Default risk for most public US companies ticked lower at the end of the third quarter compared to the second quarter.
Median probability of default scores dropped across seven of 11 market sectors, with the remaining four — healthcare, utilities, real estate and financials — all roughly flat as of Sept. 30 compared to June 30, according to S&P Global Market Intelligence's RiskGauge model.
The scores represent the median odds of default on debt within a year and are based on financial reports and the volatility of share prices for public companies on major US exchanges, accounting for country- and industry-related risks and other macroeconomic factors.
Global corporate defaults are slowing in 2024 compared to 2023, with 67 defaults by US companies in the first nine months of 2024, 10 fewer than the same period a year earlier, according to S&P Global Ratings data as of Oct. 16. Ratings does not contribute to or participate in the generation of Market Intelligence's RiskGauge scores.
Most, least vulnerable
Oil and gas equipment and services companies and publishers were the industries with the highest median probability of default scores at the end of the quarter. For the publishing industry, this is at least the third quarter in a row that the industry has landed at or near the top of most-vulnerable industries, according to Market Intelligence data.
Self-storage REITs registered the lowest median probability of default score among US industries, again ranking among the least vulnerable industries. Regional banks ranked second on the least-vulnerable industries as measured by Market Intelligence's RiskGauge model, though the median default risk score fell from the prior quarter.
Biggest increases, drops
At the industry level, median probability of default scores moved 1 percentage point or less during the quarter. The greatest rise was for diversified financial services with jump to 4.2% from 3.2% at the end of June. Healthcare services followed, also moving to 4.2%, yet the move was a narrower 0.8 percentage point increase.
The fall in median probability of default scores was smaller than the rise, with the greatest drop at 0.7 percentage point for apparel retail companies to 7.7% at the end of the third quarter. That was a similar fall as footwear and oil and gas refining and marketing companies.