Haven't had one of those in a long time...
:)
dailynews.yahoo.com
Record Corp. Bond Defaults in Jan - S&P
By Jonathan Stempel
NEW YORK (Reuters) - In a fresh sign that the credit woes of companies worldwide have not abated, Standard & Poor's said on Thursday that 41 issuers defaulted on $31.3 billion of rated bonds in January. Both totals set records for a single month.
Among the higher profile defaults were those of Bermuda-based emerging telecommunications company Global Crossing Ltd. (GBLXQ.PK), with $7.6 billion of bonds according to S&P, and Troy, Michigan-based discount retailer Kmart Corp. (NYSE:KM - news), with $3.8 billion. Both sought bankruptcy protection.
The old records for defaults were set in December, when 27 issuers defaulted on $25.3 billion of bonds, S&P said. Among these was energy trader Enron Corp. (ENRNQ.PK) (NYSE:ENE - news).
Defaults have surged in the last two years as economies worldwide slowed and access to fresh capital grew tighter. S&P said defaults will likely peak by the end of June.
``Typically, defaults reach a peak about six months after the bottom of a recession, which would suggest a peak at the beginning of summer,'' said Diane Vazza, S&P's head of global fixed-income research.
On Wednesday, the Commerce Department (news - web sites) said U.S. gross domestic product grew at a 0.2 percent annualized rate in the fourth quarter, confounding economists who expected a decline. This suggests that the U.S. recession that began last March may be ending or over.
S&P said 18 of January's defaulting companies came from the United States, including Cedar Rapids, Iowa-based emerging telecom McLeodUSA Inc. (Nasdaq:MCLD - news), North Charleston, South Carolina-based fabric maker Polymer Group Inc. (NYSE:PGI - news) and Denver-based media company United Globalcom Inc. (Nasdaq:UCOMA - news).
Another 18 came from Argentina, following that country's default on some of its debt, it said. The other five came from Bermuda -- Global Crossing -- as well as Australia, Britain, France and Poland.
The January data come on the heels of last year's record-setting default totals. S&P said 211 companies defaulted last year on $115.4 billion of bonds.
S&P said its ``junk bond'' default rate, which ended last year at 8.57 percent, will rise in the first half of this year, before declining to near that level by year end.
``Media, telecom and high-tech remain three of the weaker sectors,'' said Vazza. ``Beyond that, the risks of default are widely dispersed by sector.'' |
