaken and financial pressures constrain lending, Diane Vazza, head of S&P global fixed-income research group, said in the report. The U.S. speculative-grade default rate will rise to 4.7 per cent in the next 12 months from a 25- year low of 0.97 per cent at the end of 2007, according to the mean S&P forecast.
“A material risk remains that defaults could be significantly more pronounced and severe, especially if the recession would be deeper and longer than expected,” Vazza wrote in the report.