Corporate Bond Default Rate Near 9-year High

Corporate bond defaults reached $10.6 billion in February, the most since July 1999, as a slowing U.S. economy pinched corporate profits, according to Moody’s Investors Service. Worldwide, 17 companies representing 6.6% of all “junk”-rated issuers defaulted last month, the highest default rate in nearly nine years, Moody’s said. The biggest defaults in the U.S. came from Finova Capital Corp., Sunbeam Corp. and Loews Cineplex Entertainment Corp. Deteriorating corporate credit was the main driver of bond defaults last year, but a slowing U.S. economy is the big threat now, Moody’s said. The 6.6% default rate follows a 6.3% pace in January and is the highest since June 1992, Moody’s said. Almost one of every 10 junk-rated issuers will default in the next year, the ratings company forecasts.February saw the third-biggest bond defaults by dollar amount, following $11.3 billion recorded in July 1999 and $15 billion in 1935 during the Great Depression, Moody’s said. Finova’s $6.3 billion debt was the biggest since Daewoo Corp. of Korea defaulted on $5.6 billion of debt in July 1999.