S&P: More Defaults Bring Yearly Tally to 153
June 12, 2009
Eight corporate defaults this week brought the 2009 year-to-date tally to 153, according to a report released today by Standard & Poor’s. That is more than four times the 35 defaults for the same period in 2008.
Two of this week’s defaults came via Chapter 11 filings, three were due to distressed exchanges and three were confidential defaults, the report said. Missed payments account for 57 of the 153 defaults this year; 41 were due to bankruptcy filings; 40 were from distressed exchanges; and 15 were due to various other reasons.
“The precipitous increase in defaults reflects a pronounced decline in economic fundamentals and earnings prospects, as well as the continued credit freeze, effectively halting lending to speculative-grade borrowers,” said S&P analysts in the report. “A large number of defaults likely will be concentrated in the first two or three quarters of 2009 as a result of these factors, coupled with distressed exchange offers.”
S&P’s 12-month trailing U.S. corporate speculative-grade default rate is expected to reach 14.3% by the end of Q1 2010.
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