Bonds
High-Yield Default Rate to Climb as Pressures Mount, Fitch Says
- Fitch raises flags on junk issuers’ capacity to pay back debt
- Forecasts HY default rate to be as high as 5% by year end
This article is for subscribers only.
Fitch Ratings Inc. is concerned about the ability of US junk-bond issuers to pay back their near-term obligations as the Federal Reserve continues to raise interest rates.
The credit grader expects the high-yield default rate to be as high as 5% by the end of this year, as banks pull back on lending and interest expenses weigh on company profits, according to a Tuesday report. Defaults by issuer count were 2.8% in July, up from 2.6% in June, the report said.