Updated at: 1949 PST, Wednesday, January 14, 2009 KARACHI: Moody's Investors Service said the global default rate on junk-rated debt quadrupled by the end of 2008 to 4% and will likely triple this year as the economic slowdown further pressures those already struggling firms.Corporate defaults were at historic slows in 2006 and 2007, but have begun moving back toward more normal levels as the credit crunch and other woes have pressured results of companies and inhibited the ability of some to refinance debt.Default rates are now expected to spike further. Kenneth Emery, director of Moody's corporate default research, said global economic conditions "are now substantially weaker and more perilous" than the two previous downturns of the early 1990s and 2000s. The rate peaked at 12% in 1991.Moody's is expecting some 300 junk-rated companies to default this year, compared with 104 in 2008. Of that, 22 occurred in December, led by Tribune Co. through its bankruptcy filing and GMAC LLC because of its $38 billion note exchange. Only 18 such defaults occurred in all of 2007.The U.S. junk-rated default rate is seen jumping to 15.3% by year's end, compared with 12% on a global basis. The European rate is expected to fare even worse, surging to 18.3%. The U.S. rate ended 2008 at 4.4%, compared with 1% at the end of 2007.Moody's projected the consumer transportation sector would be the most troubled in the U.S., while durable consumer goods would likely lead increases in Europe.
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