High-Yield Bond Defaults Will Surpass $20 Billion in First Quarter, Highest Level of Defaults in History

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High-Yield Bond Defaults Will Surpass $20 Billion in 1Q, Fitch Predicts

Thursday, March 15, 2001 11:23AM EST

NEW YORK -- High-yield U.S. bond defaults probably will surpass $20 billion in the first quarter, marking the biggest cluster of defaults ever witnessed by the corporate bond market, Fitch said.

In a press release Wednesday, the credit rating firm said high-yield defaults soared to $12.8 billion for the first two months of 2001 following a record- setting $27.9 billion in default volume in 2000.

Fitch said there were $9.4 billion of defaults in February, driving the default rate for the year through February to 6.7%, up from 5.3% for the 12 months ended January.

Prominent defaults during February included Globalstar Telecommunications Inc. (GSTRF), Chiquita Brands International Inc. (CQB) and Southern California Edison, according to Fitch.

In the first week of March, Finova Capital, a unit of Finova Group Inc. (FNV), filed for Chapter 11 protection, placing an additional $6 billion of bonds in default.

The economic slowdown that has begun to slow this year, exacerbated by continuing risk aversion in the credit markets, now poses the greatest risk for increased defaults, according to Fitch.

http://dowjones.work.com/index.asp?layout=story_news_main&doc_id=41634

-- Carl Jenkins (somewherepress@aol.com), March 16, 2001

Answers

This article is a ***** puzzle piece. Telecommunication companies are going to fall by the droves as well because they paid super inflated prices at the auctions for cellular phone frequencies from governments.

This is not an isolated domino that falls in the forest. This domino has many other dominoes in close geographical proximity.

-- Guy Daley (guydaley@altavista.com), March 16, 2001.


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