The U.S. speculative grade default rate likely will climb to 5.3% by the end of 2017’s first quarter, from 3.8% at the end of the first quarter this year, as low oil and commodities prices will continue to plague debt issuers from those sectors, according to S&P Global.

The projected rate of 5.3% would mean 93 U.S. corporate defaults for the 12 months ended March 2017, a noticeable increase from the 69 defaults seen during the 12 months ended March 2016. There were only 31 defaults during the same period in 2015.

The expected defaults would be amid an estimated $161 billion of speculative grade debt due to mature in 2017, S&P says.

The 5.3% figure is a baseline forecast. Under an optimistic scenario the rate would increase to 4.2%, while under a pessimistic scenario the rate would increase to 7%, according to Diane Vazza and Nick W Kraemer of S&P, authors of the report, which was published May 9. (The full research is available here – subscriber link). – Tim Cross

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