Fewer Businesses Worldwide Default
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The number of companies worldwide that defaulted on debt payments last year fell by more than half as expanding economies allowed borrowers to better meet interest payments, Moody’s Investors Service said.
The 39 companies that failed to make timely payments on $16.6 billion in bonds, was down from 80 companies with $34.2 billion of debt in 2003. Overall, 0.7% of companies with rated debt defaulted, compared with 1.7% a year earlier.
World economic growth was probably 5% last year, the fastest pace in three decades, the International Monetary Fund forecast in its World Economic Outlook in September. The world economy may expand more than 4% in 2005, IMF chief economist Raghuram Rajan said last month.
Fewer defaults mean investors are demanding less compensation relative to government debt to own high-yield, high-risk debt.
Last year was the first since 1997 that Moody’s raised corporate credit ratings more often than it cut them.
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