The loan default rate for risky retailers has jumped above 5% in July, according to Fitch Ratings, a spike the rating agency warned about last week. The trailing 12-month retail institutional leveraged loan default rate stood at 2.8% at the end of June. The rate was propelled upward by five retail defaults totaling $3.8 billion of debt, by companies including J. Crew and True Religion Apparel. "The loan universe hasn't seen defaults of this magnitude from retail since the sector's previous high of 5.7% in 2009," said Eric Rosenthal, senior director of leveraged finance. Defaults are being caused by a mixture of factors, including changes in the sector such as changing shopper behavior, as well as unsustainable capital structures, said Fitch.
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