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.
Source: Fitch Ratings
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