Nov. 19 (Bloomberg) -- Prices of high-risk, high-yield loans fell as funds were forced to sell debt and expectations rose that more companies would default as rising unemployment drags down the economy.

The price of the average actively traded leveraged loan fell 2.6 cents to 71.2 cents on the dollar since Nov. 13, according to Standard & Poor's LCD. Prices have slumped 4.4 cents since Nov. 4, reversing a rally of more than 8 cents on the dollar since the all-time low last month.

General Motors Corp., Ford Motor Co. and Chrysler LLC will renew pleas today for government aid to prevent their failure in what GM Chief Executive Officer Rick Wagoner said would be a ``catastrophic collapse'' for the economy. Moody's Investors Service on Nov. 12 increased its forecast for global defaults to more than 10 percent in the next 12 months, citing the likelihood of a ``deep and protracted'' recession in the U.S.

``It's not just the big three,'' Randy Schwimmer, managing director and head of capital markets for New York-based Churchill Financial Group LLC, said in a telephone interview, referring to GM, Ford and Chrysler. ``The impact it would have on suppliers, manufacturers and the potential rise in unemployment is adding to the negative tone.''

Declining prices are also forcing investors to sell loans because of clauses in their funds' borrowing agreements that require them to raise money when prices drop below a set level. Investors sold a record $3.3 billion of high-yield, high risk debt last month in the form of portfolio auctions, according to Standard & Poor's.

``There is still forced selling as funds hit trigger points,'' Schwimmer said.

High-yield, or leveraged, loans are graded below Baa3 by Moody's Investors Service and lower than BBB- by S&P. Loan creditors are repaid before high-yield bonds in bankruptcy.

To contact the reporter on this story: Pierre Paulden in New York at ppaulden@bloomberg.net

Last Updated: November 19, 2008 09:49 EST