A new Fitch Ratings report said that the rate at which risky corporate loans default is expected to rise next year even without a recession as downgrades outpace upgrades and market access wanes for lower-rated companies, WSJ Pro Bankruptcy reported. The default rate among U.S. institutional leveraged loans will climb to 3 percent in 2020, compared with the 1.8 percent trailing 12-month rate, the ratings agency said in the Friday report. The high-yield bond default rate is expected to reach 3.5 percent in 2020, compared with 2.9 percent on a trailing 12-month basis, according to the report. Michael Paladino, managing director and head of Fitch’s U.S. leveraged finance group, said that the second half of 2019 has been defined by “growing outstanding amounts on our lists of concern, net downgrade pressure and increased investor skepticism toward lower-rated and aggressive sponsor deals.”
