Credit conditions showed signs of weakness in August, as default rates for U.S. leveraged loans and high-yield bonds rose in August, Fitch Ratings says.
In a report published Monday, the rating agency noted that the trailing 12-month leveraged loan default rate climbed to 4.47% in August from 4.03% in July, driven by several large defaults.
“Defaults were driven by macroeconomic pressures and secular decline in some industries, including softened demand in construction and housing,” Fitch said.
These financial strains were intensified by “ongoing weak operating performance, high interest expenses, minimal liquidity and near-term maturities,” the rating agency said.
Meanwhile, the default rate for high-yield bonds edged up to 2.33% in August from 2.21% in July, Fitch reported, as defaults came at issuers grappling with cash flow challenges and continued high capital expenditures.