Fitch: Repricing of Risk Evident in 2015 for U.S. Leveraged Finance Markets

(The following statement was released by the rating agency)

Link to Fitch Ratings' Report: U.S. Leveraged Market Quarterly (Fourth-Quarter
2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876680

NEW YORK, January 26 (Fitch) Mounting liquidity fears, slowing global growth
concerns, falling commodity prices, and equity market volatility have resulted
in a repricing of risk in the high-yield bond and leveraged loan markets,
particularly at the lower end of the rating spectrum, according to Fitch
Ratings' new 'U.S. Leveraged Market Quarterly (Fourth-Quarter 2015)' report.

The repricing of risk stunted activity in the second-half of 2015 as high-yield
bond issuance totaled only $78 billion compared to $174 billion in the first
half of 2015. High-yield bond issuance was pressured in particular by the
decline in deals from riskier credits. 'CCC' debt only represented 5% of
issuance in fourth-quarter 2015 compared to 20% in fourth-quarter 2014.

The option-adjusted spread (OAS) on the BofAML U.S. High Yield 'CCC & Lower'
Index (CCC Index) has widened to levels not seen since June 2009 as investors
have exited the riskiest tranches of debt while spreads for the BofAML U.S. High
Yield 'BB' Index (BB Index) are only marginally wider. As of Friday, Jan. 22,
2016, the OAS for the CCC Index was 1,812 bps compared to an average of 981 bps
the last six years. The OAS for the BB Index was 497 bps Friday, compared to an
average of 388 bps the last six years.

Leveraged loan issuance has seen similar pressure in the fourth-quarter. Fitch
identified 23 deals that were pulled from the primary during syndication as
issuers reacted negatively to investors demanding higher pricing and larger
issue discounts. October and November alone saw 10 deals, totaling approximately
$5 billion in institutional loan volume, pulled from the market. Pricing at the
lower end of the rating spectrum has lacked investor interest at current levels.
Thirty-nine upward flexes were seen in the fourth quarter compared to only nine
downward flexes. For 'B' credits, the average pricing on newly issued
institutional term loans increased 82 bps throughout the second half of 2015 to
487 bps.

As the market adjusts to increased risk premiums, we believe leveraged credit
fundamentals will remain largely unchanged from what is currently reflected in
our ratings and default expectations. While high-yield bond and leveraged loan
defaults are forecasted to rise, pockets of risk remain mostly isolated to the
energy and metals/mining sectors.

This quarter's report also highlights Fitch's 2016 U.S. Corporates Outlook.
Industry fundamentals are broadly stable with 26 of 34 sectors assigned a Stable
Outlook. However, with commodity prices hovering around recent historical lows,
four of the six negative sector outlooks are in commodities-related areas: Oil &
Gas, Midstream Services, Oilfield Services & Mining.

For more information, visit: www.fitchratings.com/usleveragedfinance.

Contact:

Michael Paladino, CFA

Head of U.S. Leveraged Finance

Managing Director

+1-212-908-9113

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

Hugo Sancen

Leveraged Finance

Associate Director

+1-312-368-2096

Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email:
alyssa.castelli@fitchratings.com.

Additional information is available on www.fitchratings.com.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.