American companies with junky debt coming due this year are in a bind. They have a combined $178 billion in debt maturing in 2009, and there is no way they are going to refinance all of it. Many are staring at paying an average 17% on new bonds, in what is the toughest credit market in memory (see table). "Even at this spread level a lot of them don't have buyers," says Diane Vazza, a managing director at Standard & Poor's. "These companies are choking, a number won't be able to restructure, and that is going to have an impact on unemployment." Chemtura Corp., a Middlebury, Conn. specialty chemicals producer, which employs 4,500 after recently laying off 500, has $370 million of 7% bonds coming due in July. When the bonds were floated in 1999, it was presumed that refinancing them would be no big deal, says Chief Financial Officer Stephen Forsyth. Chemtura's total debt of $1.1 billion is not enormous in relation to cash flow (in the sense of Ebitda), which probably came in last year at $375 million on $1.5 billion in revenue.
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