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http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-10-27T193039Z_01_N27663964_RTRIDST_0_FINANCIAL-RECOVERIES-FITCH.XMLNEW YORK, Oct 27 (Reuters) - U.S. high-yield bond defaults remained well below historical averages in the first nine months of the year but were still costlier to investors, Fitch Ratings said in a report on Thursday.
Recovery rates, or the amount of a bond's original value recovered in a default, fell to 40 percent on average in the first three quarters from 62 percent in all of 2004, Fitch said. Fitch measures recovery rates by the price of a bond one month after default.
Bankruptcies in the airline industry and waning demand for riskier bonds both weighed on recovery values, Fitch said.
"Historically, when there have been multiple defaults in weak sectors facing systemic risks, recovery rates have fallen to below average levels," Fitch managing director Mariarosa Verde said in an e-mail response to a question.
"To the extent that we continue to see multiple defaults from distressed industries, we will very likely see lower recovery rates," she said.
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