Global Bond Default Rate Declined In July, Gradual Improvement Expected

The global default rate for speculative-grade corporate bond issuers fell to 10.1% in July from 10.3% in June, reflecting a slight decline in the still high pace of defaults, Moody’s Investors Service said today. Worldwide, 16 issuers defaulted on a total of $33.4 billion of debt in July. Moody’s said the total dollar volume of defaults in July surpassed April 2002 ($19.1 billion) as the highest dollar default volume for a single month. Moody’s said July’s default volume was boosted by the largest corporate bond default ever, WorldCom’s Chapter 11 filing, which included $23.2 billion of bonds. In addition to WorldCom, notable defaults in July 2002 were Intermedia Communications Corporation ($3.1 billion), MCI Communications Corporation ($2.6 billion), Callahan Nordrhein-Westfalen ($2 billion), and US Airways ($419 million).

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