Capital Restructuring | First Quarter 2021

May 2021 – At the end of first quarter 2021, Moody’s and S&P reported default rates of 7.5% and 6.3%, respectively, with defaults led by the oil and gas, media and entertainment, and retail sectors. Both credit agencies forecast default rates to fall to 3.9% (Moody’s) and 5.5% (S&P) by year end, with S&P citing strong economic data and forecasted growth during 2021. Credit portfolio risks in the event default rates are driven higher are primarily expected to be the increase in U.S. Treasury yields this year and its impact on the rate environment, pandemic-related drivers, credit quality, and potential inflation. Many investors are looking at the loan market as a barometer of credit conditions.

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