Prospect News records two new defaults for week, S&P sees none

By Caroline Salls

Pittsburgh, Sept. 10 - Prospect News reported two new defaults in the week ended Sept. 9 in the form of a missed interest payment by Max Petroleum plc and a Chapter 11 bankruptcy filing made by Schutt Sports, Inc.

Specifically, Max Petroleum missed an interest payment on its $75 million of 6.75% convertible bonds due 2012.

Meanwhile, Standard & Poor's recorded no defaults for the week, leaving its year-to-date default count at 53.

By region, S&P's current 2010 default tallies stand at 38 in the United States, two in Europe, five in the emerging markets and eight in the other developed region, which includes Australia, Canada, Japan and New Zealand.

So far this year, missed interest or principal payments have accounted for 17 of S&P's defaults, distressed exchanges have accounted for 16, Chapter 11 filings are responsible for 12, receiverships account for two and regulatory directives and debt reorganization account for one each.

The remaining four defaulted issuers were confidential.

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

• 42% 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%;

• 15% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 10% of the 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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