The number of global corporations defaulting on debt obligations is running nearly four times the pace of last year, Standard & Poor's said Friday.
The ratings agency said the year-to-date tally of defaults this week reached 211 after Tishman Speyer Real Estate and TLC Vision Corp. missed interest payments. That compares with 55 defaults at the same point in 2008.
With both of this week's defaults involving U.S. companies, the U.S. accounts for 151 of this year's defaults, compared with 34 in emerging markets, 13 in Europe and 13 in other developed regions. Those include Australia, Canada, Japan and New Zealand.
Missed interest payments are the leading reason for defaults this year, with 73 such instances, S&P said. Distressed exchanges — in which the debt issuer typically offers bondholders a new security such as stock that diminishes the issuer's obligation — were a close second at 72. Bankruptcy-related defaults totaled 54.
The report's author, Diane Vazza, an S&P managing director, said this year's spike in defaults "reflects a pronounced decline in economic fundamentals and earnings prospects, as well as the continued unfavorable environment" for borrowers with low corporate credit ratings.
Other factors driving the rise in defaults include the U.S. economic recession, record-high proportions of debt issuers with speculative-grade ratings, and the highest volume of low-rated debt issuance since 2003.
