November 3, 2009 / 5:05 PM / 10 years ago

UPDATE 1-U.S. junk bond default rate rises to 11.3 pct -S&P

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NEW YORK, Nov 3 (Reuters) - The U.S. junk bond default rate rose to 11.3 percent in October from 10.8 percent in September as corporate America’s credit quality worsened despite positive economic news, Standard & Poor’s said on Tuesday.

Eleven bond issuers defaulted in October, bringing the year-to-date total to 175, S&P said in a statement.

A global credit crisis and the worst recession since the 1930s have already triggered six of the 10 largest bankruptcies on record, including the failures of General Motors in June and CIT Group CITGQ.PK on Sunday.

Numerous government lifelines, including near-zero interest rates, are beginning to relieve default pressures as the economy revives, however.

S&P last month slashed its forecast for the default rate, saying a thawing of the bond markets after last year’s credit crisis is helping more companies survive.

The agency expects defaults to fall to 6.9 percent by September 2010, compared with an earlier forecast of a rise to 13.9 percent by August 2010. A 6.9 percent rate would still be above the long-term average rate of 4.3 percent between 1981 and 2008, however.

S&P’s previous peak junk bond default rate was 12.7 percent in July 1991, based on records dating back to 1981. (Reporting by Dena Aubin; Editing by James Dalgleish)

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