Global default rates sharply higher in 2008

NEW YORK (Reuters) - Seventy-five companies around the world have defaulted on debt worth a total $226 billion (139.7 billion pounds) in the year to Oct 15, far exceeding the 22 defaults for all of 2007, Standard & Poor's said Wednesday.

The majority at 65 were domiciled in the United States, followed by two each from Canada, Hong Kong and Mexico, and one each from France, Germany, Iceland and Britain, the agency said in a note.

U.S. companies also account for the majority of the list of "weakest links," or issuers with a rating of "B-minus" or lower, who have either a negative outlook or are on review for a potential downgrade, meaning they are more at risk of default.

S&P's "B-minus" rating is six notches into speculative, or 'junk' status.

A full 140 out of 181 weakest links are U.S. companies. The combined rated debt of all 181 totals $388.52 billion.

"In 2008, defaults have increased significantly in the U.S., but remain scarce elsewhere," said S&P managing director Diane Vazza.

The 12-month trailing global corporate speculative-grade bond default rate rose to 2.04 percent in September from 1.84 percent in August, but held below the long-term average of 4.35 percent for 56 consecutive months. The long-term average is calculated on the period from 1981 to 2007.

In contrast, the U.S. speculative-grade default rate rose to 2.68 percent in September from 2.44 percent in August, climbing for a ninth consecutive month.

The rate had hit a 25-year low of 0.97 percent at the end of 2007.