Fitch Ratings: US leveraged loan default rate remains above 4% in July

The US leveraged loan default rate stayed above 4.0 per cent in July due to ongoing macroeconomic pressures and sector-specific risks, as per the latest Fitch Ratings report.

Defaults included AMC Entertainment’s distressed debt exchange (DDE), contributing $1.9 billion to the leveraged loan default volume, and Rodan & Fields, which also completed a DDE after missing payments on approximately $563 million in debt.

The trailing 12-month high-yield (HY) default rate decreased to 2.11  from 2.34 per cent in June. Technology firm Mobiluem defaulted after missing payments last December, and online education company 2U filed for Chapter 11 due to a decline in demand.

The Top Market Concern Loan list increased by $3 billion in August, with notable additions including Franchise Group, facing a potential covenant breach, and Allen Media, struggling with declining ad revenue and high leverage.

Attribution: Fitch Ratings

Subediting: M. S. Salama