With two issuers defaulting in July—C&J Energy Services and Transtar— the U.S. leveraged loan default rate reached a 16-month high of 2.17%, up from 1.97% at the end of June, according to the S&P/LSTA Leveraged Loan Index.
Publicly traded C&J Energy, an oilfield services company, became the sixth loan issuer in the oil-and-gas space to default in 2016. S&P Global Ratings downgraded the company to D after it reached a second forbearance agreement due in part to a missed interest payment (within the month, the company filed for Chapter 11).
Despite the clear leveraged loan default trend line, the bulls can take solace in a few stats. The rates by principal amount and by number remain inside of their historical averages of 3.1% and 2.8%, respectively, according to LCD, an offering of S&P Global Market Intelligence.
This story is part of LCD's comprehensive quarterly loan market default analysis, available on www.lcdcomps.com. LCD’s subscription site offers complete news, analysis, and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.