Fri 19 Jun, 2020 - 10:48 ET Related Fitch Ratings Content: Fitch U.S. Leveraged Loan Default Insight Fitch Ratings-New York-19 June 2020: June institutional term loan defaults are impacting several sectors as the default rate approaches 4%, according to a new Fitch Ratings report. "The trailing 12-month default rate stands at 3.5% and is likely to end June at nearly 4%. YTD default volume totals $36.9 billion following $14.6 billion in May, the most recorded in a month since April 2014," said Eric Rosenthal, Senior Director of Leveraged Finance. Imminent bankruptcy filings anticipated from Chesapeake Energy and California Resources would propel the trailing 12-month energy institutional term loan default rate above 17% for the first time since July 2018. At the end of May, the energy default rate stood at 10.5% after remaining in a tight 4.5% to 5.5% band since 2H19. The energy default rate is forecasted to finish 2020 at 18%, with Seadrill Partners expected to add to the volume. June defaults tally $1.7 billion so far, affecting several sectors, including leisure/entertainment, consumer products, gaming/lodging/restaurants and automotive. The trailing 12-month leisure/entertainment default rate stands at 6.6% and will climb above 7% when Town Sports' expected bankruptcy occurs. Fitch projects leisure/entertainment might experience defaults of nearly 40% of its current $46 billion universe by YE 2021, paced by movie theatres and gyms. Fitch projects $80 billion loan defaults by year end and more than $200 billion through YE 2021 - a two-year cumulative 15% rate. The number of second-quarter defaults (34), including a record 18 in April, has also been significant an indication of the broad-based nature of the current recession. The retail default rate is expected to reach 19% by year-end, up from the current 11.7%. Retail comprises 18% of the Top Loans of Concern, the most of any sector. Fitch's Top Loans of Concern total fell for the second straight month to $56.3 billion due to recent defaults, down slightly from $56.9 billion in May and off 19% from the April peak. The Top and Tier 2 Loans of Concern's combined lists stand at $256.7 billion, essentially unchanged from May's $257.1 billion, and makes up 18% of the loan index. The loan universe contracted for a third consecutive month, shrinking by $6.5 billion and lowering the three-month total by nearly $16 billion. This is the largest three-month drop since Fitch began tracking on a monthly basis in 2013. For more information, a special report titled "U.S. Leveraged Loan Default Insight Report: Loan Default Rate Approaching 4% on Imminent Energy Bankruptcies" is available on the Fitch Ratings web site at www.fitchratings.com. https://www.fitchratings.com/resear...-4-on-imminent-energy-bankruptcies-19-06-2020