S&P marks 7 defaults for week; Prospect News sees bankruptcies, missed payments, distressed exchanges

By Caroline Salls

Pittsburgh, Oct. 2 - Standard & Poor's reported seven global corporate defaults for the week ended Oct. 1, bringing the year-to-date tally to 223, according to a news release.

S&P said five of the seven defaults stemmed from distressed exchanges and one from a missed interest payment. The other was confidential.

All of the latest defaulters were based in the United States.

Meanwhile, Prospect News recorded two bankruptcy filings for the week, six missed interest payments and two distressed exchanges.

The bankruptcy filings were made by Holley Performance Products Inc. and PT Alliance Corp.

The missed interest payments recorded by Prospect News came from Bradford & Bingley plc, FairPoint Communications, Inc., two from Anthracite Capital Inc., Orleans Homebuilders Inc. and NJSC Naftogaz of Ukraine.

The distressed exchanges seen by Prospect News came from Advanstar Communications, Inc. and Treofan Germany GmbH & Co. KG.

S&P's defaulters for the week included Golden Nugget Inc. (Landry's Restaurant), Realogy Corp., Merrill Corp., NewPage Corp., FairPoint and Appleton Papers Inc.

The ratings agency said distressed exchanges leads the reason for defaults in 2009 with 82, followed by missed payments with 76. S&P's year-to-date bankruptcy filing default tally stands at 54 issuers.

By region, S&P said 162 issuers have defaulted this year in the United States, 13 issuers in Europe, 34 issuers in the emerging markets and 14 issuers in the other-developed region, which includes Australia, Canada, Japan and New Zealand.

Of the global corporate defaulters so far this year, S&P said:

• 41% of issues with available recovery ratings had recovery ratings of 6, indicating the ratings agency's expectation for negligible recovery of 0% to 10%;

• 15% of issues had recovery ratings of 5, for modest recovery prospects of 10% to 30%;

• 12% had recovery ratings of 4, or average recovery prospects of 30% to 50%;

• 11% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 12% of issues had recovery ratings of 2, indicating substantial recovery prospects of 70% to 90%; and

• 10% of issues had recovery ratings of 1, or very high recovery prospects of 90% to 100%.

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