Bangkok--24 Oct--Standard & Poor's
According to a report released by Standard & Poor's Ratings Services earlier today, liquidation is becoming more likely in default and recovery scenarios, with market conditions making the financing needed for companies to emerge from bankruptcy as going concerns increasingly scarce.
In this light, Standard & Poor's has conducted a review of a sample of the largest speculative-grade issuers rated 'B-' or lower to assess the potential effects on post-default recovery if issuers are forced to liquidate assets in bankruptcy, rather than reorganize.
"Under current market conditions, the availability of debtor-in-possession financing for some defaulted issuers may be in question, with the number of DIP providers dropping sharply," said Standard & Poor's recovery analyst Tom Mowat. "We think it's reasonable to expect that we will see a rise in the number of bankruptcies leading to liquidation. Forced to accept the outcome of liquidation rather than the superior prospects of reorganization, the debtholders of many defaulted entities may face recovery prospects below their original expectations."
The report, titled "Liquidation Increasingly Likely In Some Post-Default Recoveries," is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected]. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054, [email protected]
Analyst Contacts:
Thomas L Mowat, New York (1) 212-438-1588