Global corporate default rate up in May - Moody's

Nine companies rated by Moody's defaulted in May, the most since August 2003. Eight of the companies that defaulted were based in the United States and one was based in Bulgaria, Moody's said.

In the first five months of 2008, the global default rate doubled from 1 percent at the end of 2007, Moody's said. The U.S. default rate also rose in May to 2.3 percent, from 2.1 percent in April, and is up from 1.6 percent in May 2007, Moody's added.

"Many speculative-grade issuers will face mounting financial pressures over the remainder of the year as a weak economy negatively impacts issuers' revenue growth and reduced access to credit markets limits their ability to modify debt service obligations," Moody's analyst Kenneth Emery said in the report.

"The result will be continued upward pressure on default rates," he added.

Moody's expects defaults by junk-rated companies to rise to 5 percent by the end of 2008, and to 6.3 percent one year from now. In the United States, Moody's expects the default rate to climb to 5.8 percent by the end of the year.

The consumer transportation sector is likely to be most exposed to weakness in the United States in the coming year, while the consumer goods sector is expected to have the highest default rate in Europe, Moody's said. (Reporting by Karen Brettell; editing by Leslie Adler)