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News Link • Economy - Economics USA

Forty percent of U.S. junk bonds to default by 2013: BofA

• Reuters
About 40 percent of all U.S. junk bonds outstanding in late 2008 will likely default by 2013 as government aid measures end and a wall of corporate debt comes due, Bank of America Merrill Lynch said.

By contrast, the cumulative five-year default rate was about 30 percent in the last two default cycles, Bank of America said in a report.

The worst recession since the 1930s has already pushed defaults to double-digit rates. According to Standard & Poor's, the default rate rose to 10.4 percent in August from less than 1 percent in 2007 as the recession and credit crunch left companies unable to pay off debt.


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