Debtwire Middle-Market – 6/14/2021

Institutional loan & HY bond default landscape
improves dramatically year-over-year

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Source: Fitch Ratings, Debtwire Par

Defaults on institutional loan and high yield bond debt have subsided from elevated levels seen last year during the height of the coronavirus (COVID-19) pandemic, which shuttered many businesses under pressure to service debt agreements. Ending May at just 2.4%, the trailing twelve-month institutional loan default rate has improved dramatically from the 2020 high of 4.2%, according to Fitch. Similarly, high yield bond defaults have eased to 2.6% from a high of 5.7% last year. The decline in defaults is expected to continue into June, with Fitch predicting leveraged loan and high yield bond defaults to fall to 1.9% and 2.0%, respectively.