UPDATE 2-Global junk bond default rate up to 1.79 pct - S&P
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By Dena Aubin
NEW YORK, Aug 14 (Reuters) - The global junk bond default rate rose to 1.79 percent in July from 1.44 percent in June as U.S. financial and real estate firms struggled to make debt payments, Standard & Poor's said on Thursday.
More than $41 billion in debt has defaulted globally so far this year, about five times the $8 billion total for all of last year, S&P said in a statement.
"Corporate casualties continue to rise as the economy deteriorates and volatility in the financial markets remains high," S&P said.
The U.S. default rate rose to 2.37 percent in July from 1.92 percent in June and is likely to rise to 4.9 percent over the next 12 months, S&P said.
Troubles in the auto sector are threatening to push defaults higher.
About $352 billion of debt is vulnerable to default, up from $126 billion last month, S&P said. The volume of risky debt, or "weakest links," ballooned after U.S. automakers Ford Motor Co (F.N), General Motors Corp GM.N and Chrysler LLC were added to the total in July, S&P said.
Sectors that depend on consumer spending such as leisure, media, retail and restaurants are also at risk, the rating agency said.
S&P defines weakest links as debt rated "B-minus" or lower with either a negative outlook or with ratings on review for downgrade. The default rate on such debt is about 6.6 times higher than for junk bonds overall, S&P said.
The United States leads in both defaults and weakest links. Of this year's 52 defaults, 49 were in the United States, while 129 of the 156 weakest links are U.S. issues.
July's defaults included U.S. mortgage originator IndyMac IDMC.PK, U.S. newspaper publisher Journal Register Co JRCO.PK, U.S. packaging company Portola Packaging, Canada-based Ainsworth Lumber Co (ANS.TO) and France-based spirits and wine producer Belvedere SA (BEVD.PA), S&P said.
The default rate in Europe increased to 0.49 percent in July from zero, while emerging market defaults held steady at 0.17 percent for the fifth straight month. (Reporting by Dena Aubin, Editing by Daniel Trotta)
