The third quarter’s total, $31.9 billion belonging to Worldcom, is less than the second quarter’s $48.2 billion, with S&P seeing signs of ” a gradual decrease from the record defaults experienced in the previous quarters”.
“However, this is not to say that a dramatic drop in default rates is expected any time soon, because the economy remains weak and credit quality continues to deteriorate,” cautions Brooke Brady S&P’s associate director for corporate default research.
Specifically, S&P cautioned about potential weakness in:
- Media & Entertainment
- Capital goods
- High technology
Five companies defaulted on more that $1 billion of rated debt during third quarter:
- WorldCom ($31.9 billion)
- AT&T Canada ($3.3 billion)
- Conseco ($2.6 billion)
- NRG Energy ($1.4 billion)
- Callahan Nordrhein-Westfalen ($1.3 billon)
In total, 1.4% of speculative grade issuers and 0.5% of all rated issuers defaulted.