The stock market may be acting like the recovery has started, but in the world of real corporate earnings, corporate defaults are happening at a larger and faster rate.
A record total of 82 US nonfinancial companies defaulted during the second quarter, led by 16 in the media and entertainment sector, 15 in autos, and 15 in natural resources. These 82 defaults accounted for a collective $254 billion in outstanding debt, dramatically overshadowing the 30 defaults totaling $52.9 billion in debt during the first quarter. By contrast, for all of 2008, 69 issuers defaulted on about $102 billion in debt.
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In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody's said it anticipated a tidal wave of defaults was approaching.
It said that in the coming months more than 15pc of speculative-grade bonds and loans - all but the most highly-rated - would default on their debts.
This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.
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