Bloomberg is reporting that the global speculative-grade default rate rose to 12.4 percent in October, the highest proportion of defaults since the Great Depression, according to Moody’s Investors Service.
“The global default rate is now likely near its cyclical peak, as indicated by a rapidly slowing pace of defaults in recent months,” said Kenneth Emery, the director of corporate default research at Moody’s. The firm’s model predicts eight to 10 defaults per month on average for the coming year, down from the rate of 20 per month for the past year.
The U.S. Treasury plans to sell a record $75 billion in its quarterly auctions of debt next week and also indicated plans to expand inflation-indexed securities next year as it finances unprecedented budget deficits.
The Treasury plans to auction $37 billion in three-year notes on Aug. 11, $23 billion in 10-year notes Aug. 12 and $15 billion in 30-year bonds Aug. 13.
New Jersey had the credit-rating outlook on $31 billion in debt reduced to negative from stable by Moody’s Investors Service, which said the recession hurt tax revenue and led the state to deplete its reserves.
New Jersey has Moody’s ratings of Aa3, the fourth-highest investment grade, on $2.5 billion in general-obligation bonds and A1, one level lower, on $28.5 billion in appropriation- backed securities. Its net tax-supported debt load is the third highest among U.S. states after California and New York. The outlook change, disclosed late yesterday in a news release by the New York-based credit-rating company, raises the possibility that those ratings will be reduced.
U.S. Treasury debt prices shed gains on Tuesday after data from the National Association of Realtors showed pending sales of previously owned U.S. homes rose at a faster-than-expected pace in June.
The data was seen as further evidence that the struggling U.S. housing market may be reaching a bottom.
Treasuries fell Thursday, pushing the yield on seven-year notes to near the highest level in more than a month, as the U.S. prepares a $28 billion offering of the debt amid concern the deluge of supply will overwhelm demand.
The yield on the seven-year note rose five basis points, or 0.05 percentage point, to 3.35 percent at 11:42 a.m. in New York, according to BGCantor Market Data. The 10-year note yield rose four basis points to 3.70 percent. The 30-year bond yield increased three basis points to 4.53 percent.