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S&P: six new global corporate defaults in week; 2009 total up to 108
By Caroline Salls
Pittsburgh, May 8 - Standard & Poor's reported that six global corporate issuers defaulted this week, bringing the 2009 year-to-date tally to 108 issuers, nearly four times the default count this time last year, according to an S&P news release.
Specifically, the new defaulters in the week of May 1 to May 7 were Mark IV Industries Inc., Workflow Management Inc., Source Interlink Cos. Inc., Wolverine Tube Inc., GSCP (NJ) LP and Thomson SA.
S&P said all but one of this week's defaulted issuers were based in the United States, bringing the corporate default tallies by region to 76 issuers for the United States, seven issuers in Europe, 17 issuers in the emerging markets and eight issuers in the other developed region, including Australia, Canada, Japan and New Zealand.
According to the release, reasons for default this week were mixed, with two Chapter 11 bankruptcy filings, two missed payments, a distressed exchange and a loan amendment that has new terms that inhibit the company's ability to meet earlier obligations.
S&P said 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.
As a result, the ratings agency said a large number of defaults will likely be concentrated in the first two or three quarters of 2009.
Other factors that make the current environment more conducive to defaults include deep recessionary conditions in the United States, a record-high proportion of issuers with speculative-grade ratings, the highest volume of low-rated issuance since 2003 and the seasoning of much of the debt rated B- or lower issued in the past several years, according to the release.
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