Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
 December 14, 2015 - 12:41 PM EST
Print Email Article Font Down Font Up
Fitch: U.S. High Yield Default Volumes Nearing Milestone as DDEs Surge

More than $5.5 billion of December defaults has increased the trailing 12-month (TTM) high yield rate to 3.3% from 3% at the end of November, according to Fitch Ratings. This marks the 13th consecutive month that defaulted volume exceeded $1.5 billion, closing in on the 14-month run seen in 2008-2009.

"Investors are taking note that the lower-for-longer oil price scenario doesn't look like it's going away anytime soon," said Eric Rosenthal, Senior Director of Leveraged Finance.

Corporate spreads for 'CCC' credits exceeded 1,600 bps on Friday for the first time since summer 2009. Energy and metals/mining compose $84 billion of the 'CCC' rating category. Spotty capital markets access for these companies has led to decreased issuance, and pricing suggests distress will continue. Of 'CCC' rated energy and metals/mining companies, 88% are bid below 80 cents.

So far this month the energy TTM default rate climbed to nearly 7%. Vantage Drilling's chapter 11 filing and Magnum Hunter Resources and Swift Energy's missed payments pushed the E&P TTM default rate close to 12%.

Distressed debt exchanges (DDEs) accounted for 44% of defaults on an issuer-count basis in the past year. Energy companies have relied on DDEs to improve their capital structure and buy time as liquidity and cash flows are affected by low oil prices. Several companies including SandRidge Energy, Halcon Resources, Warren Resources and Exco Resources have completed multiple DDEs.

The full report, "U.S. High Yield Default Insight: 2016 U.S. High Yield Default Rate Forecast at 4.5%; Energy at 11%" is available at www.fitchratings.com

Additional information is available at www.fitchratings.com

Fitch U.S. High Yield Default Insight (2016 U.S. High Yield Default Rate Forecast at 4.5%; Energy at 11%)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875076

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings
Eric Rosenthal
Senior Director
Leveraged Finance
+1 212 908-0286
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Michael Paladino, CFA
Managing Director
Leveraged Finance
+1-212-908-9113
or
Sharon Bonelli
Senior Director
Leveraged Finance
+1-212-908-0581
or
Media Relations
Alyssa Castelli, +1-212-908-0540
alyssa.castelli@fitchratings.com


Source: Business Wire (December 14, 2015 - 12:41 PM EST)

News by QuoteMedia
www.quotemedia.com