S&P slashes US junk bond default forecast to 6.9 pct

NEW YORK, Oct 21 (Reuters) - Standard & Poor’s on Tuesday slashed its forecast for the U.S. junk bond default rate, saying a reopening of the bond markets after last year’s credit crisis is helping more risky companies survive.

S&P said it now expects defaults to decline to 6.9 percent a year from now from a September rate of 10.8 percent. On Oct 2, it had said it expected defaults to escalate to 13.9 percent by August 2010.

“This does not mean that corporate default risks are permanently lower,” S&P said in a statement. Without a revival in corporate revenues and growth, many borrowers could face renewed default risks unless they significantly reduce debt, the agency said.

Reporting by Dena Aubin; Editing by Diane Craft