Fitch: Institutional leveraged loan default rate unchanged at 2.4%

By Caroline Salls

Pittsburgh, Feb. 22 – Fitch Ratings said in a Thursday news release that its February trailing-12-month institutional leveraged loan default rate stands at 2.4%, the same as the year-end 2017 mark.

Fitch said Fieldwood Energy Inc. contributed the bulk of the year-to-date volume.

The ratings agency said the four 2018 defaults tallied $4.2 billion, but volume could jump to $11 billion if iHeartCommunications Inc. and Remington Outdoor Co. Inc. file for bankruptcy. Fitch said the default rate would briefly hit 3% before settling around 2.7% at the end of March when $4.2 billion leaves the trailing-12-month default universe.

“While Fieldwood represents the largest loan default in three years, Fitch forecasts only a couple more energy defaults for 2018, equating to an 11% year-end rate,” Fitch’s Eric Rosenthal said in the release.

According to the release, energy accounts for more than 40% of the overall trailing-12-month default volume, but the energy rate should slide to roughly 19% in March when Ocean Rig UDW Inc. and EXCO Resources Inc. age out of the sample.

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