Fitch: Energy, Metals/Mining Challenges Persist for U.S. Leveraged Loans

NEW YORK--(BUSINESS WIRE)-- The U.S. institutional leveraged loan default rate ended 2015 at 1.7%, according to Fitch Ratings. This is close to the non-recessionary average of 1.6% but below the long-term average of 2.8%.

'While energy and metals/mining comprise just 6% of the overall loan market, the two sectors are driving the default volumes and post-default prices,' said Eric Rosenthal, Senior Director of Leveraged Finance.

The energy and metals/mining sectors made up for 48% of leveraged loan defaults on an issuer basis in 2015, tallying $6.8 billion. These defaults picked up steam in the second half of 2015 (2H15), accounting for six of the nine total defaults since September. Arch Coal's Jan. 11th bankruptcy filing will add another to the total, affecting $1.9 billion in loans. However, the overall default rate will drop by end-January, as Caesars' bankruptcy exits the trailing 12 months universe.

The overall price levels for first lien term loans also fell in 2015, posting average 30-day post-default prices of 50% of par, due to energy and metals/mining defaulters trading at very low levels, compared with 78% of par in 2014.

Leveraged loan issuance levels dropped to a four-year low in 2015, as the near-term maturity schedule remains minimal and spreads widened, which limited refinancing activity. Only $14 billion are due to mature in 2016 and just $127 billion through 2018.

The full report, 'Fitch U.S. Leveraged Loan Default Insight: 2015 U.S. Institutional Leveraged Loan Default Rate 1.7%; Defaults Heat Up in January,' is available at www.fitchratings.com.

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

Fitch U.S. Leveraged Loan Default Insight (2015 U.S. Institutional Leveraged Loan Default Rate 1.7%; Defaults Heat Up in January)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876679

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/20160129005606/en/

Fitch Ratings
Eric Rosenthal
Senior Director
Leveraged Finance
+1-212-908-0286
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Michael Paladino, CFA
Managing Director
Leveraged Finance
+1-212-908-9113
or
Sharon Bonelli
Senior Director
Leveraged Finance
+1-212-908-0581
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• 6 Best Crypto Presales as a $4B Stablecoin Gets the Green Light for Its Own US-Chartered Crypto Bank
• Best Crypto Presale to Watch Turns Heads as White House Shakes Crypto and Pepeto Fills Fast
• Arshiner Unveils Back-to-School Collection: "Let Kids Be Kids" – Unlocking Unrestricted Campus Style for Children