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Weekly Market Summary
Jan 12 to Jan 16, 2026
Extra Credit*
- Loan defaults eased in 2025, with both payment and bankruptcy-related defaults continuing to moderate. By year end, 13 companies had defaulted over the prior 12 months, down from 17 at the close of 2024. With no new defaults in December and one issuer dropping out of the tally, the Morningstar LSTA US Leveraged Loan Index’s issuer count default rate declined to 1.18%, compared with 1.26% in November and 1.45% at the end of 2024.
- As of December 31, the trailing 12 month default rates for the Morningstar LSTA US Leveraged Loan Index were:
- Payment default rate by amount: 1.23%, rising from 0.91% in December 2024.
- Payment default rate by issuer count: 1.18%, up from 1.45% a year earlier.
- Dual track default rate by issuer count: 3.35%, a year over year decrease of 130 bps.
- Despite fewer liability management exercises (LMEs) and payment defaults over 2025, the share of loan facilities trading at distressed levels climbed to a two year high in December. A leading indicator of potential future defaults, the distress ratio—measured as the percentage of loans priced below 80 cents on the dollar—rose to 7.24% at year end, up from 4.44% in late 2024 and the highest reading since November 2023.
Pitchbook as of 1/14/2026.
Previous reports
*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.
Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.
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