Fitch: Refinancing Continues to Drive U.S. Leverage Finance Market in Second-Quarter

CHICAGO--()--High-yield bond issuance reversed the trend of quarter over quarter declines 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 June at 2.7%. High-yield bond issuance for second-quarter 2014 totaled $73.3 billion, up by 17% from the first-quarter 2014. The energy sector saw the most issuance in the quarter at 30.1%, followed by the business services sector at 10.6%.

The TTM U.S. leveraged loan default rate was up to 4% in June from 1.6% at year-end 2013. Second-quarter 2014 leveraged loan issuance was down at $244 billion from first-quarter 2014's issuance of $276 billion and well below second-quarter 2013's and first-quarter 2013's issuance of $354 billion and $307 billion, respectively.

$36.9 billion of notes and equity were issued by 65 U.S. CLOs in the second quarter, making the quarter the most active for new CLO issuance on record. New issue stated spreads on senior notes averaged 147 basis points (bps) over Libor compared with 150 bps over Libor in first-quarter 2014. Credit enhancement for senior notes remained stable at an average of 37.5%.

This quarter's report, Fitch's 'U.S. Leveraged Market Quarterly,' also highlights the recent developments in Emerging markets and 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.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'U.S. Leveraged Finance Multiple EV-aluator' (July 2014);

--'Fitch 50 - Structural Profiles of 50 Leveraged Credits' (July 2014);

--'Latin America Leveraged Finance Stats Quarterly - Fourth-Quarter 2013' (June 2014);

--'Fitch U.S. High Yield Default Insight: Secured Bonds in the Mix' (June 2014);

--'U.S. Leveraged Finance Stats Quarterly - Fourth Quarter 2013' (June 2014);

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

--'Leveraged Finance Annual Manual for the Americas' (April 2014).

Applicable Criteria and Related Research: U.S. Leveraged Market Quarterly

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752473

U.S. Leveraged Finance Multiple EV-aluator

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749693

Fitch 50 (Structural Profiles of 50 Leveraged U.S. Credits)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752040

Latin America Leveraged Finance Stats Quarterly (Fourth-Quarter 2013)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749776

Fitch U.S. High Yield Default Insight (Secured Bonds in the Mix)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750186

U.S. Leveraged Finance Stats Quarterly (Fourth-Quarter 2013)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=745616

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

Leveraged Finance Annual Manual for the Americas

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746947

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Contacts

Fitch Ratings
Michael Paladino
Senior Director
+1-212-908-9113
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
Email: brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Michael Paladino
Senior Director
+1-212-908-9113
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Media Relations:
Brian Bertsch, New York, +1 212-908-0549
Email: brian.bertsch@fitchratings.com