U.S. high yield defaults tally just $0.7 billion so far in August, a significant decline from the $12.8 billion monthly average over the past four months, according to a new Fitch Ratings report.

"August default volume could reach nearly $3 billion driven by distressed debt exchanges expected for Carlson Travel and Revlon," said Eric Rosenthal, Senior Director of Leveraged Finance. "The trailing 12-month default rate stands at 5.6 percent and will likely finish August at 5.7 percent."

Fitch's Top Bonds of Concern list is at $26.7 billion, the lowest level in over a year and down 49 percent from its May peak. There have been only a handful of additions to the Top Bonds of Concern list over the past few months. The combined Top Bonds and Tier 2 list total is $209.3 billion, which has more than doubled since the pandemic began, comprises 15 percent of the index. Energy continues to dominate, making up 52 percent of the Top Bonds and 42 percent of the Tier 2 totals.

The energy trailing 12-month default rate stands at 14.7 percent following Martin Midstream Partners' distressed debt exchange and Chaparral Energy's bankruptcy filing. The energy default rate is at its highest level since March 2017 and accounts for 38 percent of the year-to-date volume.

High yield issuance already registers over $40 billion this month, more than quadruple the amount last year through August. Volume this year is on pace to approach the annual record total set in 2012. The high yield universe size grew to $1.36 trillion, up 15 percent from one year prior due to fallen angel additions and new issuance.

For more information, a special report titled "U.S. High Yield Default Insight Report: High Yield Default Volume Tapers off in August; TTM Default Rate at 5.6%" is available on the Fitch Ratings web site.