Default exposure in US CLOs climbed to its highest mark of the year in August after a "slew" of corporate defaults, a trend that has sharpened the concern for weakening credits in loan pools, according to a monthly industry report from Fitch Ratings.

Default exposure in collateralized loan obligations during August averaged 0.6% of outstanding portfolios tracked by Fitch, up from the 0.1% figure for each of the past eight months, according to Fitch.

"This was the highest monthly level recorded since December 2020, although it was well below the recent peak of 1.4% observed in July 2020," the structured credit report noted.

The default exposure figure does not yet account for the Sept. 8 bankruptcy filing of Cineworld Group PLC. Cineworld is held in 40% of US CLOs under Fitch's surveillance, representing the largest US institutional leveraged loan default since iHeart Communications in March 2018.

Other corporate actions not impacting the exposure rate were defaults that were resolved in the past month for Dawn Acquisitions LLC, The Geo Group Inc. and Output Services Group, Inc.

The most widely held defaulted issuers in August were Envision Healthcare Corp. (49% of CLOs), Bright Bidco B.V. (25%), and Endo International plc (18%).

Exposure to corporate names on Fitch's loans of concern averaged 5% of portfolios, down 0.2% from July, according to the report.

Fitch noted 32 negative ratings actions (including downgrades and negative outlook designations), versus 26 positive actions to Fitch's equivalent issuer default ratings. Fitch also reported a worsening in weighted-average ratings factor, denoting more exposure to lower-rated corporates.

This article originally appeared on PitchBook News