Fitch: Energy, Metals/Mining Continues to Weigh on U.S. Leveraged Loan Universe
Samson Resources Co.'s bankruptcy pushed the energy sector TTM institutional leveraged loan default rate to 5.2% in September, up from 3.1% in August, while the TTM rate for metals/mining stands at 11%.
These two sectors have experienced the most defaults by both volume and count since March.
The default rate will advance higher in October, as there are three new defaults totalling more than $500 million, including a chapter 11 filing for Miller Energy Resources Inc. In addition, Millennium Health LLC's bankruptcy ($1.8 billion outstanding) is expected in the next couple of weeks and would push the overall rate to 1.7%.
'Post-default prices continue to show bifurcation between the energy and metals/mining companies and the rest of the universe,' said Eric Rosenthal, Senior Director of Leveraged Finance.
Energy and metals/mining has a post-default first-lien price at 35% based on five defaults while the other industries are averaging 77%. The average September TTM 30-day post-default price on all 13 defaulted first lien loans was 59%.
The full report, 'U.S. Leveraged Loan Default Insight: Energy Default Rate Surpasses 5%; Overall Rate Tracking to 1.5%-2% Forecast,' is available at www.fitchratings.com.