Prospect News, S&P both record one new default in week ended Thursday

By Caroline Salls

Pittsburgh, Sept. 17 - Prospect News reported one new default in the week ended Sept. 16 in the form of a Chapter 11 bankruptcy filing made by Island One, Inc.

In addition, Prospect News reported a debtor-in-possession facility forbearance agreement default from 7677 East Berry Avenue Associates, LP.

7677 East Berry had previously defaulted on the DIP loan in June.

Prospect News also recorded a missed interest payment on Kazakhstan Kagazy JSC's fourth coupon of its 12% bonds. This missed payment occurred in the previous week, on Sept. 7.

Kazakhstan Kagazy previously defaulted in April.

Meanwhile, Standard & Poor's also recorded one default for the week, bringing its year-to-date default count to 54.

Specifically, Wastequip, Inc. exercised a payment-in-kind toggle option on its mezzanine loan this week, causing it to default as per S&P's criteria.

By region, S&P's current 2010 default tallies stand at 39 in the United States, two in Europe, five in the emerging markets and eight in the other developed region, which includes Australia, Canada, Japan and New Zealand.

So far this year, missed interest or principal payments have accounted for 17 of S&P's defaults, distressed exchanges have accounted for 16, Chapter 11 filings are responsible for 12, receiverships account for two and regulatory directives, debt reorganization and exercising of PIK toggle options account for one each.

The remaining four defaulted issuers were confidential.

Of the global corporate defaulters so far in 2010, S&P said:

• 42% of issues with available recovery ratings had recovery ratings of 6, indicating the agency's expectation for negligible recovery of 0% to 10%;

• 12% of the issues had recovery ratings of 5, for modest recovery prospects of 10% to 30%;

• 12% had recovery ratings of 4, for average recovery prospects of 30% to 50%;

• 15% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 10% of the issues had recovery ratings of 2, indicating substantial recovery prospects of 70% to 90%; and

• 10% of issues had recovery ratings of 1, or very high recovery prospects of 90% to 100%.

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