A dissection of the latest quarter’s BDC portfolios by LevFin Insights and Advantage Data shows that non-accruals dropped significantly over the past year. For the 24 public and nonpublic BDCs with at least $1 billion in assets under management, the non-accrual rate has retreated to an average of 1.77% for the three-month period ending June 30, down from 3.31% in the same period last year.
July Default Rate Below 2%: The July U.S. TTM high yield default rate stands at 1.9%, down from 2.2% at June 30. This represents the seventh straight month the rate will have fallen and marks the lowest level since March 2014. Chinos Intermediate Holdings’ (J. Crew Group Inc.) distressed debt exchange (DDE) and Armstrong Energy Inc.’s missed payment were the two July defaults registering $766 million. The month’s total is well below the $4.7 billion rolling off the TTM universe.
Topics: High Yield, energy
Mississippi Power Co. (NYSE: MP-D) is under review for a credit downgrade as a result of an ongoing investigation of continued delays and cost overruns for its coal gasification plant in Kemper County. The energy company last experienced a downgrade of its debt in November 2015, which brought its Moody's rating down to near junk status of Baa3. If the review goes poorly for the plant, Mississippi Power Co. will be in danger of crossing over into non-investment grade status.
Topics: energy, junk bonds, Downgrade, Crossover
Divergence in Southwestern Energy and Chesapeake Energy bond and equity prices hit a high in Q1 2016 with the spike in Chesapeake 5 Year Senior USD MR14 CDS spread. Thereafter and through to present, equity prices remain divergent while bond prices converge.
Topics: credit default swaps, energy, CDS
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