Cross border insolvencies and financial restructurings are remarkably opaque considering we live in the Information Age. The mission of the Centre of Main Interest (the COMI) is to light some candles in the darkness and create a forum for further discussion. The Law Offices of Tally M. Wiener, Esq. are pleased to publish the COMI blog.
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Tuesday, December 29, 2015
U.S. Companies Led the World in 2015 Debt Defaults, S&P Says
Bloomberg Business reports that, according to Standard & Poors analysts, more American companies have defaulted on their debts this year than have companies issuing debt in any other country or region. Per Bloomberg Business: By Michelle Davis December 28, 2015
More U.S. companies have defaulted on their debt this year than issuers from any other country or region, S&P analysts led by Diane Vazza wrote in a Dec. 24 report.
As of last week, 111 companies worldwide had defaulted on their obligations, the highest tally since 2009 when the the figure hit 242 for the same period. About 60 percent of this year’s global defaults have come from U.S. borrowers, Vazza wrote, up from 55 percent a year ago, when 33 of 60 defaulters were American.
After the U.S., companies from emerging markets were the second-largest defaulters, accounting for 23 percent of the pool, which is a smaller share than last year, according to S&P data.
Plummeting oil prices and speculation about how the Federal Reserve’s plan to tighten monetary policy would affect corporate borrowing costs has made companies more vulnerable, Vazza wrote.
“The current crop of U.S. speculative-grade issuers appears fragile, and particularly susceptible to any sudden, or unanticipated shock,” she wrote.
Arch Coal Inc. was the most recent addition to the list, having its credit rating downgraded to “speculative default” by Standard & Poor’s last week after the coal producer missed about $90 million in interest payments and exercised a 30-day grace period with the holders of some of its notes.
Looking ahead, S&P expects the U.S. corporate default rate will rise to 3.3 percent by September 2016 from 2.5 percent a year earlier. The bulk of the failures will come from companies in the oil and gas sector, which accounted for about a quarter of this year’s defaults....