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Glut of Junk Bonds Seen Boosting Overall Bond Default Rate

Posted on May 13, 2008

Junk bonds now account for half of all corporate bonds, likelyresulting in an escalating overall default rate, according to Standard& Poor s. In a Credit Trends report, S &P said 50.41% of firmsrated speculative grade at the end of the first quarter of 2008, 3%higher than during the comparable period in 2006 and 12% higher than adecade ago.An increase in both defaults and downgrades and a drop of newlyrated entities have affected the ratings distribution during the lastquarter, S&P said. Indeed, the flow of speculative-grade newentrants has been primarily responsible for the downward shif...

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default rate , sp , speculative