US corporate defaults on course to hit 2009 levels: Moody's

[NEW YORK] Oil and gas company defaults are pushing total corporate defaults to levels not seen since 2009, said Moody's Investors Service on Monday.

A total of 16 oil and gas companies defaulted in the second quarter of 2016, helping to push the sector's default count to 30 for the first half of the year, Moody's said.

"We saw the amount of defaulted debt jump 123 per cent to US$45 billion, which matched the highest quarterly dollar amount since the recession," John Puchalla, Moody's senior vice president, said.

The overall US speculative-grade default rate rose to 5.1 per cent from 4.4 per cent in the second quarter and is projected to jump to 6.4 per cent - its highest level since June 2010, Moody's reported.

The US speculative commodity default rate rose to 23.9 per cent in the second quarter from an already high 19.9% in the prior quarter.

"A growing US economy and the ongoing benefits of receptive capital markets over the last few years has constrained much of the stress to the commodities sector," the rating agency said.

Excluding commodities, the US speculative-grade default rate rose to 2.3 per cent from 2.0 per cent in the second quarter.

"While sector default risk remains heavily concentrated in commodity companies, the default rate and credit strains outside of commodities are edging up, but remain far less pronounced," Moody's said.

IFR