S&P marks 2 defaults for week; Prospect News records five bankruptcies

By Caroline Salls

Pittsburgh, Aug. 28 - Standard & Poor's reported two global corporate defaults for the week ended Aug. 27, bringing the year-to-day tally to 211, according to a news release.

S&P said both of the week's defaults stemmed from missed interest payments, and both were based in the United States.

Meanwhile, Prospect News recorded five defaults for the week, all stemming from bankruptcy filings.

The defaults recorded by Prospect News included Reader's Digest Association Inc., Taylor, Bean & Whitaker Mortgage Corp., Colonial BancGroup, Inc., FormTech Industries LLC and Guaranty Financial Group Inc.

The ratings agency said the latest defaults brought the missed interest payment count to 73 issuers for the year, making it the leading reason for default in 2009. Distressed exchanges follow closely behind at 72 issuers, and the year-to-day bankruptcy filing default tally stands at 54 issuers.

By region, S&P said 151 issuers have defaulted this year in the United States, 13 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%;

• 16% 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%;

• 11% 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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