Amid intensifying economic growth concerns, and still-tight monetary policy, the default rate for U.S. leveraged loans remained elevated in July, Fitch Ratings said in a report Tuesday.
The rating agency said the trailing 12-month default rate stayed above 4% last month.
“Macroeconomic pressures and sector-specific risks, such as shifts in consumer spending priorities, continue to exert upward pressure on default rates as issuers await the Fed’s decision in September,” Fitch noted.
The ongoing pressure posed by tight monetary policy has produced recurring defaults, such as repeated distressed debt exchanges, among issuers struggling with high interest costs, the report said.
Despite the upward pressure on defaults, the high yield default rate ticked down to 2.11% in July, from 2.34% in June, the report also noted.