More Defaults on High-Yield Bonds — Fitch Ratings

Corporate performance lagged in the second quarter, according to Fitch, with revenue and EBITDA growing at the slowest pace in two years. And there’s more weakness:

Fitch rating activity so far in the third quarter also points to a speculative grade downgrade to upgrade ratio of 2 to 1. While corporate fundamentals and funding conditions remain solid — issuance soared in August to $28.5 billion — the economy’s sluggish performance in recent quarters is having an impact. Clearly the Federal Reserve’s launch of another round of quantitative easing is intended to address this, and worries that the U.S. fiscal cliff and recessionary conditions in Europe will further threaten growth.

The Fitch Ratings report is available here.

Paul Ausick