For a third consecutive month there were no new defaults among constituents of the S&P/LSTA Leveraged Loan Index. Consequently, the default rate fell to a 10-month low of 1.81% in September, from 1.99% in August.
Though the rate has declined significantly from the three-year high of 2.42% at the end of March, it remains well inside the 3% historical average where, as detailed below in LCD’s quarterly default survey of loan portfolio managers, it is expected to stay for a couple more years.
By issuer count, the default rate fell to 1.59%, down from 1.71% at the end of August.
This marks the first three-month default-free streak in the Index since August 2014, though some potential situations loom.
The well-flagged 30-day grace period on American Tire’s missed Sept. 1 interest payment, for one, is set to expire at the end of September. Tweddle Group, meanwhile, is said to be negotiating a deal to equitize its term loans.
Other Index issuers whose debt is trading in technical distress include American Commercial Lines, Caelus Energy, Catalina Marketing, Empire Generating Co., Longview Power, David’s Bridal, FullBeauty Brands, CrossMark, Petco, Phillips Pet Food & Supplies, CTI Foods, Dixie Electric, Academy Ltd, Acosta, and Revlon, among others. – Staff reports
LCD comps is an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.