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Debt default watch – 213 companies so far this year

September 4, 2009

It’s a big number, and it’s no suprise that corporate debt issurers defaulting are in the U.S. Standard & Poor’s Diane Vazza has the breakdown in a report emailed out today.

Two global corporate issuers defaulted this week, bringing the 2009 year-to-date tally to 213 issuers—nearly 4x the 55 defaults at this time in 2008. Both of this week’s defaults were based in the U.S., bringing the default tallies by region to 153 issuers in the U.S., 13 in Europe, 34 in the emerging markets, and 13 in the other developed region (Australia, Canada, Japan, and New Zealand).

The U.S. default rate as of Aug 31 sits at 10.2%, according to Vazza, who expects it reach its peak of 13.9% by mid-2010. Under a gloomier scenario, it could reach 18% and under a brighter one, 11.4%.

What’s also interesting is a large number of defaults that are due to distressed debt exchanges, which leave debt holder in a worse position but generally not as bad as would be the case if the company went into bankruptcy.

Distressed exchange offers are now the top reason for default this year at 74 issuers-over 5x the distressed exchange count in the full year of 2008 and nearly 19x the count in 2007.

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