Prospect News records one new default for week, S&P sees zero

By Caroline Salls

Pittsburgh, May 14 - Prospect News reported one new default for the week ended May 13, a bankruptcy filing made by Chem Rx Corp.

Prospect News also recorded a missed interest payment from Alliance Bank, which had previously defaulted.

Meanwhile, Standard & Poor's reported no defaults for the week, leaving its year-to-date default tally at 32.

By region, S&P said the current year-to-date default counts are 22 defaults in the United States, two in Europe, three in the emerging markets and five in the other developed region, which includes Australia, Canada, Japan and New Zealand.

So far this year, the ratings agency said that Chapter 11 filings and distressed exchanges account for 10 defaults each, missed interest or principal payments are responsible for seven defaults, regulatory directives and receiverships account for one issuer each, and the remaining three defaulted issuers were confidential.

Of the global corporate defaulters so far in 2010, S&P said:

• 38% of issues with available recovery ratings had recovery ratings of 6, indicating the agency's expectation for negligible recovery of 0% to 10%;

• 12% of the 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%;

• 19% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 15% of the issues had recovery ratings of 2, indicating substantial recovery prospects of 70% to 90%; and

• 4% of issues had recovery ratings of 1, or very high recovery prospects of 90% to 100%.

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