Prospect News records three new defaults for week, S&P reports one

By Jennifer Lanning Drey

Savannah, Ga., Oct. 22 - Prospect News reported three new defaults for the week ended Oct. 22 in the form of Chapter 11 bankruptcy filings made by Petra Offshore Fund LP with its Petra Fund REIT Corp. subsidiary and TerreStar Networks Inc. and a distressed exchange by Compton Petroleum Corp.

Meanwhile, Standard and Poor's saw one new default for the week, bringing its year-to-date default total to 69.

S&P said one Mexican-based mortgage and construction lender missed an interest payment on Oct. 15.

By region, S&P's current default tallies stand at 46 in the United States, three in Europe, nine in emerging markets and 11 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 24 defaults, Chapter 11 and foreign bankruptcy filings are responsible for 22, distressed exchanges have accounted for 18, receiverships accounted for three and regulatory directives and administration accounted for one each.

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

• 42% of issues with available recovery ratings had 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%;

• 8% had recovery ratings of 4, for average recovery prospects of 30% to 50%;

• 17% had recovery ratings of 3, for meaningful recovery prospects of 50% to 70%;

• 12% of the issues had recovery ratings of 2, indicating substantial recovery prospects of 70% to 90%; and

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

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