Fitch: US private credit default rate declines in Oct. ’24

Fitch Ratings has reported a slight decline in the US Private Credit Default Rate (PCDR) for October 2024, which stood at 4.7 per cent, down from 5.0 per cent in September 2024.

This annualised year-to-date (YTD) default rate reflects defaults across approximately 300 issuers in the Privately Monitored Rating portfolio, along with around 900 additional issuers covered by Fitch’s Credit Opinions for middle-market CLO ratings.

Two new defaults were recorded in October, both in the health care providers sector. These defaults pushed the sector’s annualised default rate to 4.9 per cent, up from 3.6 per cent in September. As of October, six healthcare providers, out of about 150 issuers, have defaulted. Both defaults were classified as Restricted Defaults under Fitch’s criteria. One issuer missed an interest payment, and the cure period expired before a forbearance agreement could be reached, although the issuer later made the payment. The other issuer entered a Distressed Debt Exchange, extending its maturity under financial stress.

The technology software sector did not record any defaults in October. Despite this, it still holds the highest annualised YTD default rate at 7.3 per cent, with seven defaults out of approximately 115 issuers, though this rate is down from 8.1 per cent in September.

The consumer products sector also saw an above-average annualised YTD default rate of 5.3 per cent, slightly improving from 5.7 per cent in September. No defaults were recorded in this sector in October.

Overall, the top five sectors accounted for nearly half (22 out of 46) of the YTD defaults reported by Fitch.

Attribution: Fitch Ratings

Subediting: M. S. Salama