OREANDA-NEWS. June 16, 2015. Nine defaults in May, all in the energy and metals/mining sectors, fueled the trailing 12-month (TTM) U.S. high yield default rate to 2.3%, according to Fitch Ratings. This is the highest number of defaults in a single month since October 2009, and pushes the default rate above the 2.1% seen in April 2015.

Twenty-eight issuers have defaulted since the beginning of the year on \\$22.8 billion of outstanding debt. We have observed a spike in distressed debt exchanges (DDEs), with nine DDEs since the beginning of the year now totaling \\$2.6 billion versus three and \\$0.7 billion for the same time period last year. Seven energy and metals/mining DDEs were executed in the past two months. Energy and metals/mining now account for 60% of the year to date defaulted high yield issuers although they represent only 23% of the universe on a dollar basis.

'Several recent DDEs have comprised only a small portion of the issuers' outstanding bonds,' said Eric Rosenthal, Senior Director of U.S. Leveraged Finance. 'The key will be whether they reduce leverage enough to stave off further restructurings.'

Recent DDEs for SandRidge Energy, Halcon Resources and Alpha Natural Resources represented 1%, 8% and 20% of their outstanding bonds, respectively.

If those seven energy and metals/mining issuers filed chapter 11 instead of executing DDEs for only a small portion of their capital structure, then the TTM default rate would have been 3% and default volume would have been \\$32 billion.

In addition, 35% of all DDEs executed between 2008 - 2014 resulted in a subsequent default.

Energy sector companies continue to account for a larger share of 'CCC' or lower rated bonds, comprising \\$62 billion of the \\$259 billion 'CCC' or lower universe. This is more than double the amount from one year ago and nearly equal to the next three largest sectors combined.

New high yield bond issuance remains strong, registering \\$149 billion through end-May 2015. Up 20% from the same period last year, current volumes are tracking ahead of the record \\$307 billion issued in 2012.