Number of Troubled Companies Rise in Latest Default Risk Study

A monthly study tracking the probability of defaults among companies rose to its highest level in several months in June. The dubious list was dominated by companies based in Greece and the United States.

An index tracking the percentage of companies with a default probability exceeding 1% rose a half-percentage point from May to 6.51%, according to research firm Kamakura Corporation. That total is more than two percentage points higher than one year ago.

The riskiest company listed, amid concerns of a Greece exit from the eurozone and increasing trouble in renegotiating debt with European and International Monetary Fund leaders, is Greek financial institution Piraeus Bank SA. With a KDP (Kamakura Default Probability) score of 52%, it is one of four Greece-based banks among the 10 riskiest companies at present, at least according to these metrics. Dubiously, it is also one of just two companies with a KDP exceeding 50%—Japan’s Sharp Corp. measured at 50.1% after being below 5% just three months ago.

Four U.S. based companies—Resolute Energy Corp., Hercules Offshore Inc., Warren Resources Inc., Quicksilver Inc.—placed in the top 10 riskiest. Resolute Energy was deemed riskiest in fourth place overall, with a KDP of 36.4%. This continues a trend of problems within natural resource-based and energy-related companies since the U.S. shale boom inspired an oil price freefall and a glut of producers operating in the industry.

- Brian Shappell, CBA, CICP, NACM managing editor


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