The TTM U.S. institutional term loan default rate is expected to finish higher for the ninth consecutive month, potentially reaching 4.6% from 4.3% at the end of August, according to a new Fitch Ratings report.

"September volume registers a modest $1 billion thus far though there could be another $3.5 billion coming by month's end," said Eric Rosenthal, Senior Director of Leveraged Finance. "Fitch's Top Loans of Concern total climbed to $51.3 billion from $45.5 billion in August mainly due to the additions of Ligado Networks and GTT Communications."

September filings included iQor US and Town Sports International. Other names to watch include Travelport's distressed debt exchange along with J Jill Group's restructuring and filings from Chief Power and FTS International.

The default rate is expected to finish at the lower end of our 5%-6% forecast for YE 2020. The YTD default rate is 3.7% on $53.2 billion of volume, and it would take another $19 billion to reach 5%.

Town Sports' bankruptcy lifted the TTM leisure/entertainment default rate to 8.5%. There have been eight leisure/entertainment defaults YTD. The leisure/entertainment sector might see nearly 40% of its current $47 billion universe default by YE 2021, with movie theatres and gyms leading the trend.

The TTM retail default rate stands at a record 19.2% and will inch up to 19.6% after J Jill's restructuring. Retail accounts for 19% of the YTD default volume, the most of any sector.

The Top Loans of Concern is down 26% from its April peak. Fitch's Top and Tier 2 Loans of Concern combined total stands at $245.7 billion and makes up 17% of the index.

The total institutional loan amount outstanding shrank a negligible $400 million in August, remaining essentially flat at $1.42 trillion.

Loan bids continued to grind higher this month but remain well below par. As of Sept. 15, the average first-lien bid was 93.9, up from 92.6 as of late August.