U.S. junk bond defaults rise to nearly 5 pct -S&P

[Joanne98]

NEW YORK, Feb 4 (Reuters) - The U.S. junk bond default rate rose to 4.96 percent in January, topping its long-term average for the first time in more than four years as the deepening recession took a toll, Standard & Poor's said on Wednesday.

The default rate is up from 3.96 percent in December. It is expected to more than triple to 13.9 percent by year-end "based on a substantial worsening of the economy and the financial environment," S&P managing director Diane Vazza said in an interview.

"That would mean 209 companies would default during the year," she said.

The default rate could reach as high as 18.5 percent if economic conditions are worse than expected, S&P said in a statement. The long-term average for U.S. junk bond defaults since 1981 has been about 4.3 percent.

January's defaults included LyondellBasell's Lyondell Chemical Co; Smurfit-Stone Container Corp, one of the largest U.S. corrugated packaging makers; and Merisant Worldwide, the maker of Equal low-calorie sweetener. All three companies filed for bankruptcy protection.

Charter Communications (CHTR.O) was also counted as a default after the cable company missed interest payments due in mid-January. Charter, whose biggest investor is Microsoft Corp co-founder Paul Allen, is struggling with about $21 billion in debt.

http://www.reuters.com/article/marketsNews/idUSN0430307820090204

[madrchsod]

1. that`s why they are called junk bonds

badly run companies are bound to fail

[girl gone mad]

2. The bond bubble appears to be bursting.