Corporate Defaults Reach 28, Exceeding Total for 2007

from Bloomberg:



Corporate Defaults Reach 28, Exceeding Total for 2007 (Update1)

By Bryan Keogh

May 22 (Bloomberg) -- Global corporate defaults in 2008 have surpassed the total for all of last year after companies including Tropicana Entertainment LLC and Linens 'n Things Inc. failed to meet their debt obligations, according to Standard & Poor's.

S&P reported 28 defaults on $18.9 billion of debt, compared with 22 last year and 30 in all of 2006, New York-based S&P said today in a report. U.S. companies were responsible for all but one this year.

Companies are finding it increasingly difficult to meet debt payments as the economy slumps into a recession, curbing profit Diane Vazza, the head of S&P global fixed-income research group, said in the report. Banks are reining in lending after suffering $383 billion in losses on mortgage-related securities. The global default rate will rise to 4.7 percent in the next 12 months from a 25-year low of 0.97 percent at the end of 2007, according to S&P's mean forecast.

``Defaults could be significantly more pronounced and severe, especially if the recession would be deeper and longer than expected,'' Vazza wrote in the report.

Under a ``pessimistic'' scenario, the default rate would reach 8.5 percent, or about 136 actual defaults, in 12 months, according to the report. The ``optimistic'' scenario forecasts a rate of 3.7 percent. Both forecasts have a 20 percent chance of occurring, the report said.

Tropicana, Linens

Tropicana, the casino company that filed for bankruptcy this month, defaulted on $2.93 billion of debt on May 6, S&P said in the report. The default by Tropicana, an affiliate of Crestview Hills, Kentucky-based Columbia Sussex Corp., is the largest in the S&P/Loan Syndication Leveraged-Loan Index in 2008.

Linens 'n Things, the Clifton, New Jersey-based retailer purchased in 2006 by Apollo Management LP, filed for bankruptcy on May 2 and defaulted on $1.35 billion of debt, S&P said.

Linens 'n Things blamed a slowdown in consumer spending and an unsuccessful overhaul attempt after the Apollo buyout. Linens joined retailers Sharper Image Corp., Lillian Vernon Corp., Bombay Co. and Levitz Furniture Inc. in bankruptcy. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aIfF1Fi4ENus&refer=home

Lots more.

Don't forget; we're technically looking at the 1st quarter of the year and already it's skyrocketing out of control.

Analysts are expecting some kind of recovery, but not until early 2010.