S&P marks two defaults in week ended Sept. 3; Prospect News records 8 bankruptcies, one missed payment

By Caroline Salls

Pittsburgh, Sept. 4 - Standard & Poor's reported two global corporate defaults for the week ended Sept. 3, bringing the year-to-day tally to 213, according to a news release.

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

Meanwhile, Prospect News recorded eight bankruptcy filings for the week, as well as one missed interest payment. In addition, CIT Group Inc. said it will miss the interest payment due Sept. 15 on its 6.1% junior subordinated notes due 2067.

The bankruptcy filings recorded by Prospect News included FormTech Industries LLC, Guaranty Financial Group Inc., Baseline Oil & Gas Corp., Everest Holdings, LLC, Cynergy Data, LLC, Freedom Communications Holdings, Inc., Samsonite Co. Stores, LLC and Palm Energy Partners, LLC.

In addition, Prospect News said Anthracite Capital Inc. missed the Sept. 1 interest payment on its $51.05 million of 11.75% convertible senior notes due 2027.

The ratings agency's latest defaulters included Arinc Inc. and CC Media Holdings Inc.

S&P said the latest defaults brought the distressed exchange count to 74 issuers for the year, making it the leading reason for default in 2009. Missed interest payments follow closely with 73 issuers for the year, and the year-to-day bankruptcy filing default tally stands at 54 issuers.

By region, S&P said 153 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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