Fitch Sees Increased Default Rate on Junk Bonds, Leveraged Loans

Default rates on US junk bonds and leveraged loans will be higher this year than previously forecast because of tighter lending conditions and reduced access to capital amid banking industry turmoil and inflation uncertainty, Fitch Ratings said in a report Tuesday.

• Fitch raised its 2023 forecast for high yield bond defaults to 4.5%-5.0% from 3.0%-3.5%
  • The cumulative 2023-2024 HY bond default rate should total 8.75% at the forecast mid-points, well below the 22% during 2007-2009, according to the report
• The ratings firm lifted its leveraged loan default rate forecast to 4.0%-4.5% from 2.5%-3.0%
  • Fitch expects the cumulative 2023-2024 LL default ...