US high yield recovery rates rise to 59%, according to Fitch

Defaults were few but sizeable, with recovery rates high in 2011 according to a Fitch default report. 

Fitch’s US high yield default rate ended 2011 at 1.5% as 29 issuers defaulted compared to 35 in 2010. The lower number of defaults was offset by the size of the defaults with bankruptcies of over $1 billion from OPTI Canada, Newpage, American Airlines and Dynergy. The paper and packaging sector had the highest rate of defaults at 10.3%, according to Fitch, while the rates for the energy sector remained relatively low at 2.6% despite the size and competitive nature of the sector.

There was a modest increase in the weighted average recovery rate to 59.4% for 2011 from 56.7% in 2010, having recovered from a recent low of 34.1% in 2009.