Given positive momentum with GDP, inflation, and interest rates in 2024, S&P Global Ratings expects defaults to decline in the fourth quarter but finish the year higher than 2023. This should push the U.S. trailing-12-month speculative-grade corporate default rate to 4.75% (80 defaults) by December 2024, S&P Global Ratings said in its article "U.S. Speculative-Grade Corporate Default Rate To Hit 4.75% By December 2024 After Third-Quarter Peak," published today.
This reflects a slight decline from our previous 5% projection through September. The proportion of 'CCC/C' ratings remains elevated, and we expect these firms to contend with weak cash flow and elevated interest expenses this year.
Distressed exchanged will likely remain common as well.
Any downside surprise to the currently optimistic backdrop could push the default rate toward our pessimistic case of 6.75%; however, at this time a recession is looking less likely in 2024.
This report does not constitute a rating action.
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