Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Bobby Yellin who wrote (42950)	10/14/1999 9:29:00 AM
From: Giraffe	Read Replies (2) \| Respond to of 116764

Bond defaults rise to 5.78% By Edward Luce, Capital Markets Editor The level of defaults on bonds globally surged to its highest level since 1991, driven mostly by bankruptcies in the US and emerging market turmoil. In a report, Moody's Investors Service, the credit rating agency, said the proportion of defaults had risen to 5.78 per cent of all bonds. The ratio had been climbing steadily since early 1997 when it hit a low of 1.4 per cent. Of the 30 defaults in the third quarter of 1999, 18 were from the US and two each from the UK, Mexico and Canada. Analysts said most of the defaulters were high-yield companies that came to the market in its most bullish phase between late 1996 and mid-1998. This meant they had access to capital at relatively cheap rates despite their low credit ratings and poor cash flow generation. "There was an enormous flood of weak credits who came to the market in that period," said Sean Keenan, an analyst at Moody's in New York. Recent defaulters include Drilling Technologies and TransAmerica Energy, of the US, and ICO Global Communications of the UK. The default rate was aggravated by the recent rise in US interest rates that hit highly geared companies harder than others. It also triggered a shift of funds into short-term deposits and government bonds, which deprived many emerging markets of access to capital. Both Ecuador, the South American country, and Daewoo, the Korean conglomerate, have defaulted on obligations in the past two months. However, analysts said the default rate was still relatively low when judged against previous credit cycles. It surged to more than 13 per cent in early 1991, following the Savings & Loan bankruptcies in the US and the onset of a deep recession in the US and UK. The ratio may have peaked since the shakier credits have been denied access to the market over the past 12 months. "The default rate is likely to plateau or even fall over the next few months," said Mr Keenan. ft.com