Fitch: Energy, Metals/Mining Defaults Hit Leveraged Loans

NEW YORK--(BUSINESS WIRE)-- The institutional leveraged loan market saw 11 defaults in 1H15, with five attributed to the energy and metals/mining sectors, according to Fitch Ratings. Walter Energy's filing and a potential August bankruptcy by Alpha Natural Resources would add two to the tally and $1.6 billion of additional volume before the end of the summer.

The energy and metals/mining sectors comprised just 7% of outstanding leveraged loans at 1H15 compared with 23% of outstanding high yield bonds.

'Walter and Alpha affect the default rate for both loans and bonds, but the lower loan exposure of energy, metals/mining has this year's overall rate heading toward 1.5%-2% for loans versus 2.5%-3% for bonds,' said Eric Rosenthal, Senior Director of Leveraged Finance.

In addition, there are a handful of companies that could default before the end of the year and have over $1 billion of outstandings in institutional loans in a few sectors, including energy.

At end-June 2015, the institutional leveraged loan market stood at $916 billion. The year-to-date default rate was 1%, in line with Fitch's estimate of 1.5%-2% by year-end.

On a trailing 12-month (TTM) basis, the leveraged loan default rate at end-June was 1.4%. For energy alone, the TTM rate was 3.5%, while the metals/mining sector came in at 4.5%.

The gaming sector continues to top the charts for leveraged loan default volumes with a TTM rate of 12.2% due to Caesars Entertainment Opco's January bankruptcy.

The full report, 'U.S. Leveraged Loan Default Insight: TTM Loan Default Rate at 1.4%, Tracking at 1.5%-2% for 2015,' is available at www.fitchratings.com.

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

Fitch U.S. Leveraged Loan Default Insight (TTM Loan Default Rate 1.4%, Tracking Toward 1.5%-2%)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=868721

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150728006368/en/

Fitch Ratings
Eric Rosenthal
Senior Director
Leveraged Finance
+1-212-908-0286
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Michael Paladino, CFA
Managing Director
Leveraged Finance
+1-212-908-9113
or
Media Relations
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

You May Also Be Interested In

• Elevate Black Wellness Spearheads Transformative Movement With Inaugural Black Wellness Week
• NextEra Energy Partners, LP first-quarter 2024 financial results available on partnership's website
• McFarlane Completes Geophysical Survey at Its Past Producing McMillan Gold Mine