Prospect News records three new defaults this week, S&P marks one

By Caroline Salls

Pittsburgh, Feb. 26 - Prospect News reported three new defaults for the week ended Feb. 25, including two bankruptcy filings and one distressed exchange.

Specifically, Bear Island Paper Co. LLC, a subsidiary of White Birch Paper Co., filed for Chapter 11 bankruptcy, as did Northstar Mountain Properties, LLC.

Houghton Mifflin Harcourt Publishing Co. recorded the distressed exchange.

Prospect News also reported an additional default by White Birch Paper, which filed for Companies' Creditors Arrangement Act protection and Chapter 15 bankruptcy.

Meanwhile, Standard & Poor's recorded one global corporate default for the week, bringing its year-to-date tally to 16 defaults.

S&P said its most recent default was made by a confidential company.

S&P's year-to-date default counts by region include 14 defaults in the United States, one in the emerging markets and one in the Other Developed region of Australia, Canada, Japan and New Zealand.

So far this year, S&P said six issuers have defaulted because of distressed exchanges, five because of bankruptcy filings, four because of missed interest payments, and one was confidential.

Of the global corporate defaulters so far in 2010, S&P said:

• 42% of issues with available recovery ratings had recovery ratings of 6, indicating the agency's expectation for negligible recovery of 0% to 10%;

• 8% of the issues had recovery ratings of 5, for modest recovery prospects of 10% to 30%;

• 25% had recovery ratings of 4, for average recovery prospects of 30% to 50%;

• 17% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• None of the issues had recovery ratings of 2, indicating substantial recovery prospects of 70% to 90%; and

• 8% of issues had recovery ratings of 1, or very high recovery prospects of 90% to 100%.

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