Third Quarter Shows Fewer Corporate Defaults

October 24, 2002 ( - Companies defaulted on $46.3 billion of rated corporate debt during the third quarter, according to Standard & Poor's (S&P).

The third quarter’s total, $31.9 billion belonging to Worldcom, is less than the second quarter’s $48.2 billion, with S&P seeing signs of ” a gradual decrease from the record defaults experienced in the previous quarters”.

“However, this is not to say that a dramatic drop in default rates is expected any time soon, because the economy remains weak and credit quality continues to deteriorate,” cautions Brooke Brady S&P’s associate director for corporate default research.

Specifically, S&P cautioned about potential weakness in:

  • Media & Entertainment
  • Telecommunications
  • Capital goods
  • High technology

Five companies defaulted on more that $1 billion of rated debt during third quarter:

  • WorldCom ($31.9 billion)
  • AT&T Canada ($3.3 billion)
  • Conseco ($2.6 billion)
  • NRG Energy ($1.4 billion)
  • Callahan Nordrhein-Westfalen ($1.3 billon)

In total, 1.4% of speculative grade issuers and 0.5% of all rated issuers defaulted.