Loan managers are constructive on the default outlook over the next two years, according to LCD’s latest quarterly buy-side survey taken in early December. On average, those polled said the default rate by amount will finish 2015 at 1.64% before increasing to 2.52% in 2016.
Putting this in context
Technically, that would mean default rates would be lower in two years than they are now. After all, the rate at the end of November was 3.33%, and it’s on track to finish 2014 at 3.24%, assuming no defaults over the final few weeks of the year.
These figures, however, include Energy Future Holdings, which single-handedly increased the default rate by amount by 3.5 percentage points when it filed for bankruptcy in April. Sans EFH, which most participants view as an aftershock of the 2008/2009 credit crisis, the default rate was a mere 0.39% in November.
- S&P/LSTA Leveraged Loan Index by issuer region
- Average bid of first-lien loans
- Shadow default rate (excluding EFH)
- 2016 maturity wall
- Average cash-flow coverage of outstanding loans
- Average Leverage of large LBOs
- Averaged cash-flow coverage for large-corporate LBOs
- Maturity wall