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Moody's: LatAm default rate reaches 6-year high, shows no sign of slowing

The default rate for Latin American corporates has risen toa six-year high and shows no sign of slowing, Moody's reported.

The speculative-grade issuer-weighted default rate for LatinAmerican corporates surged to 5.3% for the 12 months through June, up from 4% ayear ago. It is also higher than the global rate of 4.6% for the same period,Moody's said in a Sept. 30 report. Meanwhile, a Moody's model shows that therate for the 12-month period through June 2017 could climb to 5.7%.

"Twelve Latin American corporates with Moody's-rateddebt have defaulted since this time last year," Yang Liu, a Moody'sassociate analyst, said. "Of those four were in Brazil, including that ofOi S.A., the largest default in the region's history."

Ratings downgrades have outnumbered upgrades in the regionover the past year, the rating agency noted. "On average, senior unsecuredequivalent ratings have drifted down by 0.69 notches in the region," itstated. "The one-year volatility for Latin American ratings has alsoincreased significantly, rising to 0.98 from 0.38 a year earlier. That's muchhigher than the historical average of 0.49."