Default Not In Our Stars
Source: SeekingAlpha
2025-04-28 11:45:00 ET
Summary
- Once a quarter, our Non-Investment Grade research team estimates the likelihood of default for every issuer in the high-yield and loan indices. For our latest estimates, we reduced our US GDP growth assumption to 0-1% and our European growth assumption to -1-0%. We also modeled the impact of the current global tariff regime.
- That pushed our estimate of the cumulative high-yield default rate for 2025 and 2026 to 3.75-4.75%, an increase of about 100 basis points on our estimates heading into this year.
- Despite the low-growth and high-tariff assumptions, that default rate would be below the long-term historical average, reflecting the general rise in credit quality in the indices over the past 15 years.
By Ashok Bhatia, CFA, Chief Investment Officer and Global Head of Fixed Income, Christopher Kocinski, CFA, Co-Head of U.S. High Yield & Senior Portfolio Manager, and Rachel Young, Director of Research & Senior Research Analyst ...
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Default Not In Our Stars
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