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In This List

US leveraged loan default rate remains stubbornly low in May

Outflow streak hits 30 weeks as leveraged loan funds see $686M withdrawal

Despite aging credit cycle, near-term spike in leveraged loan defaults unlikely

European leveraged loan returns stall in May, though best high yield, equities

Investors withdraw $1.5B from US leveraged loan funds as outflow streak hits 29 weeks

US leveraged loan default rate remains stubbornly low in May

The U.S. leveraged loan default rate was unchanged in May, holding at a slim 1% and remaining slightly off a seven-year low of 0.93%, seen at the end of March, according to the S&P/LSTA Loan Index.

As it has been for some time, the rate is well below the historical average of 2.93%.

Default Rate Chart

Empire Generating Co. was the sole loan default last month. Its impact was largely offset by Proserv Group rolling off the trailing 12-month default calculation.

Citing increasing natural gas prices, power producer Empire Generating filed for Chapter 11 protection in New York bankruptcy court on May 20 after it tripped a technical default caused by a covenant breach.

The restructuring will see asset managers Black Diamond Capital Management and MJX Asset Management leverage their 55% stake in the company’s secured debt into forcing an asset sale via a credit bid, a move opposed by the holders of the minority share of the debt led by Ares Capital Management. Ares has already made a rival bid for the assets, and has signaled in bankruptcy court filings that it intends to litigate the credit bidding of the assets. — Rachelle Kakouris

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