Citing credit availability and good corporate fundamentals in light of an improved economy, Fitch projects the U.S. high yield default rate will remain between 1.5% and 2% in 2014. The 2013 default rate stands at 1.5% through late December, four basis points below last year.
The firm calculates that 64% of current high yield volume in the market is made up of bonds sold in the past three years and 71% of outstanding institutional leveraged loan volume ($700 billion) consists of deals originated in 2013. This shifts maturities out toward 2016 and 2017, which results in maturities that are “quite low over the near term.”