The U.S. institutional leveraged loan default rate ended 2015 at 1.7%, according to Fitch Ratings. This is close to the non-recessionary average of 1.6% but below the long-term average of 2.8%.

'While energy and metals/mining comprise just 6% of the overall loan market, the two sectors are driving the default volumes and post-default prices,' said Eric Rosenthal, Senior Director of Leveraged Finance.

The energy and metals/mining sectors made up for 48% of leveraged loan defaults on an issuer basis in 2015, tallying $6.8 billion. These defaults picked up steam in the second half of 2015 (2H15), accounting for six of the nine total defaults since September. Arch Coal's Jan. 11th bankruptcy filing will add another to the total, affecting $1.9 billion in loans. However, the overall default rate will drop by end-January, as Caesars' bankruptcy exits the trailing 12 months universe.

The overall price levels for first lien term loans also fell in 2015, posting average 30-day post-default prices of 50% of par, due to energy and metals/mining defaulters trading at very low levels, compared with 78% of par in 2014.

Leveraged loan issuance levels dropped to a four-year low in 2015, as the near-term maturity schedule remains minimal and spreads widened, which limited refinancing activity. Only $14 billion are due to mature in 2016 and just $127 billion through 2018.

The full report, 'Fitch U.S. Leveraged Loan Default Insight: 2015 U.S. Institutional Leveraged Loan Default Rate 1.7%; Defaults Heat Up in January,' is available at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Fitch U.S. Leveraged Loan Default Insight (2015 U.S. Institutional Leveraged Loan Default Rate 1.7%; Defaults Heat Up in January)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876679

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