S&P reports nine new U.S. corporate defaults in September

By Jennifer Lanning Drey

Portland, Ore., Oct. 2 - Standard & Poor's said corporate defaults in the United States continued to rise in September with nine U.S. defaults reported during the month, bringing the year-to-date total to 61.

By comparison, there were 16 defaults in 2007 and 22 in 2006, according to S&P.

Credit metrics relevant to the United States show continued deterioration of credit quality alongside a prolonged contraction of new issuance and tightening credit conditions, the agency said in a Thursday news release.

Included in the September figure were the notable defaults of Lehman Brothers Holdings Inc. and Washington Mutual, Inc. Other September defaults included Motor Coach Industries International Inc., UTGR Inc. and HRP Myrtle Beach Holdings LLC.

The agency's preliminary estimate for the U.S. 12-month trailing speculative-grade default rate in September is 2.68%, which is roughly in line with 2.5% in August but higher than the 0.97% reported in December 2007.

"We expect the speculative-grade default rate to escalate to a mean forecast of 4.9% by August 2009, but it could reach as high as 8.5% if economic conditions are worse than expected," Diane Vazza, head of S&P's global fixed-income research group, said in the release.

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