S&P sees two more defaults; Prospect News sees bankruptcies, missed payments, distressed exchanges

By Angela McDaniels

Tacoma, Wash., Oct. 23 - Standard & Poor's reported two global corporate defaults for the week ended Oct. 22. They bring the year-to-date tally to 235, which is roughly triple the 79 defaults recorded at this time in 2008, according to an agency news release.

S&P said both of the defaults stemmed from distressed exchanges.

One of the latest defaulters was based in the United States, and the other was from Japan.

Meanwhile, Prospect News recorded three bankruptcy filings for the week, three missed interest payments and two distressed exchanges.

The bankruptcy filings were made by Nortek Inc., Erickson Retirement Communities, LLC and Stallion Oilfield Services Ltd.

Two of the missed interest payments recorded by Prospect News came from California Coastal Communities, Inc., and the third was from Metro-Goldwyn-Mayer Inc.

The distressed exchanges seen by Prospect News came from Atlantic Express Transportation Corp. and NCI Building Systems, Inc.

S&P said distressed exchanges leads the reason for defaults in 2009 with 84.

By region, the agency said 172 issuers have defaulted this year in the United States, 15 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:

• 39% of issues with available recovery ratings had recovery ratings of 6, indicating the agency's expectation for negligible recovery of 0% to 10%;

• 15% of 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%;

• 10% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 13% 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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