Prospect News, S&P both see one new default from April 28 to May 5

By Caroline Salls

Pittsburgh, May 6 - Prospect News reported one new default for the period of April 28 to May 5 in the form of a Chapter 11 bankruptcy filing made by Majestic Capital, Ltd.

Prospect News also reported a Chapter 11 bankruptcy filing made by Raser Technologies, Inc., which had previously defaulted after a missed interest payment on its 8% convertible senior notes.

Standard & Poor's also reported one new default for the period in the form of a distressed exchange made by Keystone Automotive Operations Inc.

The latest default brought S&P's year-to-date global corporate default tally to 14 issuers. In comparison, 32 global corporate issuers had defaulted by this time in 2010.

S&P said nine of this year's defaults were based in the United States, two were based in New Zealand, and one each was based in Canada, the Czech Republic and Russia.

The ratings agency said six of this year's defaults resulted from distressed exchanges and five from missed interest or principal payments, both among the top reasons for default in 2010.

Of the remaining three, one issuer defaulted after it filed for bankruptcy, another had its banking license revoked by its country's central bank, and the third was forced into liquidation as a result of regulatory action.

S&P's baseline projection for the U.S. corporate trailing 12-month speculative-grade default rate for March 2012 is 1.6%.

The agency said a total of 24 issuers would need to default from April to March 2012 to reach the forecast. The projection of 1.6% is another 0.86-percentage-point, or another 35% decline from the 2.46% default rate in March.

S&P said improved lending conditions and a lower cost of capital are keeping its default expectations relatively upbeat in the next 12 months. S&P said it is seeing stronger credit quality, as reflected in fewer downgrades and lower negative bias.

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