Abstract

Defaults in the third quarter of 2013 were $5.13 billion, resulting in a quarterly high-yield bond default rate of 0.37%, higher than the rates both one year (0.24%) and one quarter (0.23%) earlier. However, this continues a trend of low defaults, during which the quarterly default rates were below 0.50% in thirteen out of the last fifteen quarters, with only the fourth-quarters of 2011 and 2012 default rates higher than this level. The trailing 12-month default rate on our $1.4 trillion high-yield bond market increased to 1.40%, up from 1.28% as of mid-year 2013. The outlook is for continued low default rates but single digit returns for the entire year of 2013.