Leveraged loan default activity in the U.S. kicked up in January as four issuers—Sports Authority, Arch Coal, RCS Capital, and NewPage—defaulted on $3.57 billion of S&P/LSTA Index loans.

The lagging 12-month default rate trend, however, was mixed. With Caesars Entertainment Operating Company’s $5.6 billion default in January 2014 falling from the rolls, the rate by amount eased to 1.33%, from 2015’s final read of 1.54%. Though last month’s tally of four defaults was the highest monthly total since January 2010, when six Index issuers defaulted, default rates remain inside the historical average of 3.1% by amount and 2.8% by number.-

Looking ahead, managers judge that (1) the credit cycle is now in the second half, if not the fourth quarter, but (2) the game is not over yet, and, therefore, the loan default rate will remain below trend for at least the next twelve months.

According to LCD’s latest quarterly buyside survey conducted in early December, managers on average estimated the default rate by amount will end 2016 at 2.35%, before climbing to 3.24% by year-end 2017. For the record, results were tightly clustered at 1.65–3.00% for 2016 and 2.50–4.00% for 2017.– Steve Miller

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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.