S&P marks 8 defaults in Aug. 17 week; Prospect News records four missed payments, one bankruptcy

By Caroline Salls

Pittsburgh, Aug. 21 - Standard & Poor's reported eight global corporate defaults for the week ended Aug. 20, resulting from a variety of factors, according to a news release.

Specifically, S&P said three of the week's defaults stemmed from missed interest payments, one from an issuer being placed into receivership, one from a foreign bankruptcy and three from distressed exchanges.

Meanwhile, Prospect News recorded five defaults for the week, including four missed payments and the one bankruptcy filing.

The defaults recorded by Prospect News included Barzel Industries Inc., with a missed interest payment on its 11½% senior secured notes due 2015; Affinity Group Holding Inc., with a missed interest payment on its notes due 2012; Escada (USA) Inc., with a bankruptcy filing that followed an insolvency proceeding filed in Germany Escada AG; Reader's Digest Association Inc., with a missed interest payment on its 9% senior subordinated notes due 2017; and Haights Cross Operating Co. (Haights Cross Communications Inc.), with a missed interest payment on its 11.75% senior notes due 2011.

S&P said its defaulters included Head NV, Escada AG, CIT Group, Inc., Colonial BancGroup Inc., RDA Holding Co., Beazer Homes USA Inc., Little Traverse Bay Band of Odawa Indians and Affinity Group Holding Inc.

S&P said these latest defaults brought its year-to-date tally to 205.

In addition, the ratings agency's year-to-date distressed exchanges tally increased to 66, the missed payment count to 70 and the bankruptcy filing number to 53.

By region, S&P said six of the week's defaulters were based in the United States, with the other two based in Europe.

S&P's year-to-date default tallies now stand at 146 issuers in the United States, 13 issuers in Europe, 33 issuers in the emerging markets and 13 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:

• 41% of issues with available recovery ratings had recovery ratings of 6, indicating the ratings agency's expectation for negligible recovery of 0% to 10%;

• 16% of issues had recovery ratings of 5, for modest recovery prospects of 10% to 30%;

• 12% had recovery ratings of 4, or average recovery prospects of 30% to 50%;

• 11% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 11% 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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