US corporate borrowers create default situation for Macquarie's Fortress Notes

Missed interest payments from US corporate borrowers in the publishing and finance industries are seeing defaults in the Macquarie Fortress Notes on the increase.

Almost 5 per cent of the Macquarie Fortress Notes are now in default. The manager of the notes has advised Macquarie that a number of the portfolio’s US corporate borrowers failed to meet interest payments that were due at the end of March.

The loans in question represent 2.51 per cent of the portfolio. The total percentage of the portfolio now in default is 4.17 per cent. A further loan representing 2.31 per cent of the portfolio, from the finance industry, also missed a payment. While the borrower has 30 days to remedy the missed interest payment before being in default, Macquarie said it is not expected that the borrower will do so. That would bring the total amount of the portfolio in default to 6.48 per cent.

Macquarie’s statement to the Australian Securities Exchange said none of the loans mentioned have been sold from the Fortress portfolio, and that it is “too soon to comment on the recovery expectations for these loans”.

Of the total loans in the portfolio now in default, the majority come from the publishing industry, followed by motion pictures and entertainment, hotels and gaming, and building and real estate.

Four Corners Capital Management is the manager of the Macquarie Fortress Australia Notes Trust, while Macquarie Fortress Investments is the trustee.