Global Strategy "May Default Report: Global loan default count reaches p..."

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Global Strategy "May Default Report: Global loan default count reaches p..."

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Global Strategy Global Strategy

GlobalMay Default Report: Global loan default count

reaches post-2023 highs Matthew Mish, CFA

Strategist

matthew.mish@ubs.com

+1-203-719 1242

In this month's US/EU Credit Default and Recovery Rate Analysis, we update monthly Julien Conzano

default statistics and provide insights covering issuers in the following markets: US HY Strategist

bonds, US Leveraged Loans (LL), European HY bonds, European Leveraged Loans and julien.conzano@ubs.com

Private Credit. +44-20-7567 2067

Sachin Ganesh

Associate Strategist

1. Strong rise in LL defaults contrasts with HY stability (Figures 3-19): sachin.ganesh@ubs.com

+1-212-713 1062

We have three key takeaways: First, high frequency (3m) default rates bifurcated sharply

across global loans and bonds, with US/EU LL defaults jumping 90/160bp to 1.9/2.9%, Henry Morrison-Jones

respectively, versus US/EU HY rates flat to down slightly MoM to 0.7/0.6%, respectively. Strategist

A silver lining is market-based metrics showed more stability (e.g., LL index prices, henry.morrison-jones@ubs.com

+44-20-7901 6656

distressed ratios), but we expect this to be short-lived as AI disruption fears resurface in

the summer with US LL tech still in the 6th and services in the bottom of the 2nd inning Bhanu Baweja

of the re-rating cycle. Second, the private market default picture remains challenged: on Strategist

the positive side, UBS Evidence Lab’s (EL) bankruptcy filings data shows a seasonal rise in bhanu.baweja@ubs.com

+44-20-7568 6833

private firm filings, but not significant growth YoY, and BDC PIK rates through Q1

showed relative stability.