Despite a fresh default from coal concern Peabody Energy, the default rate of the S&P/LSTA Leveraged Loan Index slipped slightly in April, to 1.69% by principal amount, versus 1.75% at the end of March.
By number of issuers, the rate dipped to 1.93%, from 2.03% at the end of March. Though Peabody's default was sizable at just shy of $1.2 billion, it was canceled out as two April 2015 defaults—Walter Energy and Sabine Oil & Gas—fell from the rolling-12-month calculation.
With only one Index default in April—versus four in March—it is the lowest reported by number for any month thus far in 2016. It brings the 2016 tally to 11, versus 10 defaults in all of 2015. What's more, this is the most defaults by number for the first four months of a year since 2010.
While the consensus among market participants is that the credit cycle is in the later innings, as the rising number of defaults implies, thus far the damage has been fairly contained among commodity-related credits. April’s activity continued that trend. - Kerry Kantin
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