Fitch: Refinancing Drives U.S. Leverage Finance Market in First-Quarter

CHICAGO--()--The leveraged loan market posted the third highest quarterly issuance on record as noted in Fitch Ratings' new 'U.S. Leveraged Market Quarterly' report. Refinancing related issuance continued to be the predominant use of proceeds.

The trailing 12-month (TTM) U.S. high yield default rate ended March at 1.4%, down modestly from 1.5% at year end. High-yield bond issuance for first-quarter 2014 totaled $62.8 billion, down by 26% from the $84.7 billion issued in first-quarter 2013. The healthcare sector saw the most issuance in the quarter at 21.6%, followed by the energy sector at 12.9%.

The TTM U.S. leveraged loan default rate was down to 1.4% in March from 1.6% at year end. First-quarter 2014 leveraged loan issuance of $276 billion was the third highest after second-quarter 2013's and first-quarter 2013's issuance of $354 billion and $307 billion, respectively.

$20.6 billion of notes and equity were issued by 40 U.S. CLOs in the first quarter. New issue stated spreads on senior notes were elevated at an average of 150 basis points (bps) over Libor compared with 144 bps over Libor in fourth-quarter 2013. Credit enhancement for senior notes remained stable at an average of 37.7%.

This quarter's report, Fitch's 'U.S. Leveraged Market Quarterly,' also highlights the recent developments in the U.S. Retail sector.

The full report 'U.S. Leveraged Finance Quarterly' is available at www.fitchratings.com/sectors/Corporate Finance/Leveraged Finance.

For more information, visit: www.fitchratings.com/usleveragedfinance.

Applicable Criteria and Related Research:

--'U.S. Leveraged Finance: Road to Recovery (Cross Sector Analysis of Recovery Assumptions and Results)' (April 2014);

--'Fitch U.S. Leveraged Loan Default Insight - Loan Market Gathers Momentum' (March 2014);

--'Fitch U.S. High Yield Default Insight - 2013 Summary and Key Statistics' (March 2014);

--'U.S. Leveraged Finance Stats Quarterly - Second Quarter 2013' (November 2013);

--'Fitch 50 - Structural Profiles of 50 Leveraged Credits' (July 2013);

--'Leveraged Finance Annual Manual for the Americas' (April 2013).

Applicable Criteria and Related Research: U.S. Leveraged Market Quarterly -- First-Quarter Synopsis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=747038

U.S. Leveraged Finance: Road to Recovery (Cross Sector Analysis of Recovery Assumptions and Results)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744855

Fitch U.S. Leveraged Loan Default Insight -- Loan Market Gathers Momentum

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=739698

Fitch U.S. High Yield Default Insight -- 2013 Summary and Key Statistics

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=729917

U.S. Leveraged Finance Stats Quarterly -- Second Quarter 2013

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=717636

Fitch 50 -- Structural Profiles of 50 Leveraged U.S. Credits

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=712469

Leveraged Finance Annual Manual for the Americas

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704760

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Contacts

Fitch Ratings
Mike Simonton, +1-312-368-3138
Managing Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
Additional information is available at 'www.fitchratings.com'.
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Mike Simonton, +1-312-368-3138
Managing Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
Additional information is available at 'www.fitchratings.com'.
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com