Fitch: US Leveraged Loan Default Rate a Low 1.3% Excluding EFH

NEW YORK--()--Excluding Energy Future Holdings' (EFH) April bankruptcy, the US leveraged loan trailing 12-month default rate ended June at a modest 1.3%, according to Fitch Ratings. The loan default tally excluding EFH was $4.1 billion - slightly below the $4.6 billion recorded in first-half 2013.

Benign default conditions extended to both the broadly syndicated (BSL) and large middle market (LMM) segments of the market. The BSL default rate excluding EFH was 1.4% and the LMM rate was 1% through June.

The average time to default in the first half was 3.8 years, a level consistent with recent years, and a marker of standard speculative-grade default patterns. This metric tends to deteriorate (shorten) when defaults are associated with systemic stress - originating from either lax underwriting standards or a weakening economy.

Three loan defaults in the first half originated from the gaming, lodging and restaurant sector. The group is one of several areas that have produced steady post-recession default activity. There have been 97 loan issuer defaults since 2010 with industry concentrations in broadcasting and media (15), gaming, lodging and restaurants (11), services (11) and retail (9).

The price-based 30-day post default recovery rate on first lien loans was 79% of par in the first half. The rate excluding EFH was notably also 79%, up from 69% in 2013.

For additional details on loan default and recovery trends please see "Fitch US Leveraged Loan Default Insight, Excluding EFH, Default Rate a Low 1.3%".

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Mariarosa Verde
Managing Director
Credit Market Research
+1 212-908-0791
33 Whitehall Street
New York, NY
or
Eric Rosenthal
Senior Director
Credit Market Research
+1 212-908-0286
or
Robert Rowan
Senior Director
FitchWire
+1 212 908-9159
or
Media Relations, New York
Brian Bertsch
+1 212-908-0549
brian.bertsch@fitchratings.com

Sharing

Contacts

Fitch Ratings
Mariarosa Verde
Managing Director
Credit Market Research
+1 212-908-0791
33 Whitehall Street
New York, NY
or
Eric Rosenthal
Senior Director
Credit Market Research
+1 212-908-0286
or
Robert Rowan
Senior Director
FitchWire
+1 212 908-9159
or
Media Relations, New York
Brian Bertsch
+1 212-908-0549
brian.bertsch@fitchratings.com