pops
08-16-2008, 04:06 AM
Economy.
Junk Bond Defaults Rise As Economy Slows (next shoe to drop?)
Investor's Business Daily
Defaults on consumer debt -- mortgages, credit cards, home equity loans -- have dominated the news and sent markets reeling in recent months. Now the next wave of defaults looms. And it's a growing roster of corporations that figure to be the deadbeats.
U.S. corporate bond defaults are already on the rise. Moody's on Aug. 7 reported a sharp rise in July defaults and now expects the global default rate to climb over 6% over the next year. That's up from less than 1% in late 2007.
Standard & Poor's predicts that 4.9% of all speculative grade borrowers will default over the next 12 months. And there is a chance -- estimated at 20% -- that things could get much worse, with over 8% defaulting. Default, of course, sets the stage for bankruptcy court. "Default typically precedes Chapter 11," said Diane Vazza, head of global fixed income at Standard & Poor's.
Like a storm felling the weakest trees, a new wave of defaults would level the most debt-laden firms. It would mean new losses for many of the private equity deal makers, banks and investors who financed recent debt-heavy leveraged buyouts.
Junk Bond Defaults Rise As Economy Slows (next shoe to drop?)
Investor's Business Daily
Defaults on consumer debt -- mortgages, credit cards, home equity loans -- have dominated the news and sent markets reeling in recent months. Now the next wave of defaults looms. And it's a growing roster of corporations that figure to be the deadbeats.
U.S. corporate bond defaults are already on the rise. Moody's on Aug. 7 reported a sharp rise in July defaults and now expects the global default rate to climb over 6% over the next year. That's up from less than 1% in late 2007.
Standard & Poor's predicts that 4.9% of all speculative grade borrowers will default over the next 12 months. And there is a chance -- estimated at 20% -- that things could get much worse, with over 8% defaulting. Default, of course, sets the stage for bankruptcy court. "Default typically precedes Chapter 11," said Diane Vazza, head of global fixed income at Standard & Poor's.
Like a storm felling the weakest trees, a new wave of defaults would level the most debt-laden firms. It would mean new losses for many of the private equity deal makers, banks and investors who financed recent debt-heavy leveraged buyouts.