But default volumes for the year as a whole do not look so good. S&P said the total amount of defaulted debt so far recorded for 2002 – $135.9 billion – already exceeds the $117.4 billion total for 2001. “The lower rate of corporate defaults across all geographic regions, including Europe, during the third quarter signals a gradual decrease from the record defaults experienced in the previous quarters," said Brooks Brady, New York-based associate director for corporate default research at S&P. "However, this is not to say that a dramatic drop in default rates is expected any time soon, because the economy remains weak and credit quality continues to deteriorate.”
At the end of the second quarter S&P listed 48 issuers on its weakest rating – CCC or lower and on 'credit watch negative' or 'with a negative outlook'. There are now 58 issuers with such a low rating, said S&P.
Communications company Worldcom’s $31.9 billion default was responsible for most of the third quarter default volume. US companies accounted for 27 of the third-quarter defaults.