Bonds & Rates
Home›Bonds & Rates›Central Banks›Fitch finds US private credit defaults hit record leve…
Fitch finds US private credit defaults hit record levels
Fitch said the trailing 12-month private credit default rate rose to 6.0% by quarter end, with maturity extensions the top driver of delinquencies.
Fitch Ratings reported that the default rate across 1,300 US private debt borrowers it tracks rose to a record high in the second quarter, according to a report released Thursday by LiveMint Markets.
The trailing 12-month private credit default rate increased to 6.0% as of the end of the quarter, up from 5.7% in the prior three-month period. Fitch recorded 32 private credit default events from 20 new, unique defaulters during the quarter, bringing total defaulters to 84.
Fitch said maturity extensions under stress became the leading driver of quarterly delinquencies, overtaking payment-in-kind and interest-rate deferrals. More than half of the quarter’s 32 default events involved some form of maturity extension, the report added.
Default rates varied by sector, with industrials and manufacturing at 10.4%, up from 5.9% in the first quarter, and healthcare rising to 9.4% from 6.9%. Fitch’s authors said more broadly that expectations for near-term rate relief have weakened for leveraged issuers, while software showed the lowest default rate at 1.2% after falling from 2.3% last quarter, according to LiveMint Markets.