S&P marks two defaults in week ended Thursday; Prospect News sees six

By Caroline Salls

Pittsburgh, Dec. 18 - Standard & Poor's reported two global corporate defaults for the period of Dec. 11 to Dec. 17, bringing the year-to-date tally to 262, according to an agency news release.

S&P said the year-to-date default count is the highest tally since its series began in 1981.

The agency said one of the latest defaulters was based in Japan and the other in the United States.

According to the release, this week's defaulters were Mercer International Inc. and Takefuji Corp., and both defaults resulted from distressed exchanges.

Meanwhile, Prospect News recorded three bankruptcies and three missed payments for the period.

Specifically, Fairfield Residential LLC, Jones Stephens Corp. and Vion Pharmaceuticals, Inc. filed for bankruptcy this week, and Coinmach Service Corp., Buffalo Thunder Development Authority and Frontera Copper Corp. missed payments.

S&P said bankruptcy-related filings account for 70 defaults so far this year, trailing distressed exchanges, which are responsible for 103 defaults, and missed interest or principal payments, which account for 89 defaults.

By region, S&P said 189 issuers have defaulted this year in the United States, 20 issuers in Europe, 36 issuers in the emerging markets and 17 issuers in the other-developed region.

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 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, for 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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