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U.S. Leveraged Finance and CLO Weekly (Retail Defaults Down, Sears DDE Proposal, and Conference Highlights)

There have been no U.S. institutional leveraged loan defaults thus far in September, potentially marking the second consecutive month with none — a first since fall 2014. Fewer retail defaults will likely push the loan default rate down to 2% at year end, below Fitch’s forecasted 2.5%. Total outstandings on the Top Loans of Concern list has remained between $19 billion and $20 billion over the past three months, with no September additions. Fitch’s Tier 2 Loans of Concern fell to $55 billion from $58 billion in August with a few names showing improved prospects.

CLO Concentration a Potential Risk

Industry- or sector-concentrated portfolios within collateralized loan obligations (CLOs) should cause concern for senior debt investors. Diversification has been a key mitigant to prevent losses from impacting 'AAAsf' investors during past default cycles.

Fitch 50

Leverage Increases for the Fitch 50 Group of Speculative Grade Issuers

Leverage has increased for the Fitch 50 with the addition of several notable lower-rated issuers, according to the eighth edition of Fitch Ratings' "Fitch 50" - a look at debt structures and credit profiles for 50 prominent U.S. leveraged issuers.

Length of U.S. Bankruptcies Shrinks Significantly

According to a new Fitch Ratings bankruptcy case study report: "The compressed timeframe is benefitting creditors, minimizing employee and trade union uncertainty, and lessening disruption to operations," said Sharon Bonelli, Senior Director of Leveraged Finance.

US CLO Default Exposure Low for Now

While defaults in Fitch-monitored U.S. broadly syndicated loan (BSL) CLOs reached a low point in August, new defaults are likely in the near term, including some that are widely held.

Bankruptcies Still Few & Far Between for U.S. Industrials

Bankruptcies remain a rare occurrence for companies in the Aerospace & Defense (A&D) and Industrial & Manufacturing (I&M) sectors, according to a new report published by Fitch Ratings.

US Retail Leveraged Loan Defaults Drop to Lowest Rate in 12 Months

The July trailing 12-month default rate for U.S. retail leveraged loans fell to four percent from seven percent last month, marking the lowest point since June 2017, according to a new Fitch Ratings report.

Healthcare, Food, Beverage and Consumer Bankruptcy Enterprise Values and Creditor Recoveries

Despite U.S. healthcare defaults at a 16-year low, profits of some issuers are challenged. Default rates for healthcare, consumer and food & beverage sectors are lower than the U.S. market overall - a trend expected to continue absent unexpected external factors as cash flows are relatively stable.

New Language Aims to Preserve Value in Credit Agreements

Secured lenders have seen the value of their collateral deteriorate in recent years. The examples of J.Crew, Claire's, and most recently, PetSmart, draw attention to provisions that enable leakage of potentially valuable collateral. Consequently, lenders have addressed relevant provisions in debt documentation for new transactions.

Few High Yield Defaults Expected Later This Year

The final five months of 2018 could see only $3 billion of defaults, the lowest amount since 2013, according to a new Fitch Ratings report.


Report: Fitch U.S. High Yield Default Insight (High Yield YTD Volume Approaching $25 Billion, but Few Defaults Expected Later this Year)

Strong Revolver Recovery Rates in Recent Bankruptcies

Median revolver usage rates on bankruptcy petition dates were consistent year over year for companies that recently exited bankruptcy, clocking in at even levels to the May 2017 revolver study.

Late Stage Credit Data Healthier Than Prior Cycles; Defaults to Remain Low

As the credit cycle enters its late stage, key metrics are stronger than before the start of prior recessions, pointing towards a lower expected default rate in the near term, according to a new Fitch Ratings report.

European Leveraged Finance

Trends in the leveraged loan and high-yield bond markets and points out what to watch in the near term.

US Leveraged Finance

Trends in new issuance, portfolio credit quality, and defaults and recovery for leveraged finance in the US.

Read the Latest from Fitch on Leveraged Finance and CLOs

Expert analysis and insights from Leveraged Finance and CLOs from your region or across the globe can be found here. Use the filters on the right to refine your results. 


Latest ResearchFitch Rated Entities

Senior US CLO Notes Resilient Under LevLoan Stresses

Loosening loan documentation, rising senior leverage and other late-cycle changes in leveraged loan credit dynamics suggest recoveries could come under greater stress in the next downturn, but we expect senior CLO ratings to withstand this pressure under three stress scenarios of differing severity. 

What to Watch in 2018

Outlooks compendium for US CLO and Leveraged Finance

Enterprise Value Tool

EV-aluator looks at transaction multiples in the European and US high-yeld markets.

Data Comparators

Key headline figure and ratio computations by sector and rating category.

Bond & Loan Market Data

Latest market statistics for bonds and loans from Europe and the US.

Transparency & Guidance

Default and recovery prospects of different forms of asset-backed lending

How Fitch determines recovery ratings, and views shareholder loans

Identifying 'CCC' issuers

Fitch 50 Issuer Handbooks

Profiles, debt charts, and forecasts for the market's top issuers in Europe and the US.

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