STANDARD & POOR'S: Record set for defaults on rated bonds:
From Tribune news services
Published February 1, 2002
NEW YORK -- In a fresh sign that the credit woes of companies worldwide have not abated, Standard & Poor's said Thursday that 41 issuers defaulted on $31.3 billion of rated bonds in January. That broke the previous record set in December, when 27 issuers defaulted on $25.3 billion.
Separately, the Federal Deposit Insurance Corp. said a record 257 public companies, with $258.5 billion in assets, filed for bankruptcy in 2001, up 46 percent from the 2000 total of 176, the previous record.
Among the higher-profile defaults in January were those of Bermuda-based telecommunications company Global Crossing Ltd., with $7.6 billion of bonds, and Troy, Mich.-based discount retailer Kmart Corp., with $3.8 billion. Both sought bankruptcy protection.
Defaults have surged in the last two years as economies worldwide slowed and access to fresh capital grew tighter.
"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. "Media, telecom and high-tech remain three of the weaker sectors. Beyond that, the risks of default are widely dispersed by sector."
S&P said 18 of January's defaulting companies came from the U.S., including McLeodUSA Inc., the Cedar Rapids, Iowa-based telecommunications company that announced Thursday it was filing for bankruptcy protection. Another 18 came from Argentina, following that country's debt default.
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