S&P says that if that pace continues, defaults will account for 3.81% of the companies rated by S&P, compared with 1991’s all-time high of 3.96%. Roughly 10% were by companies that had held investment-grade ratings at one time.
Worldwide, 101 companies defaulted on $57.9 billion worth of debt in the first six months, compared with 117 defaults and $42.3 billion in debt defaulted in all of 2000.
Most of the 101 companies that defaulted during the first six months were American (83). Other countries represented were
- Canada (8)
- Australia (2)
- United Kingdom (2)
- The Netherlands
Telecommunications companies accounted for 20.8% of the business failures, according to S&P.
Things are no better with junk bonds, whose default rate has soared to 10% over the past 12 months according to credit rating agency Fitch. It’s the first time that the high-risk, high-yield category has reached double digits since the early 1990s.
Fitch identified $45.5 billion of defaults in the first half of the year, more than triple the $14.2 billion of defaults in the same period last year.
Fitch said $15.5 billion of telecom debt has slid into default this year – and cautioned that another $4.5 billion remains at “high risk” of default by year-end.
« ISS Rates Corporate Governance