Fitch Ratings said it expects U.S. institutional leveraged loan and high-yield bond default rates to decline to 1.5% in 2019, partly reflecting strength in the energy and retail industries.

The rating agency's forecast is below the nonrecessionary averages of 1.8% for leveraged loan and 2.3% for high-yield default rates and represents the lowest default rates for loans since 2011 and for bonds since 2013. The forecast also reflects minimal near-term maturities and favorable market access along with shrinking amounts on Fitch's lists of top loans and bonds of concern.

Fitch expects a leveraged loan default rate of about 2% and a high-yield default rate of just over 2% at the end of 2018. Default volume will come in at about $23 billion for loans and $29 billion for bonds this year and at $20 billion for loans and $19 billion for bonds in 2019, according to the debt watcher.

Rising interest rates, increasing transaction leverage, trade tensions or unforeseen shocks are among the risks Fitch said could affect its forecasts. The rating agency added that it is not expecting an economic downturn in 2019, but low default rates typically coincide with the beginning of recessions.

"Lower default rates should be considered in the context of the stage of the credit cycle, as improving profitability, open access to capital markets and looser credit terms are typical markers of late cycle stages," Fitch said.