Capital Restructuring | Fourth Quarter 2018

February 2019 – At year-end 2018, Moody’s and S&P reported default rates of 2.8% and 2.4%, respectively. Moody’s forecasts that the default rate will fall to 2.6% by December 2019, with defaults expected to be highest in the media, retail and restaurants sectors. In Q4, the total of outstanding U.S. dollar leveraged loans hit $1.27 trillion, overtaking high-yield bonds to cement the status of leveraged loans as the go-to financing source for speculative-grade companies. Syndicated middle market loan volume was $10.7 billion in 2018, down 22% from 2017 (the three year high point) in part as a result of the late 4Q2018 capital markets new issuance shutdown, the impact of interest rate increases, and uncertainty regarding the Federal Reserve’s monetary policy.

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