Hot sectors in a tepid recovery
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Refunding not concern for US junk bonds in '08-S&P
NEW YORK, July 8 (Reuters) - Tight credit conditions are making it hard for stressed companies to refund debt, but they may dodge a bullet this year because of a light schedule of maturing debt, Standard & Poor's said on Tuesday.
U.S. junk-rated companies have just $9.1 billion in bonds maturing in the second half of the year, and only a scant $1.8 billion is from the lowest-rated companies, "B-minus" or below, S&P said in a report.
When credit is tight, there is always a risk that financially strapped firms may find it hard to refund debt, resulting in a default. But the light maturity schedule means that refunding should not be a significant source of default pressure this year, S&P said.
Refunding pressures will pick up after this year, however, with an average of $74 billion in junk-rated bonds maturing each year between 2009 and 2014, S&P said.
Maturing bonds will spike in 2011 as a result of a glut of issuance in 2001 when the Federal Reserve started lowering interest rates, S&P said. Refunding needs for junk-rated companies will average about $89 billion a year between 2011 and 2015. (Reporting by Dena Aubin; Editing by Leslie Adler) (dena.aubin@thomsonreuters.com; +1-646-223-6325; Reuters Messaging: dena.aubin.reuters.com@reuters.net))
