US Leveraged Loan Default Rate Rises to Still-Low 1.62% in February

The default rate of the S&P/LSTA Leveraged Loan Index climbed to 1.62% in February, from a 17-month low of 1.42% in January, after Windstream Holdings and Ditech filed petitions for bankruptcy protection in the Southern District of New York.

By issuer count, the default tally is now 1.52%, up from a 15-month low of 1.44% last month.

Leading February’s defaulters by size, Windstream Holdings made a quick dash to Chapter 11 without a confirmed restructuring plan after a federal court ruled against the company in its long-running battle with Aurelius Capital Management over covenant default claims.

Despite the increase, the default rate remains well below the 3.1% historical average.

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