Fitch: U.S. Energy and Metals/Mining Issuance Slows
Overall, new issuance slowed in September to $20 billion from $41 billion a year earlier. Third quarter new issuance tallied $38 billion versus $69 billion in 2014. Volume in the first nine months of 2015 is down 35% year over year for energy and metals/mining but up 3% for the rest of the high yield market.
"Capital markets access for many commodity price-challenged companies has been solid for most of 2015, but energy and metals/mining issuance trailed off dramatically in the third quarter, registering $5 billion versus $16 billion in the second quarter," said Eric Rosenthal, Senior Director of Leveraged Finance.
Nearly half of U.S. energy and metals/mining bond issues are bid below 80 cents compared to just 7% a year ago. These two sectors comprise about 22% of the overall high yield bond market.
The trailing 12-month (TTM) high yield default rate stands at 4.8% and 10.3% for the energy and metals/mining sectors, respectively. The former is at its highest rate since 1999. The overall TTM default rate is 2.9%.
The U.S. high yield bond market has seen at least four defaults per month since February, including October, which already has six registering more than $2 billion in volume. More than $4 billion in default volume has been tallied for three consecutive months in the third quarter, levels not seen since 2009.
The full report, "U.S. High Yield Default Insight: 2015 Default Outlook Boosted to 3.5%," is available at www.fitchratings.com.