Speculative grade corporates: sunny spells, but clouds on the horizon

Sub-investment grade companies will continue to improve in credit quality into 2004, according to a report by Standard & Poor’s, although a rush of recent bond issues could cause problems in two to three years time.

The rating agency’s latest review of speculative grade defaults shows that the global default rate fell to 1.64% in September, down from 1.69% in August, and is expected to drift still lower in 2004. The rate has now remained below the average of the past two decades, of 5.27%,