Since early 2016, US HY default rates have experienced a sort of “mini –cycle”, peaking at the end of 2016. Nevertheless, the recent rise and fall movements appear mostly commodity driven: default rates would have remained fairly stable if energy and material sectors were excluded from calculations.

Looking at default rates from a rating perspective, the picture looks benign with default rates of high quality speculative grade bonds (BB rated) moving to zero in the last couple of years, B rated bonds stabilizing between 0 and 1.5% and CCC-rated names falling remarkably.