Fitch's Inside Credit: U.S High Yield Energy Companies Pay Up

In this week's edition of Inside Credit, Fitch Ratings highlights the higher costs that high yield energy companies faced to access capital markets in 1Q15.

High yield energy companies paid a 7.3% par weighted average coupon for new issuance in the first quarter, up from 6.2% one year prior, as oil prices remain low and investors become more sensitive to the sector's rising risk. During the first quarter of the year, 85% of high yield energy companies in the market paid a higher coupon compared with the average on their existing bonds.

"The trailing 12-month default rate continues to rise, propelled by energy companies like Quicksilver Resources' and Dune Energy's bankruptcy filings," says Eric Rosenthal, Senior Director of Leveraged Finance. "With a number of energy companies still hanging in the balance, the energy default rate hasn't finished it's run-up yet."

Other topics covered in this week's edition of Inside Credit include:

-U.S. CDS spreads hit new post-crisis lows, down 80% from peak
-Low-rates a risk for German insurers' guaranteed returns
-GSE sales of NPLs could offer outlet for U.S. banks
-Spanish Fundamentals Index shows recovery holding up
-Brazil's banks face intensified litigation environment
-U.S. mortgage foreclosure timelines begin to plateau
-U.S. homebuilders showing more spring in their step
-China's tolerance for defaults by small, non-strategic SOEs to rise
-Nigeria transition smooth but creates policy uncertainty
-New European CMBS addressing legacy weaknesses

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