Eight Bermuda-registered companies defaulted on their debt in 2002, according to Standard & Poors.

That made Bermuda the country with the fourth highest number of defaults after the US, with 120, Argentina with 42 and 12 in the United Kingdom.

The news came as S&P Risk Solutions yesterday released preliminary year-end default statistics for 2002.

These showed the dollar amount of debt defaulting will vault to a record $157.3 billion this year.

However, the firm said, default rates are declining globally after peaking at midyear. Telecommunications and European companies have been hit hardest during 2002, but prospects look better for 2003 as default rates are expected to decline gradually throughout next year.

S&P also noted that just a few companies were responsible for the lion's share of the defaults, led by WorldCom Inc. and its subsidiaries, which defaulted on $31.9 billion of its debt.

Among the Bermuda companies named by S&P, Global Crossing was the fifth largest global defaulter when it failed to pay $5.6 billion in debt.

Others included: Adelphia Communications Corp. and its subsidiaries defaulted on $14.3 billion; NTL Inc. and its subsidiaries defaulted on $10.8 billion; United Globalcom Inc. and its subsidiaries defaulted on $6.7 billion; Global Crossing Ltd. and its subsidiaries defaulted on $5.6 billion; McLeodUSA Inc. defaulted on $4.6 billion; and Williams Communications Group Inc. defaulted on $4.1 billion.

“Although the 2002 annual default rates are almost identical to those of 2001 on a global basis, there are significant differences when one takes a closer look at different industries and geographic regions,” said Brooks Brady, Associate Director for Standard & Poor's Risk Solutions.

“The US and EU switched places this year compared with 2001. During 2001, 6.92 percent of speculatively rated companies defaulted in the EU compared with 9.72 percent in the US. This year, a whopping 12.77 percent defaulted in the EU compared with only 7.09 percent in the US. The telecommunications industry was a major force driving default rates globally.

“In the EU, 62.5 percent of speculatively rated telecoms have defaulted in 2002 compared with 24.7 percent in the US.

“The number of investment-grade companies defaulting during 2002 is unprecedented,” noted Brady, “and it is the result of parent companies removing support from subsidiaries, difficult economic conditions, and fraud.”

Among the investment grade companies defaulting were Bermuda insurer Mutual Risk Management Ltd. and its subsidiary Legion Insurance Company, S&P said.

Others included AMERCO, AT&T Canada Inc., Covanta Energy Corp., Genuity Inc., MCI WorldCom Inc. and its subsidiary SkyTel Communications Inc., NRG Energy Inc. and its subsidiary NRG South Central Generating LLC, PG&E National Energy Group Inc., Teleglobe Inc., and TXU Europe Ltd. and its subsidiaries The Energy Group Ltd. and TXU Europe Group PLC.

Of the $157.3 billion of debt that has defaulted during 2002, $123.6 billion is from the US and $14.6 billion is from the EU. This compares with the previous record amount of $117.4 billion that defaulted globally during 2001, with $100.6 billion coming from the U.S. and $2.7 billion coming from the EU.

Of the 222 defaults this year, 120 were in the US followed by 42 in Argentina, 12 in the United Kingdom, 8 in Bermuda, 7 in Canada, 6 each in Brazil and the Netherlands, 5 each in Germany and Mexico, 2 each in Indonesia and Switzerland, and one each in Australia, Chile, China, Italy, Russia, Spain, and Uruguay.