Extraordinary policy intervention has made this HY default cycle unusually short-lived, helping to limit quite significantly the rise in defaults among mid- and high-rated speculative grade companies. A turn into a more benign falling trend over the next quarters looks likely, in light of improved macro perspectives, expected progress in vaccinations and encouraging signals from financial drivers.
The current cycle has recorded a very rapid rise in default rates, driven by the credit effects of the coronavirus-induced recession and the stress already prevailing in some sectors like energy and retail, especially in the US before the crisis.
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