Defaults rate continues to decline, says Moody’s

The rate of high yield defaults in Europe continued to decline in August, according to the latest Moody’s monthly default report. The rolling 12-month European default rate declined to 4.8% in August from 6.2% in July and is well down from the 9.6% rate recorded in August 2009.

The same pattern holds globally, as the global high yield default rate eased from 5.5% in July to 5% in August, compared to a rate of 12.3% a year ago.

Moody’s projects that the global default rate is likely to continue its downward trend for the rest of 2010, reaching 2.7% by the end of the year, and hitting 2% a year from now.