Kodak, MGM Mirage, Lear feature in Moody's list of likely defaulters

12 March 2009

Eastman Kodak Co. and casino operator MGM Mirage are among 283 US companies at the highest risk of default, according to Moody's Investors Service.  Lear Corp, the world's No. 2 maker of automobile seats, also became one of the companies most at risk of defaulting in the first quarter, according to the latest Moody's report.

The number of speculative-grade issuers on the ''Bottom Rung'' list compiled by Moody's has almost doubled from 157 a year earlier, the New York-based ratings company said in report published today.

Moody's ''Bottom Rung'' is a new database and quarterly publication, the rating agency said. The list will be updated monthly.

''The current Bottom Rung list provides ample evidence of a severe default cycle,'' analysts David Keisman, Tom Marshella and Jennifer Brown wrote in the report. About 45 per cent of companies on the list will default on debt in the next year, Moody's says, which could include anything from filing for bankruptcy to missing debt payments.

More than 23 per cent of all US speculative-grade companies are on the list, compared with 9 per cent before the credit crisis, Moody's said. So-called junk-graded companies worldwide defaulted on their bonds at a rate of 5.2 per cent in February, the rating firm said in a separate report last week, as $1.2 trillion of bank losses combined with the deepest economic slump since World War II to hamper borrowers' finances.

Companies with exposure to weak consumer spending, such as auto, retail and media firms, are ''highly represented'' on the list, Moody's said.