NEW YORK (Reuters) – Global credit conditions improved in August as the number of companies at risk of defaulting on their debt fell, and credit conditions are now better than the average since 1990, according to risk management firm Kamakura Corp.
The number of companies with a high risk of defaulting on their debt globally fell 2.3 percentage points in August, the fifth consecutive month of decline, to 12.4 percent of the global public company universe, the company said on Monday.
This is down from its recent peak of 24.3 percent in March, Kamakura said. The all time low was 5.4 percent in April and May of 2006.
A company is considered troubled when its default probability is in excess of 1 percent. The index hit a high of 28 percent in September 2001.
The number of companies with a default probability of more than 20 percent fell by 38 to 258, or a drop of 0.1 percentage point to 1.0 percent of the 26,951 companies in Kamakura’s database.
Those with a 10 percent to 20 percent default risk also fell by 0.2 percentage point to 1.3 percent of the total universe, the company said.
Companies with a 5 percent to 10 percent default risk dropped by 0.5 percentage point to 1.8 percent in the month, and companies with a 1 percent to 5 percent default probability decreased by 1.4 percentage point to 8.4 percent, Kamakura said.
(Reporting by Karen Brettell; Editing by Kenneth Barry)