U.S. corporate debt default rates will continue to hit records through 2011, even though the worst of the recession may be past. This estimate comes from Bain & Company's Corporate Renewal Group (CRG), which sees the final total approaching 600 large companies running out of cash through the period that began with onset of the downturn in 2008. This includes almost 300 already filed to date, and compares with just 116 for the prior four-year period from 2004 to 2007.

These failures will not be limited to small or marginal firms, but will affect major companies with at least $100 million in assets. The triggering mechanism is a new wave of maturities as speculative debt comes due.

What's also significant is not only that big, high-profile companies will default—either by missing a payment, making a distressed exchange with lenders to buy time, or filing for bankruptcy-but that virtually every sector in the U.S. economy will be touched. Among those likely to be hardest hit are: media and entertainment, consumer products, retail, restaurants, insurance and transportation.

In recently raising its estimates, CRG analysis indicates that persistent economic softness and the looming two-year spike in speculative debt maturities will result in the following default totals:

• 2009: 180-210 defaulting issuers (12-14% default rate)
• 2010: 140-160 defaulting issuers (9-11% default rate)
• 2011: 100-130 defaulting issuers (7-9% default rate)

Exacerbating this forecast is that speculative grade maturities, which are the date when the debt comes due, will rise by about 50% in 2010—to more than $65 billion—and then double again in the following year, to more than $120 billion.

Or as Sam Rovit, Bain CRG partner, puts it: "We are seeing a pig in a python. A significant number of companies won't be able to pay the tab for all of the speculative debt that they've consumed." This also means that further speculative grade financing will be increasingly difficult to obtain.

Meantime, a big chunk of recent defaults are postponed reckonings. About one-third resulted in a distressed exchange, with only about a quarter actually filing for bankruptcy. This reflects the natural desire of issuers to buy time in order to fight another day, and a strong preference by lenders to avoid a loss or deal with the hassle of taking control. Delay, however, won't fix the underlying problem of a weak balance sheet.