U.S. High Yield Default Loss Rate Below 1% in 2012
U.S. High Yield Default Loss Rate Below 1% in 2012
For the third consecutive year, the U.S. high yield default rate remained well below average, ending 2012 at 1.9% and up just modestly from 1.5% in 2011. The average recovery rate on the year’s defaults was 50.2% and the median recovery, 38.9%. Both measures slipped from 2011’s more robust 59.4% average and 47.9% median.
The market’s default loss rate was 0.9% in 2012. The paper and containers and utility sectors experienced the highest industry specific default loss rates of 5.3% and 4.9%, respectively.
Fitch Ratings finds that 44 of the 65 companies that completed DDEs from 2008 – 2012 have not had a subsequent event of default. The weighted average recovery rate on 2012 DDEs was 69.1% of par versus 46.5% excluding DDEs (bankruptcy / missed payments).
The long term average annual default rate through 2012 now stands at 4.6%. This average has fluctuated over 10 year investment horizons from 3.1% (1990 – 1999) to 6.7% (1994 – 2003).
The average recovery rate over the period 2000 - 2012 is 36.5% and the median rate 25%. Details by seniority and industry are available in Fitch Ratings' new report.
For the third consecutive year, the U.S. high yield default rate remained well below average, ending 2012 at 1.9% and up just modestly from 1.5% in 2011. The average recovery rate on the year’s defaults was 50.2% and the median recovery, 38.9%. Both measures slipped from 2011’s more robust 59.4% average and 47.9% median.
The market’s default loss rate was 0.9% in 2012. The paper and containers and utility sectors experienced the highest industry specific default loss rates of 5.3% and 4.9%, respectively.
Fitch Ratings finds that 44 of the 65 companies that completed DDEs from 2008 – 2012 have not had a subsequent event of default. The weighted average recovery rate on 2012 DDEs was 69.1% of par versus 46.5% excluding DDEs (bankruptcy / missed payments).
The long term average annual default rate through 2012 now stands at 4.6%. This average has fluctuated over 10 year investment horizons from 3.1% (1990 – 1999) to 6.7% (1994 – 2003).
The average recovery rate over the period 2000 - 2012 is 36.5% and the median rate 25%. Details by seniority and industry are available in Fitch Ratings' new report.
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