S&P warns default rates at seven year high

Rating agency Standard & Poor has warned that global corporate defaults has reached highest level in seven years, worst since global financial crisis. However large chunk of defaults are concentrated in United States and in energy space.

So far in 2016, 40 corporates have defaulted, which is worst YTD since 2009. Last year it was 29.

Mainly energy prices drop since mid-2014 is to blame for. While oil price has staged recent rally of 40-50%, and up 3% for the year, natural gas is worst performing commodity this year declining around 14% YTD. So things could get worse, before it gets any better. Lower investments have hit drilling companies the hardest, which is likely to recover from the trough last.

So far 34 companies in U.S. have defaulted and 29 of them are from energy space. 5 corporates have defaulted in emerging markets.

More could follow suit as earnings per share growth has been in negative for S&P 500, quite some time now.