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Company bankruptcies may top 100 next year: Bain
NEW YORK (Reuters) - Corporate bond defaults are on track to quadruple this year and company bankruptcies may soar to more than 100 in 2009, a senior Bain & Co consultant said on Thursday.
Bain, a financial consultancy, expects as many as 75 corporate bankruptcies this year, a figure that will rise as high as 105 in 2009 for U.S. public companies with more than $100 million in assets.
"Our forecast is for high defaults and bankruptcies this year and next," Sam Rovit, head of Bain's corporate renewal group, told Reuters in an interview.
The group was formed about a year ago to advise distressed companies. Rovit, former CEO of Swift & Co, a Colorado-based beef and pork processor, has headed the unit from Chicago since January.
Bain & Co, which spun off private equity firm Bain Capital in 1983, said there may be as many as 95 defaults from speculative-grade U.S. issuers this year, versus 21 defaults in 2007. Defaults may soar to as many as 160 next year, Rovit said.
He said bankruptcies are set to swell after 13 filings in 2007 and 14 in 2006, though it was too early to forecast if the current bankruptcy wave will eclipse records seen in 2001.
Public company bankruptcies hit 179 in 2000 and rose to a record 263 in 2001, according to U.S. bankruptcy court records.
"The big question is going to be whether the economy goes into recession," Rovit said. "Our forecast is low growth as opposed to recession."
Standard & Poor's on Thursday also said slowing economic conditions and stress in capital markets have raised the credit risk for S&P 500 companies.
S&P expects operating earnings to decline to $79.40 per share for the 2008 and $76 in 2009 from $82.5 in 2007, the rating company said.
In a separate report, Martin Fridson, chief executive officer of Fridson Investment Advisors LLC, said he expects global junk bond defaults to climb through 2010, with the default rate peaking at 10.9 percent, compared with 2 percent over the past 12 months.
"Our projected peak rate matches the last cyclical high in January 2002" amid a mild recession, Fridson said in a statement. "This scenario suggests that investors are in for a long, hard slog."
(Reporting by Walden Siew; Editing by Tom Hals)
