It’s Official: 2009 Sets New Default Record At 265

By David McLaughlin Wall Street Journal

In case you needed more evidence that 2009 was a blockbuster year for bankruptcies, the total number of defaults for the year are out. And the news is grim. Standard & Poor’s on Friday released its default tally for 2009. The ratings agency says the total hit 265, the highest since it began keeping track in 1981 and well above the 229 defaults racked up in the 2001 recession. S&P said distressed exchanges, in which a company looks to ease its debt load by asking investors to swap their debt for new debt or equity, made up the largest share of the default tally at 103 followed by missed payments.

The news wasn’t all negative (or positive if you’re someone who makes a living off corporate failures). The default rate in the U.S. is expected to come down markedly from 10.9% to about 6.9% during the next year, S&P says. Also, the ratings agency counts 225 companies globally with combined rated debt of $214 billion that are most at risk for default. That’s down from the March 2009 peak of 300 companies with more than $500 billion in outstanding debt. S&P’s projections seem to jive with bankruptcy experts who predict a slowdown in activity after a hectic 2009. Still, the new year has kicked off with a fresh batch of corporate struggles. The first week of 2010 saw three defaults: trucking company YRC Worldwide Inc., Regent Communications Inc., Gateway Casinos & Entertainment Inc. and United Site Services Inc.

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TEXT-S&P cuts Gateway Casinos to 'D'4:57PM ET on Wednesday Jan 06, 2010 via Thomson Reuters

(The following statement was released by the rating agency) -- Canadian gaming company Gateway Casinos did not make its interest and principal payments on its first- and second-lien credit facilities. -- We are lowering our corporate credit and issue-level ratings on the company to 'D'.

Jan 6 - Standard & Poor's Ratings Services today lowered its corporate credit and issue-level ratings on British Columbia, Canada-based gaming company Gateway Casinos & Entertainment Inc. to 'D'.

The recovery rating on Gateway's first-lien credit facilities remains unchanged at '3', indicating our expectation of meaningful (50% to 70%) recovery for lenders, and the recovery rating on the second-lien credit facility remains unchanged at '6', indicating our expectation of negligible (0% to 10%) recovery. The rating actions stem from the fact that Gateway did not make required principal and interest payments on its first and second-lien credit facilities on Dec. 31, 2009 and Jan. 4, 2010. Gateway is in discussions with lenders and has entered into forbearance agreements with both first- and second-lien lenders. RELATED RESEARCH "2008 Corporate Criteria: Standard & Poor's Ratings-And Their Role In The Financial Markets," April 15, 2008