Standard & Poor’s said last week that 2001 set a record for corporate defaults, with 211 companies worldwide — 162 in the United States — defaulting on $115.4 billion worth of debt. The old record was set a year earlier, when 132 companies defaulted on $42.3 billion of debt, said the credit ratings agency. S&P expects the U.S. economy to bottom out in the first quarter, with the default rate peaking near 11% by this summer and then “trailing off” by the end of 2002.

Companies included on the short list were Enron Corp., Pacific Gas & Electric Co. and Southern California Edison. Most of the defaults, however, were in new telecommunications companies, said S&P. Telecommunications companies had 39 defaults, or 18.5% of the total.

“In a typical cycle, defaults peak six months after an economic bottom,” said Diane Vazza of S&P’s global fixed income research unit.

The default rate for speculative grade or junk-rated companies jumped to 8.7% in 2001, up from 5.68% in 2000. The record was set in 1991 when 10.87% were junk rated. About 4% of the companies, including those with investment grade ratings, defaulted last year, matching the record set in 1991, said S&P. For 2002, S&P expects defaults will be more “broad based,” but the credit ratings agency said there will be some “weakness in certain areas of consumer products and retail.”

Argentina had the most defaults outside of the United States, with 15 totaling $141 billion of debt. Nine companies defaulted in Canada, five more in the United Kingdom, and four were in Australia. There also were three in Poland and two in Mexico.

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