Thursday, January 20, 2005
The default rate of companies worldwide halved last year according to Moody's.
The 39 companies that failed to make timely payments on $16.6 billion in bonds, was down from 80 companies with $34.2 billion of debt in 2003. Overall, 0.7% of companies with rated debt defaulted, compared with 1.7% a year earlier.This is a reflection of easy money. In fact, real interest rates are negative at the short end, and about 1% at the long end. With free money to be had, it's no wonder nobody defaults. This includes, by the way, the developing world, who not only can refinance at these bargain-basement rates, but also pay back in depreciated dollars!