S&P marks 4 defaults in week; Prospect News records bankruptcy, missed payment, distressed exchange

By Caroline Salls

Pittsburgh, Oct. 16 - Standard & Poor's reported four global corporate defaults for the week ended Oct. 15, bringing the year-to-date tally to 233, roughly triple the 77 defaults reported at this time last year, according to a news release.

S&P said three of the four defaults stemmed from distressed exchanges, which account for 81 defaults this year and is thus far the most cited reason for default in 2009. The other default resulted from missed principal and interest payments.

Three of the latest defaulters were based in the United States while the other was based in Europe.

Meanwhile, Prospect News recorded one bankruptcy filing for the week, as well as one missed payment and one distressed exchange.

The bankruptcy filing was made by Chicago National League Ball Club LLC. deCODE genetics Inc. missed the Oct. 15 interest payment on its 3.5% convertible notes due 2011. The distressed exchange recorded by Prospect News was made by Wilton Holdings Inc.

S&P's defaulters for the week included Coinmach Service Corp., VAC Holding GmbH, Quality Distribution Inc. and Champion Enterprises Inc.

The ratings agency said the distressed exchanges are trailed by missed payments as the top reason for default in 2009 with 78. S&P's year-to-date bankruptcy filing default tally stands at 54 issuers.

By region, S&P said 171 issuers have defaulted this year in the United States, 15 issuers in Europe, 34 issuers in the emerging markets and 13 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:

• 40% 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%;

• 10% 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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