Moody’s Investors Service recently reported the highest monthly number of companies in default since the Great Depression. An article appearing on Bloomberg.com cites the highlights of Moody’s most recent report:
- Thirty-five companies defaulted in March, with a cumulative total of 79 Moody’s rated companies classified in default so far this year.
- The rate at which speculative borrowers failed to meet their obligations has risen from a previous 4.1 percent, to now 7 percent
- The U.S. default rate rose from 4.5 percent to 7.4 percent in March. Europe rose from 2.2 percent to 4.8 percent.
- There was some slight good news in that Moody’s lowered its 2009 year-end prediction of defaults from a previous 15.3 percent forecast, to 14.6 percent.
Many of us writing in the blogsphere have counseled readers to expect the effects of the current global financial crisis to manifest themselves in potential supplier failures during the remainder of 2009, and possibly longer. A special concern lies in the U.S. automotive supplier base, although the U.S. government has extended its TARP program to certain suppliers within this industry. This latest data from Moody’s reinforces that the crisis remains among procurement and supplier sourcing teams to continue their diligence in supplier monitoring or supplier contingency planning. But there may be the slightest optimism that 2009 although bleak in terms of corporate defaults, may not be a bleak as once thought.
Let us therefore focus on the good news which lies among that which is bleak.