The Private Equity Council and Moody's used different operational definitions to arrive at corporate debt default rates. Moody's reported roughly one fifth of firms owned by private equity underwriters (PEU's) defaulted on their debt in 2008 & 2009.
Moody's included distressed exchanges in their calculation. Prior to the economic meltdown, such exchanges triggered credit default swap agreements. Moody's sees such exchanges as voluntary out of court restructurings. WSJ reported:
Private equity 19.4%
Similar, non-private equity owned companies 18.6%
Private equity 2.84%
Similar, non-PEU owned companies 6.17%
Who to believe? Consider Carlyle Group co-founder David Rubenstein's words on the issue:
“Banks don’t really want to take over these companies.”
That pushes me to over to the Moody's definition.
The WSJ cited the image of buying companies "loading them up with debt, sucking out cash and letting them default." SemGroup might be such a case. More people would need to weigh in than Louis Freeh.