Default, Transition, and Recovery: U.S. Corporate Default Rate Forecasted To Reach 14.3% By March 2010

The U.S. corporate speculative-grade default rate has risen sharply this year, and we expect that it will reach an all-time high of 14.3% by March 2010. Historically, defaults have continued to escalate even after signs of economic recovery. This cycle will be no different. We expect the economy to bottom out in the third quarter of 2009, but default occurrences likely will be abundant past that time horizon. Our baseline projection of 14.3% would result in an unprecedented trough-to-peak increase of more than 13%, outstripping the rate of increase observed in any prior default rate cycle since the start of our series in 1981. Issuance trends to date bear out our expectation that this year will continue to see differentiation

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