US defaults down, recoveries up, says Fitch
The default rate in the United States has fallen 69%, while recovery rates went up by 50% in the first half of 2003, according to Fitch Ratings.
The defaults through June were concentrated in the telecommunications sector ($4 billion); health care and pharmaceuticals ($3.8 billion); transportation ($2 billion); metals and mining ($1.2 billion); food beverage and tobacco ($1.2 billion); and textiles ($1.1 billion).
The weighted average recovery rate moved up to 33% of par for defaulted issues through June compared with 22% of par for the full year of 2002. Fitch attributes the improvement to fewer low-value telecommunication defaults.
Fitch’s default index is based on the US dollar-denominated, non-convertible, speculative grade bond market (the rating equivalent of ‘BB+’ and below, rated by Fitch or one of the two other major rating agencies).
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