Record corporate defaults in 2001; Improvement seen by year's end. (Communique).(Standard and Poor's Corp. report)(Brief Article)(Statistical Data Included)

Annual corporate defaults exceeded 200 for the first time, with 211 issuers defaulting on approximately $115.4 billion of debt through Dec. 31, 2001, according to the latest data compiled by Standard & Poor's. This dwarfs the previous record set in 2000, when 132 issuers defaulted on $42.3 billion of debt. Significantly, 3.99 percent of all issuers defaulted during 2001, equaling the record of 4.01 percent set in 1991, when the universe of issuers was much smaller, and far surpassing 2000's global default rate of 2.56 percent.

In particular, 8.57 percent of issuers with speculative-grade ratings at the beginning of 2001 defaulted during the year, compared with 5.68 percent in 2000. "This is by far the highest speculative default rate since the record level of 10.87 percent set in 1991," said Brooks Brady, associate director for Standard & Poor's Risk Solutions and author of the forthcoming default study. "In a typical cycle, defaults peak six months after an economic bottom," said Diane Vazza, head of Global Fixed Income Research. "Standard & Poor's believes the U.S. economy will bottom in the first quarter of this year and then improve gradually. We would expect to see continued high default rates, with defaults peaking at the beginning of the summer, when speculative-grade default rates could reach 11 percent, and then trailing off at year end."

Some 0.27 percent of issuers with investment-grade ratings at the beginning of 2001 defaulted last year, far surpassing 199 l's 0.19 percent and 2000's 0.15 percent. The record level of investment-grade ...