Wednesday, March 11, 2009

Moody's "Bottom Rung" List Implicates 283 Potential Dead Man Walking Companies

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Upon further reflection there is such extreme irony to yesterday's rally. Front and center in yesterday's Wall Street Journal was a story about the government's "contingency" plans (read: eventuality) to take much starker measures to "save" Citigroup (C) (this would be rescue 32,128 for those keeping track at home). All the while the market surges on comments from Citigroup's CEO that it's doing just fine thank you.*

* just fine in today's day and age means as long as you exclude all bad things, we are doing just fine

The memo says they are making money hand over fist (as they should when you can borrow money thanks to Federal Reserve for near nothing and then lend to Americans for a lot more than near nothing).... but it leaves out the small issue of all the current/previous toxic stash on their sheets. (soon to be owned by you, Mr Taxpayer) That would be like me saying, I've had the best month ever in trading..... as long as you exclude losses! But it goes to show you why the news flow usually means nothing on a day to day basis - if the market wants to go up, it will find an excuse; or vice versa. Headline writers for financial news sites or newspapers, and cable TV hosts just need to find "reasons" hence the spin.

Another interesting item that came out yesterday was Moody's "Bottom Rung" list - essentially a list of 283 companies that have a very high chance to default. It is quite nice of Moody's to finally be doing their job, as opposed to being complicit in the carnage that brought down our financial system. (hey if you bundle 1000 subprime loans together, we'll give it a AAA rating - I mean what's the risk in that? Now pay us!) Since we're talking about ironies I bet the public companies on this list were among the biggest percentage gainers yesterday... remember, for traders junk is treasure on oversold bounces. (watch those shorts get squeeeeezed) Many of the sectors represented are areas we've been railing against just about from blog inception in mid 2007. Where was Moody's then? Ah yes, fees were to be had - can't make the companies mad by speaking the truth (after all THEY pay the fox to run the hen house)

Courtesy of The Atlantic here is a nice chart by industry


  • Moody's Investors Service published a new list on Tuesday called the Bottom Rung, which details companies that the ratings agency says are most likely to default on their debts. Moody's estimates that 45 percent of the companies on the list with default on debt in the next year. Defaulting on debt does not necessarily mean bankruptcy; it can also include missing something such as a debt payment.
  • Nearly every sector of the economy is represented on the list. Dominant industries on the list include most of the U.S. auto industry, retail chains, newspapers, casinos, broadcast TV, and radio station networks. Airlines, restaurant chains, and energy firms also appear on the list often.
Below is the list of names - if you want more comprehensive coverage ZeroHedge has the full document with the nasty details. One of our holdings is down there - James River Coal (JRCC); but that is more of a proxy play on "China will save the whole world, buy commodities" rather than any adoration for the company.

p.s. what exactly does Eastman Kodak do nowadays? Can anyone say Betamax?

155 East Tropicana
Accellent Inc
Accuride Corporation
ACIH Inc.
Advanced Micro Devices Inc
Advanstar Communications Inc
Affinity Group Holding Inc
AGS LLC
AirTran Holdings Inc.
Alion Science and Technology Corp.
Allbritton Communications Company

Allison Transmission Inc
Alon USA Energy Inc
American Achievement Group Holding Corp.
American Axle & Manufacturing Holdings Inc.
American Media Operations Inc.
Ames True Temper Inc.
AMH Holdings Inc.
AMR Corporation
Arby's Restaurant Group Inc.
Arinc Incorporated
Atlantic Express Transportation Corp.
Autocam Corporation
Aventine Renewable Energy Holdings Inc.
Baker & Tayler Acquisitions Corp.
Barneys New York Inc
Barrington Broadcast Group LLC
BCBG Max Azria Group Inc.
Beverages & More Inc
Blockbuster Inc.
Bluegreen Corporation
Bonten Media Group Inc.
Bon-Ton Stores Inc.
Bowater Incorporated
Brigham Exploration Company
Broder Bros. Co.
Brookstone Company Inc.
Buffalo Thunder Development Authority
Builders FirstSource Inc.
Building Materials Corporation of America
Building Materials Holding Corporation
Burlington Coat Factor Warehouse Corp.
Cambium Learning Inc.
Canon Communications LLC
Caraustar Industries Inc.
Carmike Cinemas Inc.
CavTel Holdings LLC
CCM Merger Inc.
CCS Medical Inc.
Centaur LLC
Center Cut Hospitality Inc
Champion Enterprises Inc.
Chaparral Energy Inc.
Charter Communications Inc.
Chem Rx Corporation
Chemtura Corporation
Chiquita Brands International Inc.
Chrysler LLC
Circus and Eldorado Join Venture
Citadel Broadcasting Corporation
Claire's Stores Inc.
Clearwire Communications LLC
Cleveland Unlimited Inc.
CMP Susquehanna Corp.
Coach America Holdings Inc.
Coinmach Service Corp.
Commercial Vehicle Group inc.
Conexant Systems Inc.
Continental Alloys & Services Inc.
Cooper Standard Automotive Inc.
Culligan International Company
Cumulus Media Inc.
DAE Aviation Holdings Inc.
Dana Holding Corporation
Dayton Superior Corporation
DeCrane Aerospace inc.
DEI Holdings Inc.
Delta Petroleum Corporation
Destination Maternity Corporation
Diagnostic Imaging Group LLC
Dole Food Company Inc.
Dollar Thrifty Automotive Group Inc.
Downstream Development Authority
Duane Reade Inc.
Dune Energy Inc.
Eastman Kodak Company
Easton-Bell Sports Inc.
Eddie Bauer Inc.
El Pollo Loco Inc.
Electrical Components International Inc.
Emmis Communications Corporation
Endurance Business Media Inc.
Energy Partners Ltd.
Energy XXI Gulf Coast Inc.
EnviroSolutions Holdings Inc.
Euramax International Inc.
Eurofresh Inc.
Evergreen International Aviation Inc.
Evergreen Tank Solutions Inc.
Finlay Fine Jewelry Corporation
Fleetwood Enterprises Inc.
Fontainebleau Las Vegas Holdings LLC
Ford Motor Company
FoxCO Acquisition Sub LLC
Freedom Communications Inc.
Freescame Semiconductor Inc.
French Lick Resorts & Casino LLC
Frontier Drilling
Gastar Exploration USA Inc.
GateHouse Media Operating Inc.
GenCorp Inc.
General Motors Corporation
Georgia Gulf Corporation
Global Crossing Ltd.
Gold Toe Moretz Holdings Corp.
Golden Nugget Inc.
Grande Communications Holdings Inc.
Gray Television Inc.
Green Valley Ranch Gaming LLC
Guitar Center Holdings Inc.
Haights Cross Communications Inc.
Hanely Wood LLC
Harrah's Entertainment Inc.
Harry & David
Hawker Beechcraft Acquisition Company LLC
Hilite International Inc.
HLI Operating Company Inc.
Hollywood Theaters inc.
Hovnanian Enterprises Inc.
Human Touch LLC
Idearc Inc.
Indalex Holding Corp.
Indianapolis Downs LLC
Inn of the Mountain Gods Resort and Casino
Instant Web Inc.
Intcomex Inc.
Integra Telecom Inc.
Intelsat Ltd.
InterDent Service Corporation
International Coal Group Inc.
IPS Corporation
Jacuzzi Brands Corp.
James River Coal Company
JetBlue Airways Corp.
JHCI Acquisitions Inc.
Jobson Medical Information LLC
Keystone Automotive Operations Inc.
Krispy Kreme Doughnut Corporation
Landmark FBO LLC
Lazy Days' RV Center Inc.
Lear Corporation
Level 3 Communications Inc.
Libbey Glass inc.
LifeCare Holdings inc.
Little Traverse Bay Bands of Odawa Indians
Local TV Finance LLC
Lodgenet Interactive Corporation
MACTEC Inc.
MAPCO Express Inc.
Mark IV Industries Inc.
Mattress Holdings Corp.
MediaNews Group inc.
Metaldyne Corporation
MetoKote Corporation
MGM MIRAGE
Michaels Stores Inc.
Milacron Inc.
Millenium New Jersey Holdco LLC
Morris Publishing Group LLC
Motorsport Aftermarket Group Inc.
MSX International Inc.
MXenergy Holdings Inc.
NBC Acquisition Corp.
Neenah Foundry Company
Neff Corp.
NES Rentals Holdings Inc.
Newark Group Inc.
Newport Television Holdings Inc.
Nexstar Finance Holdings Inc.
NextMedia Operating Inc.
Novamerican Steel Finco Inc.
November 2005 Land Investors LLC
NTK Holdings Inc.
Open Solutions Inc.
Orbitz Worldwide Inc.
Oriental Trading Company Inc.
OSI Restaurant Partners Inc.
Palm Inc.
Panavision Inc.
Panolam Industries International Inc.
Parallel Petroleum Corp.
Pegasus Solutions Inc.
Penhall Holding Company
Penton Business Media Holdings Inc.
Perkins & Marie Callender's Inc.
Ply-Gem Industries Inc.
Primus Telecommunications Group Incorporated
Quality Distribution LLC
Quality Home Brands Holdings LLC
Quantum Corporation
Questex Media Group Inc.
Quiksilver Inc.
R.H. Donnelly Corporation
Radio One Inc.
Rafaella Apparel Group Inc.
Rare Restaurant Group LLC
RathGibson Inc.
Reader's Digest Association Inc.
Real Mex Restaurants inc.
Realogy Corporation
Regent Broadcasting LLC
Renfro Corporation
Revere Industries LLC
Rhodes Companies LLC
Rite Aid Corporation
Riviera Holdings Corporation
Rotech Healthcare Inc.
Roundy's Supermarkets Inc.
Sagittarius Restaurants LLC
Salem Communications Holding Corporation
Sbarro Inc.
Securus Technologies inc.
Sirius XM Radio Inc.
Sitel LLC
Six Flags Inc.
Shoqualmie Entertainment Authority
Source Interlink Companies Inc.
Spanish Broadcashing System Inc.
St. John Knits International Incorporated
Standard Motor Products Inc.
Standard Steel LLC
Stanley-Martin Communities LLC
Station Casinos Inc.
Sterigenics International Inc.
Stillwater Mining Company
Sunstate Equipment Co. LLC
Swift Transportation Co. Inc.
Synagro Technologies Inc.
Synchronous Aerospace Group
Targus Group International Inc.
TCO Funding Corporation
Telgrant Corporation
Telcordia Technologies Inc.
Tenneco Inc.
Thermadyne Holdings Corporation
Trailer Bridge Inc.
True Temper Sprots Inc.
Truvo Subsidiary Group
TSA Stores Inc.
UAL Corporation
United Site Services Inc.
United Subcontractors Inc.
Univision Communications nic.
US Airways Group Inc.
US Xpress Enterprises Inc.
USEC Inc.
Value Creation Partners - Best Brands
Veyance Technologies Inc.
Viskase Companies Inc.
Visteon Corporation
WasteQuip Inc.
Waterford Gaming LLC
Western Refining Inc.
White Birch Paper Company
WII Components Inc.
William Lyon Homes
Wilton Products Inc.
Wise Metals Group LLC
Wm. Bolthouse Farms Inc.
Wolverine Tube inc.
Workflow Management Inc.
WP Evenflo Holdings Inc.
Xerium Technologies Inc.
X-Rite Incorproated
YRC Worldwide Inc.


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