Participants expect the U.S. leveraged loan default rate to climb modestly over the next two years as the business cycle ages and the chances of recession rise.

According to LCD’s latest quarterly buyside survey conducted in early March, managers predicted the default rate by amount will climb from February’s reading of 1.41%, to 2.5% by March 2017, before pushing to 3.2% by year-end 2017. The views ranged from 1.8–3.3% for the next 12 months and 1.8–4.5% for 2017.

When asked when the default rate is likely to push beyond the historical average of 3.1%, managers were split between 2017 and 2018, with a skew toward 2017. – Steve Miller

This story first appeared on www.lcdcomps.com, LCD’s subscription site offering complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.
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