S&P marks one default for week ended Sept. 24; Prospect News records two bankruptcies

By Caroline Salls

Pittsburgh, Sept. 25 - Standard & Poor's reported one global corporate default for the week ended Sept. 24, bringing the year-to-date tally to 216, according to a news release.

S&P said the defaulter, which was based in Japan, was Aiful Corp. Aiful's default stemmed from a payment suspension after the issuer applied for alternative dispute resolution procedures.

The ratings agency said this qualified as a selective default, which has accounted for 75 defaults so far this year. S&P said a majority of these defaults have been distressed exchanges.

Meanwhile, Prospect News recorded two bankruptcy filings for the week, including a Chapter 7 filing made by Irwin Financial Corp. and a Chapter 11 filing by Velocity Express Corp.

S&P said missed payments trail selective defaults as the leading reason for defaults in 2009 with 74. The year-to-date bankruptcy filing default tally stands at 54 issuers.

By region, S&P said 155 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:

• 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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